Delhi District Court
M/S. Puran Chand & Co vs Canara Bank on 9 July, 2014
IN THE COURT OF AJAY GOEL: ADDITIONAL DISTRICT
JUDGE-12(CENTRAL):DELHI.
CS-279/10
In the matter of:
M/s. Puran Chand & Co.,
(A Partnership Firm)
At 3112, Gali Taksalian,
Bazar Sitaram, Delhi-110006.
(Through its Partners
Smt. Pushpa Wati & Smt. Rama Gupta) ......Plaintiff.
VERSUS
Canara Bank
(A Nationalized Bank)
Registered & Head Office:
Canara Bank Building
112, J. C. Road,
Bangalore-560002
Branch:
Ballimaran Branch
Chandni Chowk,
Delhi-110006. .....Defendants.
Date of filing of suit: 13.10.2010
Date of assignment to this court: 01.08.2012
Date of arguments: 21.05.2014
Date of decision: 09.07.2014
JUDGMENT
1. Vide this judgment, I shall dispose off instant suit for recovery of possession and damages/mesne profits filed by the plaintiff CS-279/2010 Page:-1/39 against the defendants. The facts as pleaded in the plaint are that the plaintiff is a duly registered partnership firm under the provisions of Indian Partnership Act and Smt. Pushpa Wati and Smt. Rama Gupta are the registered partners of the plaintiff firm and are competent to file and institute the present suit. It was further stated in plaint that plaintiff firm was formed by Late Sh. Puran Chand & Sh. Promod Kumar in the year 1970 and was registered with Registrar of Firms in the year 1973. It was further stated that there was change in the partners of the firm and at present there are two partners of plaintiff firm i.e. Smt. Pushpawati with 80% share and Smt. Rama Gupta with 20% share and plaintiff firm is continuing and existing. It was further pleaded in plaint that plaintiff firm is a owner of property No. 391 to 399, 405 and 406, Chandni Chowk, Delhi having purchased the same under auction conducted by Hon'ble High Court of Delhi on 25.09.1970 in the matter of Ex. No. 28/69 titled as Tara Chand Vs. Ganga Ram and sale in favour of plaintiff firm was confirmed by the Hon'ble High Court of Delhi and thereafter on 22.08.72 the sale certificate was issued in favour of plaintiff firm with respect to the said property as per the provisions of order 21 Rule 94 CPC and as such the plaintiff firm became the lawful owner of entire property No. 391 to 399, 405 to 406, Chandni Chowk, Delhi. It was also pleaded in plaint that defendant is a nationalized bank having its registered and head office at above given address and is having branch at Ballimaran, Chandni Chowk, Delhi. It was also averred that Pratap Bank Ltd. was inducted in the year 1943 in the suit property and was merged with Lakshmi Commercial Bank Ltd. in the year 1961 and thereafter the Laxmi Commercial Bank Ltd. was amalgamated CS-279/2010 Page:-2/39 with the Canara Bank with all rights and liabilities and defendant bank is now in illegal and unauthorized possession of the suit property. It was also stated in suit that out of property No. 391 to 399, 405 to 406, Chandni Chowk, Delhi owned by plaintiff, the defendant bank is in unauthorized occupation of three rooms and balcony and open space on the south eastern part of the first floor of property No. 395, Chandni Chowk, Delhi ad-measuring about 1014 sq. fts and is under the unauthorized and illegal occupation of defendant. It was further stated that in the year 1928 the property No. 391 to 399, 405 to 406, Chandni Chowk, Delhi was mortgaged with possession by Sh. Ganga Ram in favour of Sh. Ram Chand, Sh. Bengali Mal, Sh. Shyam Lal and Sh. Chotte Lal for Rs. 80,000/- and on the same day Sh. Ganga Ram executed a lease deed in favour of the mortgagees agreeing to pay Rs. 650/- per month as rent for the property. It was further stated that another charge was created on said property on 13.07.28 and another mortgage deed was executed by Sh. Ganga Ram in favour of aforementioned mortgagees to secure Rs. 25,000/-. It was also stated in plaint that by the third deed of mortgage dated 19.7.28 for Rs. 45,000/- in addition to the already secured property another property namely H. No. 412, Chandni Chowk, Delhi was mortgaged with possession and on the same day a lease deed was executed with respect to same property by the mortgagor in favour of mortgagees agreeing to pay rent at the rate of Rs. 32/- per month. It was also averred in plaint that the mortgagees on 23.12.30 filed a suit No. 109/1932 to enforce their rights under the mortgage against Sh. Ganga Ram impleading Sh. Bala Prasad and Sh. Alopi Prasad subsequent mortgagees of the property. It was CS-279/2010 Page:-3/39 also stated that on 27.02.1931 a compromise was entered into between mortgagor and the mortgagees and they agreed to dispose off the suit on terms as mentioned in plaint. It was also stated in suit that on 25.01.1935, a preliminary decree was passed under order 34 CPC with cost and future interest @ 9% p. a. to be realized from the sale of mortgaged property and as the mortgagor failed to pay the amount due from him to the mortgagees as adjudicated upon in the preliminary decree as found due by Lahore High Court, proceedings for final decree were initiated. It was also stated that ultimately final decree came to be passed on 23.05.1940 enabling and authorizing to realize the amount of Rs. 2,10,076.13P which was due on 06.01.1931 together with interest at the rate of 9% per annum by the sale of mortgaged property and further directing that money realized on sale after deduction of expenses shall be applied in the payment of amount payable to the mortgagees under the preliminary decree. It was also stated that mortgagees/decree holders on 01.4.52 filed an execution application and prayed that mortgaged property be ordered to be sold for realization of amount of decree and on realization the amount be paid to them. It was pleaded in suit that in Execution application No. 28/69 the Hon'ble High Court on 21.07.1970 issued a sale proclamation wherein particulars of mortgaged property to be sold were mentioned and it was stated that mortgaged property was free from encumbrances and rental of property was Rs. 1275.56 P exclusive of water, tax and plaintiff firm was declared to be the highest bidder in the public auction held on 25.09.1970 and the objections against the sale were filed and same were dismissed. It was averred that sale was confirmed CS-279/2010 Page:-4/39 by the Hon'ble High Court and on 22.08.1972 required sale certificate was issued in favour of plaintiff with respect to the property No. 391 to 399, 405 to 406, Chandni Chowk, Delhi by the Hon'ble High Court of Delhi. It was also stated that on 17.08.1973, the plaintiff filed an application registered as I. A. No. 2006/1973 in Ex. No. 28/1969 U/o 21 Rule 95 & 96 read with Section 151 CPC inter-alia praying that as per the compromise which have been arrived between the mortgagor and the mortgagees, the possession of property was delivered by the mortgagor to the mortgagees on 01.03.1931 from which date the mortgagees were to realize rent from the tenants and to keep the proper accounts and plaintiff prayed that they are entitled to take back vacant possession of that part of property which is in occupation of person who had been inducted by the mortgagees after 01.03.1931 and with respect to the remaining part of the property, the plaintiff firm prayed that they were entitled only to symbolic possession since the same was in occupation of said tenants prior to 01.03.1931 and hence plaintiff prayed for warrants of possession of the properties under the occupation of various occupants. It was further averred in plaint that occupants including the present defendant filed objections to the execution application and it resisted the claim of plaintiff on the ground that they are not in occupation of any portion of property on behalf of JD/mortgagor but are in occupation of same as tenants of the mortgagees and thereafter, issues were framed and evidence was also recorded. It was also pleaded in suit that Ld. Single Judge of Hon'ble High Court decided the I. A. No. 2006/1973 in Ex. No. 28/69 vide judgment dated 10.03.1977 and held that the plaintiff CS-279/2010 Page:-5/39 was entitled only to the symbolic possession and application U/o 21 Rule 95 & 96 was not maintainable and thus Ld. Single Judge directed that only symbolic possession be given to the plaintiff Under Rule 96 of Order 21 CPC. Thereafter, plaintiff firm filed appeal EFA (OS) No. 3/1977 against the said order and the appeal came up for the hearing before Division Bench on 20.03.1987 and question of law was framed to the effect that "Whether a tenant inducted by the mortgagee in possession can claim the benefit of protection offered by Delhi Rent Control legislation after redemption of mortgage" and matter was referred to larger bench. It was also mentioned in plaint that full bench in EFA (OS) No. 3/77 vide judgment dated 11.09.1987 answered the reference holding that the tenants inducted by a mortgagee in possession cannot claim the benefit of protection offered by the Delhi Rent Control legislation after redemption of the mortgage, unless the mortgagor had permitted the mortgagee to inducted tenant even beyond the terms of the mortgage or has concurred to the creation of lease or has adopted it. It was also averred in suit that objectors including the defendant herein filed Special Leave Petition before the Hon'ble Supreme Court against the decision of full bench and the Hon'ble Supreme Court in Civil Appeal No. 875/1988 vide order dated 27.09.94 disposed of civil appeal holding that Ld. Division Bench should hear and dispose off appeal in the light of judgment and full bench and it was held that it shall be open to the plaintiff to contend that full bench judgment has really no application to the facts of the case, it shall be also open to all the parties to take such contentions available to them and if necessary to challenge the correctness of the decision of division CS-279/2010 Page:-6/39 bench on that basis. It was also averred that at the time of filing of appeal 16 persons including the present defendant were impleaded as respondents from whom the plaintiff claimed possession and by an order passed in C. M. No. 102 of 1995 on 25.01.1995 names of few respondents were deleted since either they gave up their claim or have handed over the possession and only few remained as respondents including the defendants herein. It was also pleaded in suit that Ld. Division Bench in EFA (OS) No. 3/77 vide judgment dated 21.11.2000 held that plaintiff being an outsider not party to the suit No. 102/30 & 144/33 which resulted in compromise, preliminary and final decree in execution of which the property was put on sale, will not be entitled to recover physical possession from the respondent including the defendant in view of the provisions contained in Order 21 Rule 95 and the appeal was dismissed holding that they are not making any adjudication on the legality and validity of the tenancies since the said question is raised in any appropriate proceedings will have to be decided therein in accordance with law. It was also stated that plaintiff thereafter filed Special Leave Petition before the Hon'ble Supreme Court of India against the judgment of Division Bench and the Hon'ble Supreme Court of India in Civil Appeal No. 7250/02 vide judgment dated 12.02.2009 dismissed the appeal filed by the plaintiff and held that plaintiff was at liberty to file a fresh suit against the tenants for eviction and arrears of rent. It was stated in suit that occupation of defendant in the suit property is illegal and unauthorized and they are liable to handover the vacant possession of the suit property to the plaintiff who is the lawful owner of suit property and defendant cannot CS-279/2010 Page:-7/39 claim the protection of the Delhi Rent Control Act as they ceases to be the tenants after sale of property in favour of plaintiff and powers of the mortgagor are different from the mortgagees as provided under section 65 A of the transfer of the Property Act 1929. It was also averred in plaint that firm M/s Lakhi Ram Mahi Lal was inducted on 02.09.1970, one other tenant Samman Oil & General Mills was inducted on 20.03.1970 and M/s Indraprastha Finance Company was inducted on 16.09.1970 and whereas the sale proclamation of property was ordered on 21.07.1970 and the date of auction was 25.09.1970. It was also pleaded that on 25.09.1970, the rights of the defendant in suit property have ended and they have already enjoyed the property for more than 39 years up to the date of filing of present suit and even without payment of any use and occupation charges and defendants w.e.f. 25.09.1970 are in unauthorized possession of suit property and are liable to vacate and handover the same to the plaintiff alongwith damages. It was also stated that while the proceedings were pending before the Hon'ble High Court, plaintiff moved application U/s 151 CPC and same was registered as C. M. No. 1392/1995 in PFA No. 3/1977 and prayed that occupants including the defendants be directed to pay the damages for use and occupation of property, however, at the time of passing the judgment by the Hon'ble High Court no orders on the said application were passed since the court was of the opinion that plaintiff cannot recover possession from the occupants under order 21 Rule 96 CPC and would have to file separate suit in this regard and as such plaintiff in the present suit is entitled to claim the damages for the unauthorized use and occupation of suit CS-279/2010 Page:-8/39 property at the market rate w.e.f. 25.09.1970 with pendentelite and future damages also at the market rate of rent till the suit property is actually handed over to the plaintiff by the defendants. Hence, present suit was filed by plaintiff against the defendants seeking reliefs as mentioned in plaint.
2. Upon issuance of summons, the defendant had appeared and filed the written statement raising preliminary objections wherein it was stated that plaintiff has not approached this Court with clean hands and has suppressed the material facts with regard to continued tenancy of defendant. It was also stated that present suit is barred under Section 9 of CPC read with Section 50 of DRC Act. It was also stated that present court has no pecuniary jurisdiction to entertain the present suit. It was also pleaded that present suit is without any valid and lawful cause of action. On merits, it was stated that defendant bank is a continued successor of earlier lawful tenant of suit property because of lawful amalgamation of it with the defendant bank. It was also stated that defendant bank is not an unauthorized occupant but it is a lawful occupant being continued successor of the earlier authorized occupant due to its amalgamation with all rights and liabilities under the statute governing that. It was also pleaded that plaintiff is only a purchaser in a suit of foreclosure and cannot take any such advantage and tenant inducted by either mortgagor and mortgagee in possession will remain tenant for the auction purchaser, as he had purchased the right of mortgagee in possession and therefore stepped in to his shows and cannot take better right as the mortgagee have and having inducted the defendant as consented /permittive tenant and cannot consider CS-279/2010 Page:-9/39 the defendant to be unlawful occupant. It was also stated that defendant was ever ready to deposit and pay the rent to its lawful owner and now even had sent the lawful recoverable dues of the rent of Rs. 3,836/- for the period from July, 2009 to August 2012 to the plaintiff on 30.07.2012. It was also averred that plaintiff is maximum entitled to legal recoverable rent at the rate lastly paid by the defendant which the defendant is always ready to pay and now had sent the same for the period from July, 2009 to August 2012 at the rate of Rs. 83.19 P. Per Month being rate of lastly paid rent. It was also submitted that plaintiff is not entitled for any damages / mesne profits except the rent for the legally recoverable period and interest maximum at the rate applicable under DRC Act being applicable in the present case. The other contents of plaint were denied and it was prayed that suit of the plaintiff be dismissed with heavy costs.
3. Replication was filed by plaintiff in response to the written statement of defendants wherein contents of plaint were reiterated and reaffirmed and those of written statement were denied by plaintiff.
4. On the pleadings of parties, the following issues were framed vide order dated 12.10.2012:-
1) Whether the plaintiff is entitled for recovery of possession of the suit property?OPP
2) Whether the plaintiff is entitled for recovery of Rs. 11,00,000/- towards the damages/mesne profits?OPP
3) Whether the plaintiff is entitled for interest? If so, at what rate and for what period?OPP
4) Whether the suit is barred U/s 9 CPC read with Section 50 of CS-279/2010 Page:-10/39 DRC Act?OPD
5) Whether the suit has not been properly valued for the purposes of court fee and jurisdiction?OPD
6) Whether the plaintiff has not come with clean hands before this court and has suppressed the material facts?OPD
7) Whether the suit is within limitation?OPP
8) Relief.
5. During proceedings of the matter, an application U/o 14 Rule 5 CPC was moved on behalf of defendant for framing of additional issued. The said application was also allowed after hearing the arguments of parties vide order dated 03.01.2014 and two additional issues were framed to be read as Issue No. 8 and 9 and issue relief was ordered to be termed as issue No. 10 and are given below:
8) Whether the defendant is a lawful tenant being a successor of earlier tenant Pratap Bank Ltd. after its merger with Laxmi Commercial Bank Ltd. and further its merger with defendant bank as mentioned in the written statement?OPD
9) Whether the plaintiff had acquired right of redemption by purchasing the suit property in public auction as of mortgage in a suit of foreclosure under the final decree due to non-payment of decreetal amount by the judgment debtors as mentioned in the written statement?OPD
10) Relief.
6. Now issues which are now required to be decided are given below:-
1) Whether the plaintiff is entitled for recovery of possession of the suit property?OPP
2) Whether the plaintiff is entitled for recovery of Rs. 11,00,000/-
CS-279/2010 Page:-11/39 towards the damages/mesne profits?OPP
3) Whether the plaintiff is entitled for interest? If so, at what rate and for what period?OPP
4) Whether the suit is barred U/s 9 CPC read with Section 50 of DRC Act?OPD
5) Whether the suit has not been properly valued for the purposes of court fee and jurisdiction?OPD
6) Whether the plaintiff has not come with clean hands before this court and has suppressed the material facts?OPD
7) Whether the suit is within limitation?OPP
8) Whether the defendant is a lawful tenant being a successor of earlier tenant Pratap Bank Ltd. after its merger with Laxmi Commercial Bank Ltd. and further its merger with defendant bank as mentioned in the written statement?OPD
9) Whether the plaintiff had acquired right of redemption by purchasing the suit property in public auction as of mortgage in a suit of foreclosure under the final decree due to non-payment of decreetal amount by the judgment debtors as mentioned in the written statement?OPD
10) Relief.
7. In evidence, the plaintiff has produced PW-1 Sh. Narender Kumar in witness box who is Attorney of M/s Puran Chand & Co. and he had relied upon several documents and was also cross-examined by counsel for defendants and closed the evidence.
8. In defence, defendants produced Sh. Sanjeet Kumar as DW-1 who is Jr. Judicial Assistant, Record Room, Tis Hazari, Sh. Anil Kumar, Sr. Assistant, Legal Department, The Indian Express Ltd., was examined as DW-2 and Sh. Bhoopender Kumar, Manager, Canara CS-279/2010 Page:-12/39 Bank, Chandni Chowk Delhi was examined as DW-3. All these witnesses were cross-examined by counsel for plaintiff.
9. I have heard the arguments as well as perused the record. My issue-wise findings are given below:-
10.Issue No. 1. Whether the plaintiff is entitled for recovery of possession of the suit property?OPP:- The onus to prove this issue was on the plaintiff. The case of the plaintiff is that they have purchased the property in the auction conducted by Hon'ble High Court of Delhi and on 22.08.72, the sale certificate Ex. PW-1/9 was issued in favour of plaintiff. The defendants are claiming themselves to be the tenant on the basis of tenancies created by mortgagees and seeking protection of DRC Act. It is observed that full bench of Delhi High Court vide judgment dated 11.09.87 Ex. PW-1/20 has already examined the question "Whether a tenant inducted by a mortgagee in possession can claim the benefit of the protection afforded by the Rent Control Legislation after the redemption of the mortgage?". The Hon'ble Full Bench has held that tenant inducted by mortgagee in possession cannot claim the benefit of the protection afforded by Rent Control Legislation after redemption of mortgage unless the mortgagor had permitted the mortgagee to induct a tenant even beyond the term of mortgage or has concurred to the creation of lease or has adopted it. The relevant paras of the judgment of the Hon'ble Full Bench are as under:
"4. One of the instances where a partial transfer of ownership rights come into existence is where the owner creates a mortgage. A mortgage is the transfer of an interest in specific CS-279/2010 Page:-13/39 immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. Where the mortgagor delivers possession or expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee and authorize him to retain such possession until payment of the mortgage-money and to receive the rents and profits accruing from the property or any part of such rents and profits and to appropriate the same in lieu of interest or in payment of the mortgage-money, or partly in lieu of interest, or in payment of the mortgage-money, the transaction is called an usufructuary mortgage and the mortgagee an usufructuary mortgagee. (See S. 58 of the Transfer of Property Act. The usufructuary mortgage is, thus a transfer of some interests in the specific immoveable property. Distinguished from a sale, where all the rights of ownership which the transferor has passed to the transferee, in an usufrutuary mortgage only some of the ownership rights are transferred in an usufrutuary mortgage only some of the ownership rights are transferred and the rest remain with the mortgagor. What is transferred is the right to get the mortgage property sold to realize mortgage money and the right of possession and enjoyment of usufruct. The other rights remain with the owner / mortgagor. He is the owner of the equity of redemption. As provided in S. 60 of the Transfer of Property Act, on payment of the mortgaged money after it has become due, the mortgagor has the right to recover the possession of the mortgaged property. All the rights of the CS-279/2010 Page:-14/39 usufructuary mortgagee are wiped out on redemption".
5. Clauses (a) and (e) and last para of S.76 of the Transfer of Property Act read as under :
76. Liabilities of mortgagee in possession. - When, during the continuance of the mortgage, the mortgagee takes possession of the mortgaged property :-
(a) he must manage the property as a person of ordinary prudence would manage it if it were his own; .................
(e) he must not commit any act which is destructive or permanently injurious to the property :
................
If the mortgagee fails to perform any of the duties imposed upon him by this Section, he may, when accounts are taken in pursuance of a decree made under this chapter, be debited with the loss, if any, occasioned by such failure."
6. Clause (a) imposes an obligation on the mortgagee in possession to act as a prudent owner in the management of the mortgaged property. Under the last para of S.76 he is liable to be debited with the loss if he fails to perform this duty. By reason of these statutory provisions the mortgagee in possession, in our opinion, is competent to grant a lease by way of an act of prudent management unless, of course, there is a prohibition to do so under the mortgage contract.
7. Though the mortgagee in possession, in discharge of the statutory obligations to manage the property as a prudent owner, can create a lease, such a lease, however, cannot be CS-279/2010 Page:-15/39 created for a period exceeding beyond the period of mortgage unless the mortgage contract authorities the mortgagee to create a lease which may ensure after redemption, the principle being that a person cannot transfer a larger estate than he himself has. Every subordinate interest must perish with the superior interest on which it is dependent. This principle has statutory recognition in S.111(c) of the Transfer of Property Act which provides that "a lease of immoveable property determines where the interest of the lessor in the property terminates on, or his power to dispose of extends only to, the happening of any event - by the happening of such event."
8. As seen above, the interests of a mortgagee in possession the lessor terminates on redemption. It follows that the lease of the immoveable property created by him will also determine on redemption. It has so held by the Supreme Court in various decisions.
9. The first decision on this point is Mahabir Gope v. Harbans Narain Singh, AIR 1952 SC 205. It was held :
"The general rule is that a person cannot by transfer or otherwise confer a better title on another than he himself has. A mortgagee cannot, therefore, create an interest in the mortgaged property which will ensure beyond the termination of his interest as mortgagee. Further, the mortgagee, who takes possession of the mortgaged property, must manage it as a person of ordinary prudence would manage it if it were his own; and he must not commit any act which is destructive or permanently injurious to the property; See S.76 sub-clauses (a) CS-279/2010 Page:-16/39 and (e) of the Transfer of Property Act. It follows that he may grant leases not extending beyond the period of the mortgage; any leases granted by him must come to an end at redemption. A mortgagee cannot during the subsistence of the mortgage act in a manner detrimental to the mortgagors interests such as by giving a lease which may enable the tenant to acquire permanent or occupancy rights in the land thereby defeating the mortgagors right to khas possession; it would be an act which would fall within the provisions of S.76, sub-clause (e) of the Transfer of Property Act."
11. Similarly, in All India Film Corporation Ltd. v. Raja Gyan Nath, 1969 (3) SCC 79 : (AIR 1969 NSC 185) it was held :
"The first question to consider is this : Did the tenancy created by the mortgagee in possession survive the termination of the mortgagee interest so as to be binding on the purchaser ? A general proposition of law is that no person can confer on another a better title than he himself has. A mortgage is a transfer of an interest in specific immovable property for the purpose of securing repayment of a loan. A mortgagees interest lasts only as long as the mortgage has not been paid off. Therefore, on redemption of the mortgage the title of the mortgagee comes to an end. A derivative title from him must ordinarily come to an end with the termination of the mortgagees title. The mortgagee by creating a tenancy becomes the lessor of the property, but his interest as lessor is conterminous with his mortgagee interest. S.111(c) of the Transfer of Property Act provides that a lease of immovable CS-279/2010 Page:-17/39 property determines where the interest of the lessor in the property terminates on, or his power to dispose of the same, extends only to the happening of any event - by the happening of such event. The duration of the mortgagees interest determines his position as the lessor. The relationship of lessor and lessee cannot subsist beyond the mortgagees interest unless the relationship is agreed to by the mortgagor or a fresh relationship is recreated. This the mortgagor or the person succeeding to do the mortgagors interest may elect to do. But if he does not, the lessee cannot claim any rights beyond the term of his original lessors interest. These propositions are well understood and find support in two rulings of this Court in Mahabir Gope v. Harbans Narain Singh, (AIR 1952 SC 205) and Asa Ram v. Mst. Ram Kali, (AIR 1958 SC 183)."
12. Following these decisions we hold that the general rule is that every subordinate interest must perish with the superior interest on which it is dependent. A mortgagee in possession may grant a lease but he cannot create a lease of the mortgaged property which may ensure beyond the termination of his own interest as a mortgagee unless he has been empowered to do so under the mortgagee contract. The relationship of landlord and tenant between the mortgagee in possession and his tenant, comes to an end on redemption unless the relationship is agreed by the mortgagor or a fresh relationship is recreated.
13. There is, however, a well established exception to this general rule. The general rule will not apply if a tenant, inducted by a mortgagee in possession in the process of CS-279/2010 Page:-18/39 prudent management, is given any protection or certain rights are conferred an him by a statute enacted in the meantime. Mortgagors rights to obtain actual possession of the mortgaged property on redemption would be affected to that extent. This exception, obviously, is the creation of the statute concerned and not the Transfer of Property Act. This principle was recognized by the Supreme Court in Mahabir Gopes case (AIR 1952 SC 205) (supra). It was held :
"A permissible settlement by a mortgagee in possession with a tenant in the course of prudent management and the springing up of rights in the tenant conferred or created by statute based on the nature of the land and possession for the requisite period is a different matter altogether. It is an exception to the general rule. The tenant cannot be ejected by the mortgagor even after the redemption of the mortgage. He may become an occupancy raiyat in some cases and a non-occupancy raiyat in other cases. But the settlement of the tenant by the mortgagee must have been a bona fide one. This exception will not apply in a case where the terms of the mortgage prohibit the mortgagee from making any settlement of tenants on the land either expressly or by necessary implication."
34. Thirdly, this exception would be violative of the statutory provisions contained in Ss.60 and 62 of the Transfer of Property Act. S.60 confers a right on the mortgagor to require the mortgagee in possession to deliver possession of the mortgaged property to the mortgagor, on payment of the debt. Similar right is conferred on the mortgagor by the provisions contained in S.62. These rights would be taken away if the CS-279/2010 Page:-19/39 contention of learned counsel for the tenant, was accepted. Provisions contained in S.76(a) cannot be interpreted in a way as to make the provisions contained in Ss.60 and 62 nugatory. .....
36. This exception, as mentioned above, has been made applicable in cases of lease of agricultural land, on the strength of authorities. In Asa Rams case (AIR 1958 SC 183) (supra) the Supreme Court after holding "The law undoubtedly is that no person can transfer property so as to confer on the transferee a title better than what he possesses. Therefore, any transfer of the property mortgaged, by the mortgagee must cease, when the mortgage is redeemed." Further held "Now S.76(a) provides that a mortgagee in possession "must manage the property as a person of ordinary prudence would manage it if it were his own". Though on the language of the statute, this is an obligation cast on the mortgagee, the authorities have held that an agricultural lease created by him would be binding on the mortgagor, even though the mortgage has been redeemed, provided it is of such a character that a prudent owner of property would enter into it in the usual course of management. This being in the nature of an exception, it is for the person who claims the benefit thereof, to strictly establish it."
48. The Full Bench of the Madras High Court after holding that the exception contained in S.76(a) of the Transfer of Property Act could not be readily and automatically invoked by a tenant let into possession of urban property by a mortgagee with possession further held that, "it may be open to a tenant CS-279/2010 Page:-20/39 inducted upon urban property by a mortgagee with possession to rely upon S.76(a) to claim tenancy right for the full term of the tenancy notwithstanding the redemption of the mortgage earlier." For the reasons indicated, respectfully, we do not agree with this last proposition. In our opinion, so far as the urban property is concerned, this exception does not apply at all".
The above observations are fully applicable to the facts of the present case and the defendant cannot claim the protection of DRC Act as they ceased to be the tenant after sale of property in favour of plaintiff. The powers of mortgagor is different from mortgagee as provided U/s 65 A of T. P. Act. Section 65 A confers power on the mortgagor to make a lease and the lease so made by mortgagor is binding on mortgagee but there is no similar provision with regard to lease created by mortgagee in possession and the tenant has to step into the shoes of the mortgagee. The T. P. Act makes a clear distinction between lease so created by mortgagor and mortgagee. The lease created by the mortgagor is binding on mortgagee but lease created by mortgagee is not binding on mortgagor. It is further submitted that U/s 52 of TP Act, a transferee pendentelite is not entitled to claim protection of DRC Act. In the present case, mortgagor has not consented for the creation of tenancies by the mortgagees beyond the terms of mortgage. When in the year 1931, compromise was arrived between mortgagor and mortgagee, the mortgage has ended and there was no question of consenting for creation of tenancy beyond its terms. The mortgagee could have only inducted tenant for 2 and 1/2 year which was time granted for payment in the CS-279/2010 Page:-21/39 compromise and not beyond that. The preliminary decree was passed on 25.01.1935 under order 34 CPC and final decree for sale was passed on 23.05.1940, thus the mortgagees right to induct any tenant ceased. The compromise Ex. PW-1/11 dated 27.02.1931 does not permit the mortgagee to create tenancy which would survive redemption and there is no term which would reflect that mortgagor had intention to concur with the creation of tenancy by the mortgagees beyond the term of mortgage. The compromise Ex. PW-1/11 was not registered nor the tenancies were created through registered instrument as such no tenancy for a fixed term could be created other than month to month tenancy. The clause of the compromise does not has the effect of giving any right or mortgagor to create tenancy which would continue beyond redemption. In the cross-examination, DW-1 admitted that mortgagor's consent was not taken for creation of tenancy by mortgagee. In the present case, rule of lis pendis would apply as suit was filed on 23.12.1930, compromise was made on 27.02.1931, preliminary decree was passed on 25.01.1935 and final decree for sale was passed on 23.05.1940, therefore, for the period beyond expiry of 2 and 1/2 year and when the preliminary decree was passed on 25.01.1935 for the period subsequent to that, section 52 of T. P. Act will be available to plaintiff and the tenancies created during the period of lis pendis would not be binding on the plaintiff. It is rather seen that even few of the tenancies were created after passing of final decree and even long after sale of property was offered which shows the malafide conduct of the mortgagees. Though it has been argued by the defendant that the defendant has raised the contention that it is CS-279/2010 Page:-22/39 not a case of redemption since the property was put on sale and Hon'ble Supreme Court granted the liberty to raise the said plea and accordingly, property was sold by a court sale therefore the judgment of Full Bench would not apply. In All India Films Corporations V. Raja Gian Nath (1969 (3) SCC 79) relied upon supra, the Hon'ble Supreme Court has opined about how rights of mortgagees are extinguished. It was held that :
(8) To the above propositions there is, however, one exception. That flows from Section 76(a) which lays down liabilities of a mortgagee in possession. It is provided there that when during the continuance of the mortgage, the mortgagee takes possession of the mortgaged property, he must manage the property as a person of ordinary prudence would manage it if it were his own.
From this it is inferred that acts done bona fide and prudently in the ordinary course of management, may bind even after the termination of the title of the mortgagee in possession. This principle applies ordinarily to the management of agricultural lands and has seldom been extended to urban property so as to tie it up in the hands of lessees or to confer on them rights under special statutes. To this again there is an exception. The lease will continue to bind the mortgagor or persons deriving interest from him if the mortgagor had concurred to grant it.
(9) APPLYING these principles to the facts of this case, we find that the property, the subject of the lease, was a house in the city of Jullundur suitable for a cinema CS-279/2010 Page:-23/39 theatre. This was leased for five years on a rent of Rs. 250.00 p. m. This sum included the use of a passage for which the rent was Rs. 100.00 p. m. In effect the rent of the building was Rs. 150.00. This was lower rent than the rent it had fetched before. The mortgagee further agreed to renewal of the lease on the same terms for a further period of 10 years. It is in evidence that a plot only 8 Marias formed the passage and the rent was Rs. 100.00 and on that basis land of 3 Kanals and 17 Marias with a building fit for cinema ought to have fetched much more. Such a building in a growing city ought not to have been tied down for a period of fifteen years, to a rent of Rs. 150.00 or even Rs. 250.00 p. m. The learned subordinate Judge pointed out that the annual rent of the building was assessed at Rs. 10,800.00 for the years 1950-55. This shows how low was the actual rent. The history of the building in the hands of the head lessee shows that after an investment of Rs. 60,000.00 the rent went up to Rs. 1,250.00 p. m. with additional rights to the head lessee. The building without the fittings and the land of the passage fetched Rs. 65,000.00. Therefore a tenant willing to pay a better rent could easily have been found. The case is thus not covered by the exception because we cannot hold that such a long lease on such a small rent was an act of prudence, whether it was a bona fide act or not, and whether the exception can apply to urban property.
(10) THIS brings us to the next question. It is whether
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the tenants could take advantage of the provisions of the East Punjab Urban Rent Restriction Act, 1949 ? The answer to this question depends on whether we can say that there was a tenancy to protect. We have shown above that the lease came to an end with the mortgagee's interest in the property. Although this was not a case of a redemption plain and simple because a straight redemption was refused, the property was put to sale and the purchaser paid off the mortgage in full. [The interests of the mortgagor and mortgagee united in the person of the purchaser and the mortgage ceased to subsist. In this view of the matter the purchaser, speaking in his character as a mortgagor, could claim that the mortgagee's action came to an end and there did not subsist any relationship between him and the tenants.
(11) ............................... The property was sold and the mortgage was satisfied. This led to the extinction of the mortgagees' interest and the purchaser acquired full title to the property. The termination of the mortgagee interest terminated the relationship of landlord and tenant and it could not, in the circumstances, be said to run with the land. There being no landlord and no tenant, the provisions of the Rent Restriction Act could not apply any further".
It is further observed that purchaser has dual character i.e. there was no redemption but the sale operated to extinguish the mortgage and transferred the right of mortgagor and mortgagee CS-279/2010 Page:-25/39 in favour of plaintiff being auction purchaser and the plaintiff being a auction purchaser acquired all right of the mortgagor and can ask for recovery of possession. It has been further observed that M/s Lakhi Ram Mahi Lal other defendant in other cases was inducted on 02.09.70 and Samman Oil and General Mills other defendant in other cases were inducted on 20.03.70 and Indraprastha Finance Co. defendant in other cases was inducted on 16.09.1970; whereas the sale proclamation of the property was ordered on 21.07.1970 and the date of auction was 25.09.70. The predecessor of the defendant bank i.e. Pratap Bank was inducted in the year 1943 which is not in dispute and whereas preliminary decree was passed on 25.01.1935 and final decree for sale was passed on 23.05.1940. All these acts of the mortgagees in inducting tenants with unlimited terms and even after the passing of the final decree on 23.5.1940 and even long after the sale of the property were ordered had resulted in reduction of the value of the property at the time of the auction which reflects their malafide intentions of causing injury to the value of the property for their illegal gains. Especially when the decree for sale having passed on 23.5.1940, the Mortgagee's right to induct any tenant ceased. It is submitted that when the property was put to sale and was purchased by the plaintiff the mortgage was redeemed. Whether the mortgagor makes the payment or the property was put on sale for failure of the mortgagor to pay the amount, this cannot create any benefit to defendant because it is well settled law that after sale of the property the auction purchaser acquires all the right/interest of the mortgagor as well as of mortgagee as they existed on the date of mortgage. It was held in (1969 (3) SCC CS-279/2010 Page:-26/39
79) titled as All India Films Corporations V. Raja Gian Nath "That the interests of the mortgagor and mortgagee united in the person of the purchaser and the mortgage ceased to subsist. In this view of the matter the purchaser, speaking in his character as a mortgagor, could claim that the mortgagee's action came to an end and there did not subsist any relationship between him and the tenants. It was held in AIR 1940 PC 11 titled as Jadunath Roy & Ors. Vs. Parameswar Mullick & Ors. - that "while the purchaser at an execution sale under a mere money decree gets no more than the right title and interest of the judgment debtor at the date of the sale, the purchaser under a mortgage decree gets the right, title and interest in the mortgage subject which the mortgagor had at the date of mortgage and charged thereby. Buying the mortgage property free of encumbrances he gets, as it is sometimes put the title both of mortgagor and mortgagee and of those interested in the equity of redemption at the date of the sale.
It is seen that therefore after the sale of the property, the plaintiff acquired all the rights and interest of both the mortgagor and mortgagees as they existed on the date of mortgage and the mortgagor has not consented for the creation of tenancies beyond the terms of the mortgage to be binding upon the mortgagor after redemption. As such the tenants inducted by the mortgagees would not be entitled to the protection of the DRC Act and after the cessation of mortgagees interest in the property with the sale of the property on 25.9.70, the relationship of lessor and lessee comes to an end and it is not binding on the auction purchaser and as such their occupation become illegal and unauthorised and CS-279/2010 Page:-27/39 therefore they are liable to handover the vacant possession of the suit property to the plaintiff who is the lawful owner of the same. The defendant has wrongly contended that since the entire amount due was not realized by the sale of the property as such the mortgage was not discharged. On the contrary, it is rightly submitted by the plaintiff that as after the sale of the property in execution by the court the mortgage ended and it does not survive any further and the charge in the property ended it is for the decree holder to recover the balance from JD and the charge in the property extinguishes. The defendant cannot take the advantage of section 76(a) of TPA to claim that the act of mortgagees in inducting them was of prudent management as it was held by Full Bench of Delhi High Court in EFA (OS) No.3/1977 vide order dated 11.9.87 while relying on decision of (1969 (3) SCC 79) and other cases that protection under section 76(a) TPA cannot be made application to urban properties as it applied to agriculture properties.
The judgment of full bench supra has binding effect on the defendant as they were party to the said proceedings. The defendant has failed to show how they are not bound by the said findings. The contentions of the defendant that it was not a case of redemption and as they are not bound by the decision of Full Bench is without any merits. The crux of the previous judgment is that after the Hon'ble Full Bench has opined that tenancy created by mortgagee has no legal sanctity viz-a-viz mortgagor or auction purchaser, the Hon'ble Supreme Court vide order dated 27.09.1994 did not set aside these findings and asked the Hon'ble Division Bench to reconsider the matter in the light of the CS-279/2010 Page:-28/39 judgment of Hon'ble Full Bench meaning thereby the observation of full bench stood as such. Rather, the appellants /defendants were asked to argue before Hon'ble Division Bench as to how the Hon'ble Full Bench judgment has no application to the facts of the case. Thereafter, when Hon'ble Division Bench passed the judgment on 21.11.2000, it also only held that findings regarding Ld. Single Judge are upheld to the fact that in this proceedings only symbolic possession could be taken by auction purchaser and right of the tenant or legality or validity of tenancy was not once again touched which was allowed to be taken up in appropriate proceedings and Hon'ble Supreme Court again also vide its order dated 12.02.2009 again gave liberty to file fresh suit for mesne profit and eviction. The effect and validity of the tenancy was for the first time touched in the present matter in view of the law discussed above and thus the defendant who was admittedly inducted by the mortgagees would not be entitled to the protection of the DRC Act and after the cessation of mortgagees interest in the property with the sale of the property on 25.9.70, the relationship of lessor and lessee comes to an end and it is not binding on the auction purchaser and as such their occupation become illegal and unauthorised and therefore they are liable to handover the vacant possession of the suit property to the plaintiff who is the lawful owner of the same. On 25.9.1970, the rights of the defendant in the suit property have ended and they have already enjoyed the property for more than 39 years upto the date of filing the present suit without even payment of any use and occupation charges to anyone. The DW1 admitted in the cross examination that the defendant did not pay amount towards use CS-279/2010 Page:-29/39 and occupation charges for the period 1973 till the filing of the suit in the year 2011. Their status in the suit property is of unauthorized occupant. The defendants w.e.f. 25.9.70 are in unauthorised possession of the suit property and are liable to vacate and handover the same to the plaintiff. Accordingly, this issue is decided in favour of plaintiff and against the defendant.
11.Issue No. 2. Whether the plaintiff is entitled for recovery of Rs. 11,00,000/- towards the damages/mesne profits?OPP:- The onus to prove this issue was on the plaintiff. That since the defendants have been held to be unauthorized occupants therefore they are liable to pay the damages/mesne profit at the market rate of rent for unauthorised use and occupation of the suit property. It is submitted by the plaintiff that while the proceedings were pending before the Hon'ble High Court an application under section 151 of the CPC was registered as C.M No.1392/1995 in PFA No.3/1977 and it was prayed that the occupants including the defendants be directed to pay the damages for use and occupation of the property. However at the time of passing the judgment by the Hon'ble High Court no orders on the said application were passed since the court was of the opinion that the plaintiff could not recover possession from the occupants under order 21 rule 96 CPC and would have to file separate suit in this regard. Thereafter the liberty had been granted by the Supreme Court for fling the fresh suit as the decree of possession has already been passed, hence, as such the plaintiff in the present suit is entitled to claim the damages/mesne profits for the unauthorised use and occupation of the suit property at the market rate w.e.f. 25.9.1970 and with pendent-lite CS-279/2010 Page:-30/39 and future damages also at the market rate of rent till the suit property is actually handed over to the plaintiff by the defendants. The plaintiff has claimed that during the year 1970 the market rate of rent was about Rs.3/- per sq ft. per month. The market rate of rent during the year 1982 was about Rs.8/- per sq ft. per month. And during the year 1992 it was about Rs.15/- per sq feet per month and in the year 1995 it was about Rs.25/- per sq ft per month and in the year 2006 and at present market rate of rent in the area where the suit property is situated is about Rs.50-60 per sq ft. per month to which there is no rebuttal evidence.
The plaintiff can only be granted damages/mesne profits for a period of three years prior to filing of suit and as no orders were passed by the Hon'ble High on the said application of the plaintiff and no specific liberty was granted to the plaintiff to claim damages for the entire period as claimed. The plaintiff has submitted that in the same property where the suit property is situated the plaintiff has let out the portion of the property No.391 to 399, 405 & 406, Chandni Chowk, Delhi to State Bank of Indore at the rate of Rs.42/- per sq ft per month w.e.f. 16.1.02 for 5 years. The said rate also increased by 20% after 5 years on 16.1.02 and at the time of filing the suit the rate of rent was about Rs.50/- per sq ft per month. The plaintiff proved certified copy of registered lease deed Ex. PW-1/30 to show the rent agreed to be paid by the bank is @ Rs.50/- per sq feet per month. It has been further claimed that suit property is situated in the most famous commercial area of Chandni Chowk Delhi and is at the main road the rate of rent rate of rent @ Rs.50/- per sq feet per month as claimed by the plaintiff is proper and the same be awarded CS-279/2010 Page:-31/39 alongwith interest.
It was held by the Hon'ble High Court in judgments reported in 2010 (116) DRJ 539 & 2008 (104) DRJ 246 that to determine the point of damages the court can take into consideration the manifold increase in rent in the area and also take judicial notice of the same. Even if there is no substantial evidence the court can take judicial notice of the fact that rent in the Delhi has been rising staggeringly and there is no illegality in taking judicial notice of the said increase and even if no documentary evidence is being lead the court can fix the rent keeping in mind the prime location of the property.
The suit property is situated in the one of the famous areas of Delhi where commercial activities are being carried out. The plaintiff has proved the proved registered lease deed Ex. PW-1/30 to show the rent agreed to be paid by the bank is @ Rs. 50/- per sq feet per month in the same property which they are receiving from the State bank of India as rent and to my mind the same is best evidence of the market rate of rent for the period prior to 3 year before the filing of the suit. The defendants have led no evidence to show the rate of rent prevent in the area. The registered lead deed to my mind has been proved and it shows that Ground floor of area of 2300 sq feet and mezzanine floor of 119 sq ft of the same property was let to the State bank of Maysore for Rs.1,47,688/- p.m. w.e.f. 16.1.2002 and rent was increased by 20% w.e.f. 16.1.2007 as such the rate of rent during 2007 was about Rs.50/- per sq feet p.m. and accordingly the plaintiff is held to be entitled to damages @ Rs.50 per sq ft per month of the area of suit property. The suit property is of 1014 sq CS-279/2010 Page:-32/39 fts, therefore, the plaintiff is entitled to Rs.50,700/- p.m. for a period of 3 years prior to filing of suit and for the period during the pendency of the suit and till the time possession of actually delivered to them by the defendants. Accordingly, for 36 months prior to filing of present suit, the total amount of damages @ Rs. 50,700/- comes to Rs. 18,25,200/- but in the plaint, the plaintiff had restricted its claim to Rs. 11,00,000/- towards damages. Accordingly, a decree of Rs. 11,00,000/- is passed in favour of plaintiff and against the defendants towards the damages and mesne profit alongwith damages @ Rs. 50,700/- per month during the pendency of suit till its actual realization. The plaintiff is directed to furnish the court fee on the damages / mesne profit for the pendentelite period. This issue is decided in favour of plaintiff and against the defendant.
12.Issue No. 3. Whether the plaintiff is entitled for interest? If so, at what rate and for what period?OPP:- That since the defendant is continuing in possession of the suit property illegally and unauthorisedly, therefore, they are also liable to pay interest at the rate of 6% per annum on the amount of damages/mesne profits being payable by them for the unauthorised use and occupation of the suit property alongwith interest @ 6% p.a. on the mesne profits due periodically till its actual payment by them. This issue is also decided in favour of plaintiff and against the defendant.
13. Issue No. 4. Whether the suit is barred U/s 9 CPC read with Section 50 of DRC Act?OPD:- The onus to prove this issue was on defendants. Nothing specific has been argued by the counsel for defendant on this issue. However, while deciding the CS-279/2010 Page:-33/39 issue No.1 it has already been held that the defendants who was admittedly inducted by the mortgagees would not be entitled to the protection of the DRC Act and after the cessation of mortgagees interest in the property with the sale of the property on 25.9.70, the relationship of lessor and lessee comes to an end and it is not binding on the auction purchaser and as such their occupation become illegal and unauthorized, therefore there is no relationship of landlord and tenant between the plaintiff and the defendants and civil suit for claiming possession and damages is maintainable before the civil court and suit is not barred under 9 of CPC read with section 50 of DRC Act. This issue is decided in favour of plaintiff and against the defendant.
14. Issue No. 5. Whether the suit has not been properly valued for the purposes of court fee and jurisdiction?OPD:-
The onus to prove the same was on defendants and no evidence has been led by them to show that the value of the suit property was more than Rs.40 Lakh rather only bald statement has been made in evidence without any documentary proof or basis for making the said statement. Hence the objection raised by the defendant is liable to be rejected. This issue is accordingly decided in favour of plaintiff and against the defendant.
15. Issue No. 6. Whether the plaintiff has not come with clean hands before this court and has suppressed the material facts?OPD:- The onus to prove this issue was on the defendant. The defendant has not pointed out specifically as to what facts has been suppressed by the plaintiff and as to how the plaintiff has not come to this court with clean hands. In view of the findings of issue No. 1, the present issue is decided against the CS-279/2010 Page:-34/39 defendant and in favour of plaintiff.
16. Issue No. 7. Whether the suit is within limitation?OPP:-
Under this issue, the plaintiff has submitted that because of provisions of Section 14 of Limitation Act, the plaintiff is entitled to claim benefit of the period spent in pursuing there remedies for filing application U/o 21 Rule 95 and 96 CPC on 17.08.73. The said application was decided vide judgment dated 10.03.77 in IA No. 2006/1973 in Ex. No. 28/69. The appeal against the said judgment was filed before the Division Bench of Hon'ble High Court in EFA (OS) No. 3/77 which was decided on 21.11.2000 and in between reference was made to the full bench which was decided by Hon'ble Full Bench vide their judgment dated 11.09.87. The plaintiff further challenged the judgment dated 21.11.2000 before the Hon'ble Supreme Court by filing Civil Appeal No. 7250/2002 and which was decided on 12.02.2009 and the plaintiff was given liberty to file fresh suit by the Hon'ble Supreme Court, therefore it has been rightly contended that the period from 17.08.1973 to 12.02.2009 was spent in bonafidely prosecuting with due diligence the application U/o 21 Rule 95 and 96 CPC for obtaining possession of suit property from the defendant. The present suit has been filed on 13.10.2010 within the period of 12 years after the purchase of the property by plaintiff after deducting the aforesaid period spent in abovesaid proceedings before the Hon'ble High Court of Delhi and Hon'ble Supreme Court of India.
Moreover, Hon'ble Supreme Court of India has given liberty to file fresh suit therefore the plaintiffs are entitled to file fresh suit against the defendant and it would not be barred by limitation. The provisions of Section 14 of the Limitation Act entitles a party CS-279/2010 Page:-35/39 to seek a deduction of period spent in bonafidely prosecuting their remedies before the other forms. In the present case, since the plaintiff was held to be entitled to symbolic possession only and the application was U/o 21 Rule 95 and 96 CPC were rejected on the ground that plaintiff being outsider to the suit cannot recover possession in the execution proceedings after the purchase of property in auction and the Hon'ble Supreme court of India has given special liberty to file fresh suits to the plaintiff, therefore, the plaintiff is entitled to seek the benefit of Section 14 of the Limitation Act and the period spent by the time application U/o 21 Rule 95 and 96 CPC was filed before the Hon'ble High Court of Delhi and its ultimate decision by Hon'ble Supreme Court of India vide judgment dated 12.09.2009 is liable to be deducted in calculating the limitation period for filing the suit for possession. Since the present suit has been filed on 13.10.2010 and after deducting the period from 17.08.73 to 12.02.2009, the present suit is within the limitation. Even otherwise, the Hon'ble Supreme Court has given right vide judgment dated 12.02.2009 and suit has been filed on 13.10.2010 within limitation. Accordingly, this issue is also decided in favour of plaintiff and against the defendant.
17. Issue No. 8. Whether the defendant is a lawful tenant being a successor of earlier tenant Pratap Bank Ltd. after its merger with Laxmi Commercial Bank Ltd. and further its merger with defendant bank as mentioned in the written statement?OPD:- It is not disputed that defendant bank is successor of Pratap Bank after its merger with Laxmi Commercial Bank. As such the defendant would acquire all the rights and CS-279/2010 Page:-36/39 liabilities which would be of Pratap bank or of Laxmi Commercial bank. Admittedly the plaintiff has not accepted any rent from the defendant bank and they have also not paid any rent to anyone after the sale of property in the auction conducted by the Hon'ble High Court. Unless the plaintiff specifically accept any rent or otherwise accept the defendant bank as their tenant relationship of landlord and tenant would not be created. While deciding the issue No.1 it has already been held that the defendants who was admittedly inducted by the mortgagees would not be entitled to the protection of the DRC Act and after the cessation of mortgagees interest in the property with the sale of the property on 25.9.70, the relationship of lessor and lessee comes to an end and it is not binding on the auction purchaser and as such their occupation become illegal and unauthorized, therefore there is no relationship of landlord and tenant between the plaintiff and the defendants and civil suit for claiming possession and damages is maintainable before the civil court. Therefore the status of defendant in the suit property is of unauthorized occupant. Accordingly issue is decided against the defendants and in favour of plaintiff.
18. Issue No. 9. Whether the plaintiff had acquired right of redemption by purchasing the suit property in public auction as of mortgage in a suit of foreclosure under the final decree due to non-payment of decreetal amount by the judgment debtors as mentioned in the written statement?OPD:- While deciding the issue No.1 it has already been noted that the counsel for plaintiff submitted that that the purchaser has a dual character i.e. there was no redemption but CS-279/2010 Page:-37/39 the sale operated to extinguish the mortgage and transfer the rights of the mortgagor and the mortgagee in favour of the purchaser. As the purchaser acquired all the rights and title of the mortgagor and can ask for possession. When the property was put to sale and was purchased by the plaintiff the mortgage was redeemed. Whether the mortgagor makes the payment or the property was put on sale for failure of the mortgagor to pay the amount, this cannot create any benefit to defendant because it is well settled law that after sale of the property the auction purchaser acquires all the right/interest of the mortgagor as well as of mortgagee as they existed on the date of mortgage. It was held in (1969 (3) SCC 79) That the interests of the mortgagor and mortgagee united in the person of the purchaser and the mortgage ceased to subsist. In this view of the matter the purchaser, speaking in his character as a mortgagor, could claim that the mortgagee's action came to an end and there did not subsist any relationship between him and the tenants. It was also held in AIR 1940 PC 11 - that "while the purchaser at an execution sale under a mere money decree gets no more than the right title and interest of the judgment debtor at the date of the sale, the purchaser under a mortgage decree gets the right, title and interest in the mortgage subject which the mortgagor had at the date of mortgage and charged thereby. Buying the mortgage property free of encumbrances he gets, as it is sometimes put the title both of mortgagor and mortgagee and of those interested in the equity of redemption at the date of the sale.
It is according held that after the sale of the property, the plaintiff acquired all the rights and interest of both the mortgagor CS-279/2010 Page:-38/39 and mortgagees and is entitled to main the civil suit for possession against the defendant bank which was inducted by the mortgagees. Accordingly the issue is decided against the defendants and in favour of plaintiff.
19.Relief:- In view of the above finding, the suit of the plaintiff stands decreed with costs. Decree of possession and damages is passed in favour of plaintiff against the defendants qua suit property i.e. three rooms and balcony and open space on the south eastern part of the first floor of property No. 395, Chandni Chowk, Delhi ad-measuring about 1014 sq. fts as shown in red colour of site plan Ex. PW-1/10. The decree of Rs. 11,00,000/- is passed in favour of plaintiff and against the defendants towards the damages and mesne profit alongwith damages @ Rs.50,700/- per month alongwith interest @ 6% P. A. during the pendency of suit from the date of filing till date of decree and for future period at the same rate of Rs.50,700/- per month alongwith interest @ 6% P. A. till its actual recovery of the possession of suit property by plaintiff. Decree sheet be prepared accordingly after paying balance court fee. File be consigned to Record Room.
Announced in open court on (Ajay Goel) 09.07.2014 ADJ-12(Central)/Delhi. CS-279/2010 Page:-39/39