Punjab-Haryana High Court
Harbans Lal vs Jagtar Singh on 20 July, 2000
Equivalent citations: (2000)126PLR524
Author: M.L. Singhal
Bench: M.L. Singhal
JUDGMENT M.L. Singhal, J.
1. Jagtar Singh filed suit for possession by redemption of shop shown in letters A,B,C,D in Red in Plan Exbt. P-l attached to the plaint situated at Railway Road, Zira against Harbans Lal on payment of Rs. 10,000/- or such other sum which the court might find payable to the latter. It is alleged that on 6.9.1988, Jagtar Singh mortgaged with possession show with the defendant for a sum of Rs. 3000/- and actual physical possession of the shop was delivered to the defendant, It was a usufructuray mortgage redeemable at any time. Vide agreement dated 5.1.1989, plaintiff further received a sum of Rs. 4000/- from the defendant as mortgage money. Defendant further paid Rs. 3000/- to the plaintiff as mortgage money some time after the execution of the mortgage deed. Shop in dispute is thus under mortgage with defendant for a total sum of Rs. 10,000/-.
2. Harbans Lal-defendant contested the suit of the plaintiff urging that the defendant is entitled to remain in possession of the shop even after redemption as tenant of the plaintiff as he was in possession of the shop in dispute as tenant under the plaintiff even before creation of mortgage. He was in possession of the shop as tenant under the plaintiff since February, 1985 at a rental of Rs. 400/- per month. Prior to this suit, the plaintiff filed ejectment application on 14.5.1994 in the court of Rent Controller, Zira alleging that defendant is a tenant over the shop in dispute which was dismissed as withdrawn on 26.10.1994. On 6.9.1998, the plaintiff was in need of money and he mortgaged the shop to the defendant for Rs. 3000/-. Thereafter, the plaintiff received a sum of Rs. 4000/- and 3000/- from the defendant as mortgage money. After redemption, the defendant will revert as tenant of the shop under the plaintiff at a rental of Rs. 400/- per month.
3. On the pleadings of the parties, the following issues were framed:-
1. Whether the plaintiff is entitled to possession of the shop in dispute by redemption? OPP
2. Whether the suit is not maintainable in the present form? OPD
3. Whether the plaintiff is estopped to file this suit by his act and conduct? OPD
4. Whether the defendant is estopped to allege tenancy between the parties ? OPD
5. Relief.
4. Civil Judge (Junior Division), Zira decreed the plaintiffs suit for possession through redemption against the defendant on payment of Rs. 10000/- to the latter as mortgage money in view of his findings that this shop was mortgaged with possession with the plaintiff and the mortgage amount was Rs. 10000/-. Plea of the defendant that he was a tenant of the shop prior to the creation of the mortgage did not find favour with the Court and this plea was negatived.
5. Not satisfied with the judgment and decree passed by Civil Judge (Junior Division), Zira, Harbans Lal-defendant went in Appeal. Appeal was dismissed by the Additional Judge, Ferozepur vide order dated 18.3.1997.
6. Still not satisfied, Harbans lal has come up to this court through this Regular Second Appeal.
7. I have heard the learned counsel for the parties and have gone through the record.
8. Learned Counsel for the appellant submitted that the appellant was tenant in the shop prior to the creation of the mortgage and after the mortgage is redeemed, he is entitled to remain in possession of the shop as tenant. It was submitted that he was tenant of the shop since February, 1985 at a rental of Rs. 400/- per month. It was submitted that Jagtar Singh filed ejectment application against Harbans Lal under Section 13 of the East Punjab urban Rent Restriction Act, 1949 qua the shop and if that was so. Harbans Lal will continue to remain in possession of the shop as tenant even after redemption. Learned counsel for the respondent Jagtar Singh submitted that relationship of landlord and tenant between the parties came to an end as soon as there was execution of mortgage with possession by Jagtar Singh in favour of Harbans Lal. Possession of Harbans Lal may have been that of a tenant but as soon as Harbans Lal accepted himself to be in possession of the shop as mortgagee, he ceased to be tenant and he would have to surrender possession as soon as mortgage is redeemed. Learned counsel for the appellant submitted that there is no evidence that tenant Harbans Lal had surrendered possession and had thus put an end to his tenancy rights and there was merger of tenancy into mortgage. In support of this submission, he drew my attention to "(1998-1)93 Punjab Law Reporter 478 (Bakshi Jaswant Singh v. Smt. Pushpa Devi and Ors.), where it was held as follows:-
" It is simply unconscionable that: a lady who was trying to camouflage the deed as mortgage in place of tenancy would ever agree to execute a (ease deed or get executed from the defendant in her favour a rent note or issue any receipt for payment of rent so that the defendant may be able to produce it before the Court to prove his case. The trial Court thus acted illegally in applying the guillotine rule of excluding the evidence adduced by the defendant and basing its judgment on mortgage alleged to be a sham transaction. The finding recorded by the Court of first appeal can, therefore, be set aside being based on distorted view of the evidence on record. The plaintiff was a rich lady in affluent circumstances and was in no need for securing a paltry sum of Rs. 5000/- and, therefore in reality she had given the shop on rent and execution of mortgage deed was a sham transaction."
9. Learned counsel for the respondent on the other hand, submitted that in this case tenancy right came to an end and Harbans Lal's possession was that of a mortgagee. In support of this submission, he drew my attention to "Shah Mathuradas Maganlal and Co.- appellants v. Nagappa Shankarappa Malaga and Ors. respondents, AIR 1976 SC 1565, wherein it was observed as follows:-
The respondent executed a mortgage deed in favour of appellant who was a tenant of the premises. No interest was to be paid instead possession of the property was agreed to remain with the appellant. The period for redeeming the mortgage was fixed for 10 years. Notice for redemption of mortgage was served. The appellant claimed that after the redemption, he was entitled to retain possession because his previous tenancy right subsisted.
Held, that in the case in question delivery of possession was immediately followed by a redelivery of possession of the appellant as mortgagee. The mortgage deed establishes beyond doubt that the effect of the deed was inconsistent with the continuance or subsistence of the lease. On the redemption of the mortgage, the respondent had a right to recover possession both on the terms of the mortgage deed and under section 62 of the T.P. Act.
The deed of mortgage shows the features indicating that there was surrender of tenancy and the appellant was only a mortgagee. The High Court found that there was a surrender of tenancy right. No particular form of words is essential to make a valid surrender. A surrender may be oral. A surrender may be express although delivery of possession is necessary for surrender in the facts and circumstances of a given case.
The features in the circumstances of the case were inconsistent with the continuance of tenancy right.
It would not also be contended that there was merger of interest of the mortgagee and the tenant and that there was no surrender. Ordinarily, the doctrine or merger applies to extinction of mortgage security. This occurs by the merger of a lower in a higher security and by the merger of a lesser estate in a greater estate. Where the capacity in which a person in possession of the mortgagee's right is something quite different from the capacity in which he is in possession of the equity of redemption, the mere fact that the two capacities are united in the same physical person cannot result in a merger."
10. Learned counsel for the respondent submitted that appellant may have been holding the shop as tenant but his right to remain in occupation as tenant came to an end when he became mortgagee with possession. In my opinion, there is no evidence that tenant-Harbans Lal had surrendered possession and had put an end to his tenancy rights and there was merger of lessee's interest into mortgage's interest. It was submitted by the learned counsel for the respondent that Harbans Lal had specifically denied the relationship of landlord and tenant in his reply to the ejectment application. He had stated that there was no relationship of landlord and tenant between the parties and he is not in possession of the shop as tenant but is in possession of the shop as mortgagee of Jagtar Singh. Harbans Lal had pleaded that Jagtar Singh had never rented out the shop to him at a rental of Rs. 1500/- per month. In fact, Jagtar Singh had mortgaged the shop to him with possession for Rs. 3000/- vide registered mortgage deed dated 6.9.1988, on the same day, he had executed an agreement in his favour vide which he had received Rs. 4000/- from him. Vide this agreement, Jagtar Singh had agreed to return him the amount of Rs. 4000/- by 5.1.1989 and in case of failure to do so, Harbans Lal had option to recover the amount or Harbans Lal would become mortgagee with possession of the shop in dispute for Rs. 4000/-. Harbans Lal is in possession of the shop as mortgagee on the basis of agreement dated 6.9.1988 in part performance of the agreement and is protected under Section 53A of the Transfer of Property Act. He is in possession of the Shop in dispute for a total mortgage amount of Rs. 7000/- paid to Jagtar Singh on 6.9.1988 vide mortgage deed and agreement. It was further pleaded by Harbans Lal in his reply to the ejectment application that about three months of the execution of the mortgage deed and agreement dated 6.9.1988, Jagtar Singh received Rs. 3000/- more from him and endorsement to this effect was written by him (Jagtar Singh) in his own hand. Jagtar Singh received this amount as an additional mortgage amount. Actually it was stipulated between the parties that Jagtar Singh would mortgage the shop in dispute for Rs. 10000/-but on 6.9.1988, Harbans Lal had paid only Rs. 7000/- for which amount, the mortgage deed and agreement were executed by Jagtar Singh and the remaining Rs. 3000/- was taken by Jagtar Singh later on from him (Harbans Lal). He is in possession of the shop as mortgagee for a total mortgage consideration of Rs. 10000/-. It was submitted that in the face of this plea put up by Harbans Lal in the ejectment proceedings, Harbans Lal could not be allowed to contend that he was a tenant of the shop when categoric case of Harbans Lal was that no ejectment application was competent against him as he was in possession as mortgagee."
11. In AIR 1984 SC 1728 Gambangi Appalaswamy Naidu and Ors. v. Bohara Venkataramamayya Patra, the Hon'ble Supreme Court held that there can be no merger of a lease and a mortgage in respect of the same property since neither of them is a higher or a lesser estate than the other. Even, if the rights of the lessee and the rights of the mortgagee in respect of a property were to be united in one person, the reversion in regard to the lease and the equity of redemption in regard to the mortgage, would be outstanding in the owner of the property and accordingly, there would not be a complete fusion of all the rights of ownership in one person. Jagtar Singh had withdrawn that ejectment application on 26.10.1994 in view of the plea taken by Harbans Lal in his reply that there was no relationship of landlord and tenant between him and Jagtar Singh and instead he was a mortgagee with possession while Jagtar Singh was a mortgagor. It was submitted by the Learned counsel for the appellant that the appellant had denied the relationship of landlord and tenant between him and Jagtar Singh because Jagtar Singh had claimed that he was tenant under him at a rental of Rs. 1500/- per month whereas, to his mind, he was a tenant at a rental of Rs. 400/- per month. Mortgage was created because Jagtar Singh was in need of money and he raised money on the security of this shop. In this case, tenancy and mortgage were different transactions altogether. Learned counsel for the respondent submitted that in this case there was merger of tenancy into mortgage and after the mortgage was created, the tenancy came to an end and disappeared and with the redemption of mortgage Jagtar Singh would be able to obtain actual physical possession of the shop from Harbans Lal. In this case, the effect of execution of mortgage and agreement was that the tenancy rights of Harbans Lal were kept in abeyance and they revived upon the redemption of mortgage as was the case in AIR 1984 S.C. 1728 (supra).
12. For the reasons given above, the judgment and decree passed by the courts be-low are modified. Plaintiff-Respondent's suit shall remain decreed for possession through redemption but in execution of the decree the plaintiff-respondent shall not be able to have actual physical possession of the shop but only Kabza Malkana. Actual possession of the shop shall remain with Harbans Lal. Jagtar Singh will be entitled to actual physical possession if he succeeds in the ejectment proceedings which might be brought by him against Harbans Lal under the East Punjab Urban Rent Restriction Act, 1949. As to what the rate of rent between them is, that will be determined by the Rent' Controller. No order as to costs.