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11. Learned counsel appearing for the appellants relied on the decision reported in Shah Mathuradas v. Nagappa (AIR 1976 SC 1565), R. Kanthimathi v. Beatrice Xavier ((2000) 9 SCC 339) and Tarachand v. Sagarbai ((2007) 5 SCC 392) to canvass for the position that on execution of a mortgage deed, there is an implied surrender of the lease.

12. The stand taken by the appellants before this court is that the courts below have erred in law in coming to the conclusion that there is no merger of the lease in the mortgage. The contention is that the question is not one of merger, but one of implied surrender under Section 111(f) of the Transfer of Property Act. The argument advanced on behalf of the appellants is that when the mortgage deed is executed, there is an implied surrender of the lease and the lease no longer survives. It will be useful to refer to the decision referred to by the learned counsel for the appellants in this regard.

"We are concerned here with a converse case. The case as to whether the interest of a lessee merged with the interest of a mortgage would depend upon facts and circumstances of each case, as indicated in Gopalan Krishnankutty. There cannot be any hard-and-fast rule for arriving at only one decision as the decision thereupon will depend upon the terms of the document."

18. The issue was again considered in the decision reported in Gopalan Krishnankutty v. Kunjamma Pillai Sarojini Amma (AIR 1996 SC 1659) wherein an identical issue was considered. There the issue that arose for consideration was whether on execution of a mortgage deed by a landlord in favour of the tenant, whether the lease will continue to survive or not. The question was whether that can be treated to be an express or implied surrender of lease. After referring to various decisions, it was held as follows:

"The High Court, in the present case, proceeded on the erroneous assumption in law that surrender of the lease by the lessee (defendant) must be implied from the fact of execution of the usufructuary mortgage in his favour by the lessor (plaintiff). As indicated, this is an erroneous assumption in law. This question has to be decided on the contents of the deed since there is no other evidence of surrender of the lease by the defendant on execution of the mortgage. We find nothing in the mortgage deed (Annexure A-1) dated 18th July, 1974 read with the release deed of the same date to prove either an express on an implied surrender of the lease by the defendant in favour of the plaintiff on execution of the mortgage deed. Since there is no automatic merger of the interest of a lessee with that of a mortgagee when the same person is the lessee as well as the mortgagee, in absence of proof of surrender of the lease by the defendant, on redemption of the mortgage, the plaintiff is not entitled automatically to recover possession of the leased premises. The defendant's right to continue in possession as a lessee, therefore, continues to subsist."
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22. It is quite evident that the lease arrangement was intended to survive for the simple reason that the rent to be paid by the tenant to the landlord was to be adjusted towards interest of the mortgage. If as a matter of fact the lease was not intended to survive or if the parties intend express or implied surrender of the lease, such a clause would not have been incorporated. It was this clause which had persuaded the court below to hold that the lease cannot either get merged nor is there an implied surrender by virtue of Ext.A1 document. The view taken by the court below seems to be fully justified.