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1965 Supreme(All) 175

Allahbad High Court
S.M.DWIVEDI,G.C.MATHUR
Lachman Das - Appellant
Versus
Heera Lal - Respondent
Decided On : 11/11/1965

Advocates:
A. Banerji, G.N. Kunjru and Jagdish Swamp, for Appellants; K.C. Agarwal and Shanti Bhushan, for Respondent.

Headnote:

TRANSFER OF PROPERTY ACT, 1882 - SECTION 111(D) - MERGER OF TENANCY RIGHTS IN USUFRUCTUARY MORTGAGEE RIGHTS - INTERPRETATION AND APPLICATION - NO MERGER WHERE LESSOR RETAINS LEGAL INTEREST IN PROPERTY.

Fact of the Case:

A usufructuary mortgage was executed in favor of the defendant, who was also the tenant of the mortgaged shop. The plaintiff, who purchased the shop from the mortgagors, deposited the mortgage money in court and sought possession of the shop. The defendant claimed that his tenancy continued despite the redemption of the mortgage.

Finding of the Court:

The court held that the defendant's tenancy did not merge in the usufructuary mortgage rights and that he was entitled to continue in possession of the shop as a tenant.

Issues: Whether the defendant's tenancy merged in the usufructuary mortgage rights under Section 111(d) of the Transfer of Property Act, 1882.

Ratio Decidendi: The court interpreted Section 111(d) of the Transfer of Property Act, 1882, and held that the entire interest of the lessor and the lessee must coincide at the same time in one person for a merger to occur. In this case, the lessor retained a legal interest in the property, and therefore, there was no merger of the tenancy rights in the usufructuary mortgagee rights.

Final Decision: The court allowed the appeal, set aside the decree of the lower appellate court, and restored the decree of the trial court, which had granted the plaintiff a decree for redemption and formal possession but not actual possession.

Judgement

DWIVEDI, J. : It is a defendant's appeal against the decree of the lower appellate court. It was first heard by a learned single Judge. He has referred it to a larger Bench, and it is now laid before us. Of the defendants Lachhman Das is the father, and the others are his sons.

2. The dispute relates to a shop. It belonged to one Ganga Ram and his wife, Kiran Devi. On April 10, 1951 they made a usufructuary mortgage of the shop in favour of Lachhman Das. On January 3, 1957 they sold it to Sri Hira Lal, the plaintiff. Hira Lal deposited the mortgage-money in the court under S. 83 of the Transfer of Property Act (hereinafter called the Act) on January 8, 1957. Lachhman Das withdrew the money, but did not deliver possession of the shop to Hira Lal.

He had taken several pleas in that proceeding. We are now concerned with only one of them. That plea was that before taking the usufructuary mortgage he was the tenant of the shop, and that despite redemption of the mortgage he was entitled to continue in possession of the shop as a tenant. On account of his objection the court did not deliver possession of the shop of Hira Lal. Hira Lal then instituted the suit which has given rise to this appeal. The suit was for redemption of the mortgage and delivery of possession and also for mesne profits from January 8, 1957 to the date of delivery of possession al Rs. 100 per month.

3. The plea, which was set up by Lachhman Das in the proceeding under S. 83 was again raised by him in the suit to defeat the plaintiff's claim for possession.

4. The trial Court found that Lachhman Das was the tenant of the shop when he took the usufructuary mortgage in April 1951. It was held that on the taking of the usufructuary mortgage his tenancy was not determined by virtue of S. 111(d) of the Act. Accordingly a decree for actual possession was not granted. The suit was decreed for redemption and formal possession. Mesne profits were also allowed it the rate of Rs. 300 per year from January 8, 1957 to the date of the final decree.

5. The defendants submitted to the decree, but the plaintiff filed an appeal. The lower appellate court affirmed all the findings of the trial Court except the one regarding determination of the tenancy of the defendants. The lower appellate court held that the defendants' tenancy merged in the usufructuary mortgage and came to an end. Accordingly 'he tower appellate court granted the plaintiff a decree for possession also.

6. The defendants then filed this appeal. Before the learned single Judge, and also before us, counsel for the plaintiff cited a number of decisions based on S. 111(f) of the Act in support of his argument of merger under S. 111(d). For reasons to be presently stated we shall not discuss them.

7. As already stated, the defendants had pleaded in the proceeding under S. 83 that at the time of the execution of the mortgage they were tenants of the shop and that on redemption their tenancy revived. So the plaintiff had notice of the plea of tenancy. However, in his plaint he has merely denied their tenancy. He did not take the alternative plea that even if they were tenants on the date of the execution of the mortgage-deed, their tenancy was merged in their mortgagee rights. Nor did he take the plea that there was implied surrender of their tenancy to the landlords when they took the mortgage. No issue was framed regarding implied surrender. Neither in the grounds of appeal nor in the argument in the lower appellate court it was urged that there was implied surrender of their tenancy.

Now, implied surrender is often a question of fact depending on the intention of the parties. Their intention is to be inferred from their conduct. It may be a question of law if their conduct necessarily implies surrender. But that could not be the case here. A usufructuary mortgage does not appear to us to be incompatible with a lease. Moreover, the mortgage-deed bore certain features which created some doubt about implied surrende





























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