2007 Supreme(SC) 680

2007(5) Supreme 307
Supreme Court of India
(From Madhya Pradesh High Court at Indore)
S.B. Sinha & P.K. Balasubramanyan, JJ.
Tara Chand — Appellant
versus
Sagarbai @ Chaiyalibai — Respondent
Appeal (civil) 2411 of 2007
[Arising out of S.L.P. (C) No. 13190 of 2006]
Decided on : 09-05-2007
Counsel for the Parties :
For the Appellant : S.K. Gambir, Sr. Adv., Anil Sharma, Awanish Sinha and B.K. Satija, Advocates.
For the Respondent : K. Radhakrishnan, Sr. Adv., Niraj Sharma, Vikrant Singh Bais and Ajinkya S. Dagaonkar, Advocates.

Important Point
Whether rights of a tenant would give way to rights of a mortgagor would essentially depend upon terms and conditions of mortgage. If tenant surrenders tenancy either explicitly or by necessary implication, terms of deed of mortgage shall prevail.
It is immaterial for purpose of admissibility of document or otherwise, whether mortgagee was a signatory to Deed of Mortgage or not.
When parties altered their position knowing fully well their mutual rights and obligations under an agreement thereto existing, rule of estoppel shall apply.

Headnote:M.P. Accommodation Control Act, 1961 – Applicability to deed of usfructuary mortgage - Execution of deed of usfructuary mortgage by respondent landlord in favour of appellant tenant mortgaging disputed house for a period of 10 years for a sum of Rs. 25,000 – Suit for redemption of mortgage and delivery of possession filed by respondent – Dismissed by Trial Court – Appeal – Dismissed – Second Appeal - Allowed by High Court – Appeal there against – Plea of appellant that deed of Mortgage being an unilateral one and same not having been signed by mortgagee, relationship between parties continued to be governed by 1961 Act - No dispute that relationship of parties were governed by provisions of 1961 Act – However right of a tenant, could be available provided tenancy continued - Once, tenant ceased to be a tenant, question of applicability of said Act not arose - Whether rights of a tenant would give way to rights of a mortgagor would essentially depend upon terms and conditions of mortgage - If tenant surrenders tenancy either explicitly or by necessary implication, terms of deed of mortgage shall prevail - Having surrendered tenancy, it would not lie in mouth of a mortgagor to contend that as he had been a tenant, he would be entitled to rights of a tenant–Again It was immaterial for purpose of admissibility of document or otherwise, whether mortgagee was a signatory to Deed of Mortgage or not - Appellant himself purchased stamp paper for its execution and knew terms thereof - Parties proceeded on basis that said terms were binding on them – Hence It, did not lie in mouth of appellant now at this stage to contend, that deed of Mortgage was an unilateral one and same had not been signed by mortgagee, particularly when no such contention had been raised before courts below.(Paras 11,13,14,20)

       Transfer of Property Act – Section 111(f) - Termination of tenancy by implied surrender Suit for redemption of mortgage and delivery of possession filed by respondent – Dismissed by Trial Court – Appeal – Dismissed –Second Appeal - Allowed by High Court – Appeal there against– Plea of appellant that in any event, only because a deed of mortgage was executed, same not amounted to surrender of tenancy rights – No dispute that deed of mortgage had been acted upon - Appellant had been allowed to use ground floor of premises in question in lieu of interest - Respondent as owner of property was to pay house tax and other taxes - Deed clearly stipulated period on expiry whereof, right of redemption would vest in mortgagor. Prior to expiry of said period, respondent could not have claimed recovery of possession – Respondent could not have filed a suit for eviction under 1961 Act even if one of other conditions laid down therefor were fulfilled - Terms of tenancy was fixed - Mortgagee was to vacate house and possession thereof after 10 years on payment of entire mortgage money - Other covenants in deed of mortgage also clearly showed right of appellant as a mortgagee and not as a tenant - Stipulations contained in mortgage deed, hence, were such that they would lead to an inference that tenancy was impliedly surrendered by appellant – When parties altered their position knowing fully well their mutual rights and obligations under an agreement thereto existing, rule of estoppel shall apply. Appellant, was, thus estopped from disputing contents of mortgage or relation arising thereunder - Parties altered their position - A new relationship was created – Since it was acted upon– Hence findings of high Court held sustainable – Appeal having no merit dismissed.(Paras 21,22,24,33)

       Facts of the case :

       Deed of usfructuary mortgage was executed by respondent landlord in favour of appellant tenant herein in the instant case mortgaging disputed house for a period of 10 years for a sum of Rs. 25,000. Suit for redemption of mortgage and delivery of possession filed by respondent was dismissed by Trial Court. Appeal there against was dismissed. Second Appeal was however allowed by High Court.

       Present appeal has been filed by appellant on plea of appellant that deed of Mortgage being an unilateral one and same not having been signed by mortgagee, relationship between parties continued to be governed by 1961 Act.

       Findings of the Court :

       The Court held that even though there was no dispute that relationship of parties was governed by provisions of 1961 Act. However right of a tenant, could be available provided tenancy continued. Once, tenant ceased to be a tenant, question of applicability of said Act not arose. Whether rights of a tenant would give way to rights of a mortgagor would essentially depend upon terms and conditions of mortgage. If tenant surrenders tenancy either explicitly or by necessary implication, terms of deed of mortgage shall prevail. Having surrendered tenancy, it would not lie in mouth of a mortgagor to contend that as he had been a tenant, he would be entitled to rights of a tenant. Again it was immaterial for purpose of admissibility of document or otherwise, whether mortgagee was a signatory to Deed of Mortgage or not. Appellant himself purchased stamp paper for its execution and knew terms thereof. Parties proceeded on basis that said terms were binding on them. Hence It, did not lie in mouth of appellant now at this stage to contend, that deed of Mortgage was an unilateral one and same had not been signed by mortgagee, particularly when no such contention had been raised before courts below.

       Again covenants in deed of mortgage also clearly showed right of appellant as a mortgagee and not as a tenant. Stipulations contained in mortgage deed. were such that they led to an inference that tenancy was impliedly surrendered by appellant. When parties altered their position knowing fully well their mutual rights and obligations under an agreement thereto existing, rule of estoppel shall apply. Appellant, was, thus estopped from disputing contents of mortgage or relation arising thereunder. Parties had altered their position. A new relationship was created. Since it was acted upon, hence findings of high Court held sustainable. Appeal having no merit dismissed.