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1974 Supreme(All) 40

Allahbad High Court
K.B.ASTHANA,M.N.SHUKLA,K.C.AGRAWAL
Tajammul Husain - Appellant
Versus
Mir Khan - Respondent
Decided On : 02/22/1974

Advocates:
Yougesh Agrawal, Chand Kishore, J.N. Chatterji and S.A. Kazmi, for Appellants; M/s. S.K. Tewari, G.P. Bhargava, A.N. Bhargava and S.I. Jafari, for Respondents.

Headnote:

TRANSFER OF PROPERTY ACT - SECTION 76(A) - MORTGAGE - LEASE - REDEMPTION - TENANCY - TRESPASSER: 1. A mortgagee in possession can let out the mortgaged premises during the subsistence of the mortgage, and the rights of the person admitted to tenancy would not get automatically extinguished on redemption of the mortgage. 2. The exception to the general rule is provided under Section 76(a) of the Transfer of Property Act, which allows a mortgagee to grant leases that would continue even after the redemption of the mortgage, provided that such leases are made in the course of prudent management. 3. The status of a person admitted to tenancy by a mortgagee during the subsistence of the mortgage would not change to that of a trespasser upon redemption of the mortgage, if the letting was bona fide and in the course of prudent management.

Fact of the Case:

A house in Aliganj Town Area, District Etah, was mortgaged to three individuals. The mortgagees let out the premises to a tenant, Mir Khan, after taking a rent deed. The mortgagor, Tajammal Hussain, filed a suit for redemption of the mortgage and obtained a decree. However, he could only get symbolic possession of the premises. He then filed a suit for possession against Mir Khan, claiming that after the redemption of the mortgage, Mir Khan's status was that of a trespasser and he was liable to be ejected.

Finding of the Court:

The court held that the defendant, Mir Khan, was not a trespasser and was entitled to continue in possession of the premises as a tenant of the mortgagor after redemption. The court relied on Section 76(a) of the Transfer of Property Act, which provides an exception to the general rule that a lease granted by a mortgagee would come to an end on redemption of the mortgage. The court found that the letting of the premises to Mir Khan was a prudent act within the meaning of Section 76(a) and, therefore, Mir Khan's rights as a tenant continued even after the redemption of the mortgage.

Issues: 1. Whether a mortgagee in possession can let out the mortgaged premises during the subsistence of the mortgage, and whether the rights of the person admitted to tenancy would get automatically extinguished on redemption of the mortgage. 2. Whether the exception to the general rule is provided under Section 76(a) of the Transfer of Property Act, which allows a mortgagee to grant leases that would continue even after the redemption of the mortgage, provided that such leases are made in the course of prudent management. 3. Whether the status of a person admitted to tenancy by a mortgagee during the subsistence of the mortgage would change to that of a trespasser upon redemption of the mortgage, if the letting was bona fide and in the course of prudent management.

Ratio Decidendi: 1. The court held that a mortgagee in possession can let out the mortgaged premises during the subsistence of the mortgage, and the rights of the person admitted to tenancy would not get automatically extinguished on redemption of the mortgage. 2. The court relied on Section 76(a) of the Transfer of Property Act, which provides an exception to the general rule that a lease granted by a mortgagee would come to an end on redemption of the mortgage. The court found that the letting of the premises to Mir Khan was a prudent act within the meaning of Section 76(a) and, therefore, Mir Khan's rights as a tenant continued even after the redemption of the mortgage.

Final Decision: The court dismissed the plaintiff's suit for possession, holding that the defendant, Mir Khan, was not a trespasser and was entitled to continue in possession of the premises as a tenant of the mortgagor after redemption.

Judgement

K.C. AGRAWAL, J., (with K.B. Asthana, J.) :- This Full Bench has been constituted to consider the correctness of the Division Bench decision in Habib Seth v. Kashi Nath, (1968) All LJ 446 because of the subsequent pronouncements of the Supreme Court in the All India Film Corporation Ltd. v. Sri Raja Cyan Nath, (1969) 3 SCC 79 : (AIR 1969 NSC 185) and M/s. Saehalmal Parasram v. Ratcabai, AIR 1972 SC 637. The brief facts, necessary for understanding the background which necessitated the reference to the Full Bench are as follows :-

2. A house, situate within the limits of Aliganj Town Area, District Etah, belonged to one Tajamul Hussain. He mortgaged it with Sultan Ali, Abdul Razzaq and Gaffar. The mortgagees were put in possession under the terms of the mortgage. The mortgagees, thereafter, let out the premises to Mir Khan, after taking rent deed from him, mentioning the rent at the rate of 3/8/- p.m. In the year 1963 Tajammal Hussain filed a Suit No. 163 of 1963 for redemption of mortgage against the mortgagees. The suit was ultimately decreed. Tajammal Hussain could get only symbolic possession of the premises. He, thereafter, filed the suit giving rise to the present appeal for possession against Mir Khan and a few others, who were carrying on business is partnership with him, on the ground that after the redemption of mortgage, the status of Mir Khan was simply that of a trespasser and be was liable to be ejected from the premises in question.

3. The suit was contested by Mir Khan and it was alleged that he, even after the redemption of the mortgage, continued to be the tenant and was not a trespasser, therefore, he was not liable to be evicted and the suit, which was filed on the ground that he was a trespasser, was thus liable to be dismissed.

4. The trial Court decreed the suit holding that the defendant Mir Khan was only a trespasser and thus could be dispossessed. Aggrieved against the aforesaid decision of the trial Court, an appeal was filed in the Lower Appellate Court which was allowed and the suit of the plaintiff Tajammal Hussain was dismissed with a finding that Mir Khan was not a trespasser. The Lower Appellate Court further found that mortgagees of the disputed premises were within their rights, in the ordinary course of management, to have let out the same to Mir Khan. The Lower Appellate Court had mainly relied on the decision reported in Habib Seth's case 1968 All LJ 446 (supra) and had found on the basis of the same that Tajammal Hussain, the plaintiff, was not entitled to get any decree of possession in the present suit.

5. It is against this judgement and decree of the Lower Appellate Court that the present Second Appeal was filed in this Court. It was argued before the foamed single Judge as well as the Division Bench, where the matter had gone on a reference made by the learned single Judge, that the decision given by the Division Bench in Habib Seth's case, 1968 All LJ 446 stands overruled impliedly because of the contrary decision given by the Supreme Court in All India Film Corporation Ltd., (1969) 3 SCC 79 : (AIR 1969 NSC 185) (supra) As some prima facie doubt on the correctness of the aforesaid judgement in Habib Seth's case appeared, so the present reference was made.

6. The main submission of Sri Chand Kishore, learned Counsel for the plaintiff, was that no person could transfer a title better than what he possessed, therefore, any transfer or alienation of the property mortgaged, by the mortgagee must cease on the redemption of mortgage. It was, accordingly urged that a mortgagee in possession could let out a premises on tenancy only for the period so long as mortgage in his favour is subsistinge. But after redemption of the mortgage, the person who was holding as a tenant on lease from a mortgagee, would have no right to continue in possession as he would not be a tenant of the mortgagor. There would be no relationship of landlord and tenant between him and the mortgagor who would subseque


































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