Tribhovandas Bechardas vs Mangaldas Hargovinddas

Chhatpar, J.—This appeal arises out of the following facts: The Appellant-Plaintiff filed a suit against the Respondent for recovery of rent of a premises situated at Jamnagar for the period from 30-3-1949 to 30-4-1950. There, is no dispute as to the rate of rent payable for the premises, which consists of 45 rooms and three godowns, the rent being Rs. 258/- p.m. for the entire premises. The premises originally belonged to one Deva Nathu, who had mortgaged this property with the Plaintiff. The mortgage appears to have been intended with possession, although the mortgagor was permitted to remain in possession of the property. In 1947 the Plaintiff filed a suit for enforcement of the mortgage by sale of the mortgaged property against Deva Nathu and obtained a mortgage decree, for sale. In execution of this mortgage decree, he purchased the property at a Court-auction on 30-3-49. The present suit relates to the rent of the property from this date. The defence of the Defendant-Respondent was that he had paid two sums of money to Deva Nathu as advance rent i.e. Rs. 2000/- on 11-6-48 and Rs. 6000/- on 9-7-48, which amount to rent of about 31 months covering a period up to 31-1-51. He pleaded that this was a bona fide payment of rent the prior owner u/s 50, T.P. Act and he Cannot be made to pay it over again to the present owner, the Plaintiff. The trial Court decreed the suit for rent for the entire period claimed in the suit by the Plaintiff, but on appeal by the Defendant, the learned District Judge disallowed the rent for the period from 30-3-49 to 21-10-49 on the ground that the Defendant was given notice of the purchase of the property by the Plaintiff only on 21-10-49 and therefore the advance rent paid before that to the prior owner was bona fide and came u/s 50, T.P. Act. The learned District Judge says:

The principle of law on this point is clear. A payment by the lessee in advance to the lessor is a mere loan to the lessor and is not payment of rent. Such an advance, will ''pro tanto'' operate as payment of rent as and when the rent falls due. To the extent, therefore, of the rent that has fallen due before the lessee gets notice of the transfer, the advance will operate as a discharge of the lessee under this section.

This proposition of law is no doubt correct that an advance rent has to be considered as a mere loan to the lessor which will pro tanto operate as payment of rent as and when the rent falls due. See in this connection the commentary of Chitaley and Rao on the Transfer of Property Act, 1950 Edition, page 631. But here we have to consider two aspects. First, the property was mortgaged with Anr. person and the mortgage was said to be with possession, although the mortgagee permitted the mortgagor to remain in possession. On the assumption that this mortgage was to be ''treated as a simple mortgage without possession, the mortgagor will have the statutory right to lease the premises on rent u/s 65-A, T.P. Act. But this right is subject to conditions laid down in the section one of which is that no rent shall be payable in advance. The other aspect is based upon Section 52, T.P. Act containing the doctrine of lis pendens. The mortgagee had filed his suit in 1947. The two items of advance of rent taken by the mortgagor were in June and July 1948, while the mortgagee''s suit was pending. Now it is settled law that the doctrine of lis pendens applies to the mortgage suits also. In such suits the equity, of redemption of the mortgagor is directly and specifically in question and a transfer either privately by the mortgagor or by way of compulsory sale in execution of a decree or otherwise would be affected by the doctrine of ''lis pendens''. The transferee would be bound by the decree in the suit. He would take it subject to the incidents of the suit and one of the incidents is that a purchaser under the decree in the suit gets a good title against all persons whom the suit binds. (See Chitaley and Rao''s Transfer of property Act, 1950 Edition, pages 719 and 720). To the same effect is the commentary of Mulla on the Transfer of Property Act, 1949 Edition, p. 250, which says that the rule of lis pendens applies to suits on mortgages. In short, as soon as the mortgagee flies a suit for realisation of his mortgage interest by sale of the mortgaged property, any interest created by the mortgagor in the property during the pendency of the suit would be subject to the rights of the mortgagee as also to the incidents of the suit on a mortgage, one of which is the right of an auction-purchaser, who acquires all the rights and the equities that the mortgagee had against the mortgagor. The question arises whether a lease by a mortgagor during the pendency of a mortgage suit filed against him would be operative as against the mortgagee in view of the specific provisions of Section 65-A, which gives him a statutory right to lease the mortgaged property when the possession is with him.

The question has been dealt with by Mulla in his Transfer of Property Act, 1949 Edition, at pages 250 and 252. On the former page the learned commentator says:

A lessee from a mortgagor during the pendency of a suit to enforce the mortgage is not entitled to resist the claim for possession of the auction- purchaser at the sale in execution of the decree on mortgage.

And he relies upon the cases of - Nisar Husain and Another Vs. Sundar Lal and Others ; - ''Madan Mohun Singh v. Raja Kishori'' AIR 1917 Cal 222 (B); - AIR 1927 603 (Oudh) ; - ''Thakur Prasad v. Gaya Sahu'' 20 All 349 (D); - ''Ramasami v. Gobinda AIR 1917 Mad 128 (E) and - ''Girdharlal v. Liladhar AIR 1931 Bom 539 (F). At page 252, the same proposition is reiterated and it is further stated:

A mortgagor in possession has now a statutory power to lease u/s 65A and it is submitted that a lease granted by a mortgagor under this statutory power pending a suit by the mortgagee would be subject to the rules of lis pendens, for otherwise it would convert the mortgagee''s estate into one expectant on the term created by the lease. But where it was found that such rights could not be affected, it was held that the lease was not invalid.

Chitaley and Rao deal with the subject at pages 738 and to 740 of their Transfer of Property Act and their opinion is similar to that of Mulla. Their commentary says:

There has been a difference of opinion on the question whether this section applies to leases ''pendente lite'' by a party to the suit. On the one hand it has been held that a lease in the ''ordinary course of management'' cannot be said to ''affect'' the rights of the other party under any decree , or order that may be passed in the suit and would therefore be binding on him. On the other hand it has been held that the question of ordinary management does not arise under this section and that a lease like any other transfer ''pendente lite'' would be subject to the result of the suit or proceeding. Where the lease cannot be said to be in the ordinary course of management it has been held that it cannot, of course, prevail in derogation of the rights of the other party under any decree or order passed in the suit or proceeding. It is submitted that the second of the views expressed above is correct. Before suit, the owner of property can certainly lease out his properties in the ordinary course of management. A ''mortgagor'' can, u/s 65A, lease out the mortgaged property in the ordinary course of management and such lease will, after the mortgage but before a Suit on the mortgage is filed, be binding on the'' mortgagee. A mortgagee in possession may also u/s 76, Clause (a) lease out the mortgaged property in the ordinary course of management and such a lease, if made before any suit is filed for redemption, will be binding on the mortgagor. But where a suit is filed no party to the suit can prejudice the rights of the other party to any extent by execution of a lease or any other kind of transfer, even though he may have the power to make a lease of the property in the ordinary course of management and at a time when there is no suit pending. The question of ordinary management does not arise u/s 52, and it does not seem to be permissible to create exceptions to the applicability of the section which is very wide, by saying that a lease in the ordinary course of management cannot be said to affect the rights of the other party under any circumstances.

The direct authorities on the point are the eases of Allahabad, Oudh and Bombay cited above, reading of which leaves no doubt that after a suit has been filed, a mortgagor cannot deal with the mortgaged property to the prejudice of the mortgagee or the auction-purchaser in the mortgagee''s suit, as the latter acquires all the rights and equities that the mortgagee had against the mortgagor. If it were otherwise, any dishonest mortgagor on coming to know of the filing of the suit can impair the mortgage security by leasing out the mortgaged property on long terms. If the mortgagor cannot lease out the mortgaged property during the pendency of the suit to the prejudice of the mortgagee''s right, he cannot for the same reason accept any advance rent as has been done in the present case, and which has virtually the effect of extending the period of monthly tenancy for a long time, apart from the question whether the payment of advance rent could at all be accepted by the mortgagor u/s 65-A, which prohibits any advance rent to be paid. I am therefore clearly of the opinion that, that the action of the mortgagor in the present case was not justified and if the tenant Defendant has made any payment to the mortgagor during the pendency of the suit, he has done so at his own risk. He cannot claim protection u/s 50, T.P. Act, as the doctrine of lis pendens would come in his way. The rule of lis pendens is based not on the doctrine of notice but on expediency i.e. necessity for final adjudication. It is immaterial that the Defendant had or had not notice of the pending proceedings. Consequently, it would seem clear that Section 50, T.P. Act must be read as subject to the doctrine of lis pendens u/s 52 as much as Section 65-A is. I am therefore of the, opinion that the question of notice by the Plaintiff to the Defendant of his acquisition of property as auction-purchaser is not material for the purpose of determining the liability of the Defendant. The purchaser''s right came into being admittedly on 30-3-49 and he would be entitled to rent from that date from the tenant-Defendant, the advance payments of rent by the Defendant not being binding on him as they were made during the pendency of the suit. I am therefore of the opinion that the learned District Judge was wrong in disallowing the rent for the period from 30-3-49 to 21-10-49. Mr. Mehta, the learned Advocate for the Appellant has tried to show, that the, tenant had notice before the date fixed by the learned District Judge but I need not go into this question, which according to my decision becomes unnecessary in view of the application'' of the doctrine of lis pendens.

The result is this appeal is allowed and the decree of the lower appellate Court is set aside. The lower appellate Court had disallowed costs to the Plaintiff and had ordered each party to bear its own costs throughout. But I do not think that it is justifiable to deprive the Plaintiff of the costs of the'' trial Court. It is not dispute before me that the Respondent-tenant had in fact made these advance payments of rent to the extent of Rs. 8000/- and he will have, to pay over again to the Plaintiff. His action may have been motivated by feelings of helpfulness to the mortgagor, the former landlord, but such action cannot prejudice the rights of the mortgagee and the auction-purchaser as held above. Taking all the circumstances and equities of the case into consideration, I restore the decree of the trial Court including the costs granted. As regards the costs of the first and second appeals, I order that each party should bear his own costs.