ALL INDIA FILM CORPORATION LTD. & ORS versus SHRI RAJA GYAN NATH AND ORS.

Citation: [1970] 2 S.C.R. 581 · Decided: 26-09-1969 · Supreme Court of India · Bench: M. HIDAYATULLAH · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

581 
A 
ALL INDIA FILM CORPORATION LTD. & ORS. 
B 
c 
D 
E 
F 
G 
H 
v. 
SHRI RAJA GYAN NATH AND ORS. 
September 26, 1969 
[M. HIDAYATULLAH, C.J. AND A. N. GROVER, J.] 
Mortgage-Tenancy created by mortgagee in possession does not sur· 
vive the terminatjon o/ mortgage i.riterest-Landlord and tenant-Ettst 
Punjab Urba.n Rent Restriction A.ct, 
1949, applicability 
of-EllCCt1ce 
Interest (Separation) Act, 1951. 
The mortgagee of a property in which a cinema was run. leased it to 
tho first appellant on a monthly rental of Rs. 250/ - for a period of 5 years 
renewable fdr 10 years by yearly renewals on the same terms. The leasee 
waa given the full right to use the property whether by it.self or throui:ti. 
agents or in partnership or by sub-leasing. The lpssee sublet the premiies 
~tter equipping the house with cinema machinery on a mor...tbly rer.taL of 
Ri. 1,250/-. The property had been declared evacuee property, and tho 
louet applied under the Evacuee Interest (Separation) Act, 1951 
for 
separation of his interest. 
The Competent Officer ordered sale of the 
property, which was purchasod for Rs. 65,000/- by the respondent. 
·:.-i1c11 
(bc:tore the expiry of the term of the lease) the respondent filed a suit 
aaainst the head-lessee and the sub-lessee for possession of the property. 
On the questions (i) whether the respondent was entitled to po~sesslc11 
belore the expiry of the full term of t'ie lease; and (ii) whether the sub-
lca&~ were protected under the East Punj~!J Urban Rent Restriction Act, 
1949. 
HELD : (i) 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 repaymc;nt of a loan. A mortgagee's 
interest lasts only as long as the mortgage has not been µaid off. 
·1 b(:re-
fort on 'redemption of the mortgage the title of the mortgag~e comes to 
an end. 
A derivative title from him must ordinarily come to an end 
with the termination of the mortgagee's title. The mortgagee by crc<iting 
a tenancy becomes the lessor of the property, but his 
i~!er~st as leif!or 
ii cctern1in0:us with his mortgage interest. The relationship of lessor and 
l~ee cannot subsist beyond the mortgagee's interest unless the r..::lation-
ship is aglreed to by, the mortgagor or a fresh relationship is recreated. 
Thi.s the mortgagor or the person succeeding to the mortgagor's interest 
may elect to do. But if he does not, the lessee cannot claim any righb. 
beyond the term of his original lessor's interC$t, [584 F] 
The exception to the above propositions is the one that flows from s. 
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 ~ a person of ofdinary 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 te 
the management of agricultural lands and has seldom b~en extended to 
\ltban property so as to tie it up in the hands of Jessees or to confer Oft 
them rights under special statutes. To this again there is a3 exception. The 
hue will continue to bind the mortgagor or persons deriving interest from 
him if the mortgagor had concurred to grant it. [585 CJ 
582 
SUPREME COURT REPORTS 
[1970] 2 S.C.R· 
The present case was not covered by the exception because such a 
long lease on a small rent. could not be said to be an act of prudence, . 
whetljer it was a bona fide act or not, and whether the exemption can apply 
to urban property. 
Mahabir Gape and Ors. v. Harbans Narain Singh, [1952] S.C.R. 775 
and Asaram & Ors. v. Mst. Ram Kali, '.' 958} S.C.R, 986, fOllowed. 
(ii) A landlord means a person entitled to receive rent and a tenant 
means any person by whom or on whose account rent is payable. rfhese 
definitions apply if the tenancy, either real or statutory, could be said to 
su1vive after the termination of the rndrtgage. The scheme of s. 10 of 
the Evacuee Interest (Separation) Act, 1951 is that in the case of a mort· 
gagor or a mortgagee, (a) the Competent Officer may pay to the Custo-
dian oi' the claimant the amount payable under the mortgage' debt and 
redeem the property oc (b) the Competent Officer may sell the mortgag

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