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CASE NO.:

Appeal (civil) 3008 of 2001

PETITIONER:

M/s. Hasthimal & Sons & others

RESPONDENT:

P. Tej Raj Sharma

DATE OF JUDGMENT: 04/10/2007

BENCH:

A. K. Mathur & Markandey Katju

JUDGMENT:

J U D G M E N T

CIVIL APPEAL NO. 3008 OF 2001

MARKANDEY KATJU, J.

1. This appeal has been filed against the impugned judgment of the

Karnataka High Court dated 12.2.2001 in C.R.P. No. 2020/2000.

2. Heard learned counsel for the parties and perused the record.

3. This appeal has arisen out of a suit for redemption of the mortgage

and for possession of the mortgaged property. The owner of the properties

was one Jagadish, who mortgaged the property with the defendant-

respondent under a registered mortgage deed dated 19.3.1980 with

possession by creating an usufructuary mortgage. It appears that after the

mortgage deed, a partial release deed was signed between the parties on

21.9.1981 by which Jagadish had undertaken to give the first option to

purchase to the mortgagee. On demand for redemption, the defendant

refused and hence the suit was filed by the plaintiff, who had purchased the

property from Jagadish.

4. It appears that before the aforesaid mortgage deed dated 19.3.1980

was registered, the mortgagee was already in possession of the property as a

tenant of the mortgagor. In the mortgage deed it was specifically mentioned

that on redemption of the mortgage the mortgagee should become the lessee

of the mortgagor automatically as previous to the mortgage.

5. During the pendency of the suit, the plaintiff filed application under

Order 12 Rule 6 CPC for a decree on the basis of the admission by the

defendant that the mortgage was for 20 years which had expired on

20.3.2000. This application under Order 12 Rule 6 CPC was rejected by the

trial court, but in revision the High Court set aside the order of the trial court

and decreed the suit under Order 12 Rule 6 CPC. Hence, this appeal by

special leave.

6. There are basically two points involved in this case \026 (1) Whether the

plaintiff had a right to get possession on redemption of his mortgage and (2)

whether the provision in the agreement dated 21.9.1981 that the mortgagee

will have a right of pre-emption operates as a clog on the right of redemption

of the mortgagor.

7. Taking the second question first, learned counsel for the appellant has

relied on a decision of the House of Lords in Lewis vs. Frank Love, Ltd,

1961 All. E.R. 446. In this decision it was clearly laid down by the House of

Lords that where one of the terms arranged between the mortgagor and the

mortgagee was that the mortgagee should have a right of preemption in case

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the mortgagor wishes to transfer the property to a third party, such a

condition operates as a clog on the right of redemption of the vendee from

the mortgagor. We fully agree with this view. Hence, we decide this second

point in favour of the respondent who is the vendee of the mortgagor.

8. However, as regards the first point, we are of the opinion that the

respondent did not have a right to possession automatically on a suit for

redemption being decreed.

9. It may be noted that even before the mortgage deed was executed on

19.3.1980, the mortgagee was in actual physical possession as a tenant, and

this possession continued with him as a mortgagee. Hence, when the

mortgage was redeemed, it did not follow that the erstwhile mortgagee could

be straightway evicted. When the mortgage comes to an end, the appellant

reverted as a tenant, particularly since there was a specific term in the

mortgage deed that on redemption of the mortgage the mortgagee will be a

lessee as previous to the mortgage.

10. This was a term agreed upon between the parties and we cannot see

how the respondent can resile from this term.

11. In Gopalan Krishn