Document Fragment View

Matching Fragments

A lease of immoveable property determines--
in case the interests of the lessee and the lessor id the whole of the property become vested at the same time in one person in the same right.
This is the doctrine of merger. When a tenant takes from his landlord mortgage of the land in his possession, all the rights of the lessor and the lessee do not vest in the lessee. There is something which is left with the lessor who has entered into the transaction of mortgage with his lessee, It is equity of redemption or the right to redeem the mortgage. Therefore, the doctrine of merger which finds statutory expression in Section Ill of our Transfer of Property Act corresponding to Section 153 of the Baroda Transfer of Property Act would not be applicable in any manner whatsoever to the case of a tenancy upon which mortgage has been superimposed by a fresh contract entered into between the parties. The next mode of determining the lease which the Baroda Transfer of Property Act, provided was by express surrender of the lease. It also provided for implied surrender of the lease. The provisions in that behalf were identical with the corresponding provisions in Section Ill of our-Transfer of Property Act. The question which has therefore, arisen is whether, the tenancy of a tenant who expressly surrendered his lease at the time of taking the mortgage of the land in question or who impliedly surrendered his lease at that time to his landlord remains in abeyance and survives the redemption of mortgage. It may be noted that Section 117 of our Transfer of Property Act provides that none of the provisions in the Chapter on leases of immovable property will apply to leases for agricultural purposes, except in so far as the State Government may, by notification published in the Official Gazette, declare all or any of such provisions to be so applicable in the case of all or any of such leases, together with, or subject to, those of the local law, if any, for the time being in force. Section 160 of the Baroda Transfer of Property Act also contained an indentical provision. It provided that the provisions contained in the Chapter on leases would not apply to leases for agricultural purposes, except where His Highness the Maharaja of Baroda had by notification published in the Official Gazette provided otherwise and applied them to leases. Therefore, the doctrine of merger and the concepts of express and implied surrender incorporated in Section 111 of our Transfer of Property Act corresponding to Section 153 of the Baroda Transfer of Property Ace cannot propria vigore apply to the case of an agricultural lease upon which the transaction of usufructuary mortgage has been superimposed. Really speaking, therefore, we have to judge the effect of the superimposition of usufructuary mortgage upon lease for agricultural purpose in light of the principles of equity, justice and good conscience. However, there is nothing in Section Ill of our Transfer of Property Act corresponding to Section 153 of the Baroda Transfer of Property Act which militates against the principles of equity, justice and good conscience. There is, therefore, no difficulty whatsoever in applying the principles incorporated in Section 153 of the Baroda Transfer of Property Act not as statutory principles but as principles of equity, justice and good conscience to all cases of agricultural leases upon which - usufructuary mortgages have been superimposed. Now, this is not a case of an express surrender of lease at the time when the lessee took usufructuary mortgage of the land in question from his lessor.

18. Except the views expressed by the learned single Judges of the Madras High Court and the Rajasthan High Court referred to above, the consensus of judicial opinion is that there is no inconsistency or incompatibility between a lease and a mortgage if one and the same person has taken a lease and a mortgage in respect of the same property. Both can co-exist unless indeed the lease has been expressly or impliedly surrendered. The question of express surrender of a lease by a lessee at the time of mortgage stands on a different footing altogether. So far as implied surrender is concerned, these decisions show that since there is no incompatibility between one and the same person taking a lease and a mortgage, there is no ipso facto implied surrender of the lease when the lessee takes the mortgage of the property in question. It is, therefore, clear that a person can both be a lessee and mortgagee in respect of the same property unless he has expressly or by necessary implication surrendered the lease while taking the mortgage.

19. Now, let us turn to Section 25A which we have reproduced above it, inter alia, provides that "the tenancy of such land shall be in abeyance during the period the mortgage subsists." If at the time of taking the mortgage the lessee had surrendered the lease expressly or by necessary implication, unless it was not open to him in law to do so, the question of tenancy or lease remaining in abeyance would not arise because a tenancy or lease can remain in abeyance if it exists or has co-existed during the subsistence of the mortgage. If expressly or by necessary implication it was surrendered and had been extinguished or had become non-existent, the question of its remaining in abeyance would not arise. Mr. Shah who appears for the defendant has in terms conceded before us that if there was an express surrender, there would be no co-existence of lease or tenancy with mortgage and that, therefore, no question of its revival under Section 25A would arise. However, he has argued that the expression "notwithstanding any other law for the time being in force" used in Section 25A is inconsistent with Clause (0 of Section 111 of the Transfer of Property Act (The Baroda State Transfer of Property Act had also an identical provision couched in similar language) and, therefore, according to him, there could not have been any implied surrender of tenancy by a tenant at the time of taking the mortgage. He is right to the extent that when the tenant or lessee took the mortgage there was no ipso facto implied surrender of the lease merely by virtue of the fact that he took the mortgage of the land in question from his landlord. But, in our opinion, he is not right in his submission that he could not have impliedly surrendered it if that was his intention. Section 111(f) of the Transfer of Property Act merely enumerates the modes of surrendering or determining a lease. It does not state that there cannot be any implied surrender of a lease. If Section 111 of the Transfer of Property Act had in terms provided that there could be no implied surrender of the lease by a tenant, then probably the expression "notwithstanding any other law for the time being in force" used in Section 25A of the Bombay Tenancy and Agricultural Lands Act, 1948 could have militated against it and the question of giving overriding effect to Section 25A on Section 111(f) of the Transfer of Property Act could have arisen. What Section 111(f) does is merely to recognize a mode of surrendering a lease by an act inter vivos. It may be an express act or it may be an act to be inferred from the facts and circumstances of the case. In other words, what Section 111(f) provided is that as a lessee would enter into a transaction of lease with his lessor, he could also surrender his lease impliedly. In other words, having laid down the mode in which a lease can be created it has recognized a mode of surrendering it. It is wrong, therefore, to say that the expression "notwithstanding any other law for the time being in force" used in Section 25A of the Bombay Tenancy and Agricultural Lands Act, 1948 has an overriding effect on Clause (0 of Section 111 of the Transfer of Property Act. Therefore, when it was open to a lessee or a tenant to surrender his lease and if he did so, he validly brought to an end his lease and, therefore, nothing survived for remaining in abeyance during the subsistence of the mortgage and for being revived after redemption of mortgage. Whether a lessee or a tenant had surrendered his lease impliedly at the time when he took the mortgage is indeed to be found out from the facts and circumstances of the case. Amongst them the most important is the mortgage-deed itself. This proposition which emerges from the cumulative consideration of Section 111(f) of the Transfer of Property Act and Section 25A of the Bombay Tenancy and Agricultural Lands Act, 1948 has got to be applied to different situations.

20. In the Bombay Presidency as it was before India became independent, we had the Bombay Tenancy Act, 1939. It protected all tenancies which were created before the 1st day of April 1937 (see Section 4). It contained provisions which militated against determination of the tenancy. Now if a tenant or a lessee took mortgage of a land from his lessor or landlord to which the Bombay Tenancy Act, 1939 was applicable, there could not have been any implied surrender of his land when he took the mortgage because the statutory provisions of the Bombay Tenancy Act of 1939 militated against it. Secondly, if a lessee or a tenant had taken mortgage in respect of a land to which the Bombay Tenancy Act, 1939 was not attached, the Court will have to find out on evidence whether at the time when the lessee or the tenant took the mortgage he had impliedly surrendered the lease. If he had done so, then there would be no revival of tenancy under Section 25 A upon redemption of mortgage because there was nothing which was kept in abeyance. Similarly, if a lessee or a tenant had taken mortgage in respect of the land to which the Bombay Tenancy Act was not applicable (such as lands situate in Princely States like Baroda) but before the Bombay Tenancy and Agricultural Lands Act, 1948 was made applicable, the Court will have to find out whether there was an express or implied surrender of lease by the tenant when he took the mortgage of the land in question from his landlord. If there was no surrender, then the lease or the tenancy would revive upon redemption of mortgage but if there was one, there would be nothing which would revive. If a lessee or a tenant took mortgage of a land from his landlord after the Bombay Tenancy and Agricultural Lands Act, 1948 became applicable to it, there would be revival of tenancy upon redemption of mortgage because he could not expressly or impliedly surrender the lease while taking the mortgage as such a surrender would directly militate against or contravene the provisions of the Bombay Tenancy and Agricultural Lands Act, 1948 (see Section 15).