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1965 Supreme(Raj) 202
High Court Of Rajasthan
Judgename : Kan Singh
BHOORI LAL - Appellant
Versus
GEHRI LAL - Respondent
Second Appeal 81 Of 1964
Decided On : 10/18/1965
G.M.LODHA, Hastimal, N.L.Tibrewal
The merger of interests under Section 111(d) of the Transfer of Property Act requires that the lease-hold interest and the reversion must coincide in the hands of one person.
Headnote:
TRANSFER OF PROPERTY ACT, 1882 - SECTION 111(D) - MERGER OF INTERESTS - LEASE-HOLD AND REVERSION MUST COINCIDE IN THE HANDS OF ONE PERSON - SUB-MORTGAGEE ACQUIRES RIGHTS SHORT OF ENTIRE INTEREST - NO MERGER OF LEASE-HOLD AND REVERSION.
Fact of the Case:
The defendant, Bhoorilal, was the sub-lessee of a shop from Gehrilal and Inderlal, who were the mortgagors of the shop. Bhoorilal later became the sub-mortgagee of the shop from the mortgagees, Ismail and Sadiq Hussain. Bhoorilal stopped paying rent to Gehrilal and Inderlal, claiming that the liability to pay rent had ended due to the merger of interests under Section 111(d) of the Transfer of Property Act.
Finding of the Court:
The court held that the merger of interests under Section 111(d) of the Transfer of Property Act did not apply in this case because Bhoorilal did not acquire the entire interest in the shop. As a sub-mortgagee, Bhoorilal only acquired rights short of the entire interest, and the lease-hold interest and the reversion did not coincide in his hands.
Issues: Whether the merger of interests under Section 111(d) of the Transfer of Property Act applied in this case, where the defendant was the sub-lessee and later became the sub-mortgagee of the shop.
Ratio Decidendi: The court held that the merger of interests under Section 111(d) of the Transfer of Property Act requires that the lease-hold interest and the reversion must coincide in the hands of one person. In this case, the defendant only acquired rights as a sub-mortgagee, which was short of the entire interest in the shop. Therefore, the lease-hold interest and the reversion did not coincide in his hands, and the merger of interests did not apply.
Final Decision: The court dismissed the defendant's appeal in one case and partially allowed the appeal in the other case, reducing the decretal amount to Rs. 1,764.
KAN SINGH, J.
( 1 ) I have before me two second appeals of identical nature filed by an unsuccessful defendant in an action for realisation of rent of a shop. As the fate of these appeals falls to be determined on a common question of law, they can conveniently he disposed of together.
( 2 ) GEHRILAL and Inderlal were the owners of the shop in dispute. On 31-7-41 they mortgaged it with possession for an amount of Rs. 2,699 with one Ismail and sadiq Hussain. The latter gave it on lease to the mortgagors Gehrilal and Inderlal on a monthly rent Rs. 11 on 16-8-44. Gehrilal and Inderlal in turn sublet it on 3-449 to the defendant Bhoori Lal on a monthly rent of Rs. 60. On 12-9-59 mortgagors Ismail and Sadiq Hussain sub-mortgaged it with Bhoori Lal the defendant who was already holding it on sub-lease from Gehri Lal and Inderlal. On 12-1-59. Bhoorilal filed a suit for the recovery of the arrears of rent amounting to rs. 2,160 from Gehrilal in the Court of the Additional Civil Judge, Udaipur. Subsequent to that he filed another suit for the rent that had fallen in arrears after filing of the first suit. Bhoori Lal in resisting the suits raised several pleas one of which was that as a result of the sub-mortgage in his favour the liability of bhoorilal to pay any rent to Gehrilal and Inder Lal came to an end on the principle of merger enshrined in Section 111 (d) of the Transfer of Property Act. The first court decreed the suits. The defendant then filed separate appeals in the Court of the District Judge, Udaipur, but was not successful Aggrieved of the judgment and decree of the learned District Judge the defendant has lodged the two second appeals in this Court.
( 3 ) AS observed at the outset the only point arising for consideration is about the applicability of the doctrine of merger in the present case. Relevant portion of section 111 of the Transfer of Property Act runs as under:
"section 111. Determination of lease. A lease of immoveable property determines -. . . . . . . . . . . . . . . (d) in case the interests of the lessee and the lessor in the whole of the properly become vested at the same time in one person in the same right:. . . . . . . . . . . . A merger of interest as envisaged in this section is brought about when any estate or property becomes vested at the same time in the same person in the same right. In such a case a smaller interest has been carved out of a larger interest and at a subsequent stage the interest so carved out and the remaining interest out of the original subsequently stand combined in the hands of one person so that the two interests put together fall in one piece to constitute the old interest in its entirety. The underlying principle is that a person can not at the same time be a lessor and lessee of the same property. The merger of interests may be brought about in a variety of ways namely, by purchase, release, by operation of law or in any other manner, but the essential requirement of such a merger on integration of interest is that the two kinds of interests must be vested in the same person and in the same right. Principles of this doctrine have been elucidated by their lordships of the Supreme Court in Badri Narain Jha v. Rameshwar Dayal Singh, air 1951 SC 186. The following passage from their Lordships judgment may usefully be quoted: "if the lessor purchases the lessees interest, the lease no doubt is extinguished as the same man cannot at the same time be both a landlord and a tenant, but there is no extinction of the lease if one of the several lessees purchases only a part of the lessors interest. In such a case the lease-hold and the reversion cannot be said to coincide. "
From the above passage it will be evident that what is of the essence of the matter is that the lease-hold and the reversion must coincide in the hands of one person. Applying this test I have now to see whether in the present case it can be predicated that the lease-hold rights created in Bhoorilal
