CHERIYAN SOSAMMA AND ORS. versus SUNDARESAN PILLAI SARASWATHY AMMA AND ORS.

Citation: [1999] 1 S.C.R. 172 · Decided: 20-01-1999 · Supreme Court of India · Bench: S. SAGHIR AHMAD · Disposal: Case Partly allowed
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Judgment (excerpt)

A 
CHERIYAN SOSAMMA AND ORS. 
v. 
SUNDARESAN PILLAI SARASWATHY AMMA AND ORS. 
JANUARY 20, 1999 
B 
[S. SAGHIR AHMAD AND M.B. SHAH, JJ.) 
Tra11sfer of Property Act, 1882: 
Usufrnctuwy 11101tgage-Executio11 of-!11 favour of wife of lessee of 
C same property-Merger of lease and mortgage-A1isi11g of-Lease agreeme11t 
i11te11ded to be co11ti11ued despite executio11 of mortgage deed-Lessee a11d 
mortgagee lived together as husba11d a11d wife-Held : 11tere is 110 automatic 
merger of interest of lessee with that of the mortgaged property upo11 redemp· 
tion of mortgage-171ere is 110 automatic swrender of lease a11d, therefore, 
D mortgagor is 11ot e11titled to delivery of physical possession of property upon 
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redemption of mortgage-Implied surre11der of the lessee's rights would 
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depe11d upo11 the i11te11tion of parties at the time of execution of the mortgage 
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deed-Lessee was the husband of the mortgagee and were living 
together-Reasonable inf ere11ce that the transactio11 was really entered into by 
the deceased -lessee, though in the name of his wife. 
The respondent-owner leased his property in favour of the husband 
of the appellant by executing lease deeds. Thereafter, usufructuary 
mortgage deed was executed in favour of the appellant. Both the appellant 
and her husband were living together and continued to do so till the death 
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of the husband. From the recitals in the mortgage deed it was apparent 
that the parties unequivocally and without any reservation intended that 
the leasehold rights of the husband were kept alive despite execution of the 
usufructuary mortgage. The respondent, after the death of the husband, 
filed a suit for redemption of the mortgaged property. A preliminary 
decree for redemption under Order 34 Rule 7 of the Code of Civil Proce-
G dure, 1908 was passed by the Court of MunsilI on the ground that the 
lessee's right would merge at the time of execution of the mortgage deed. 
. _., 
The appellate court allowed the appeal by holding that there was no 
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merger of the lease and the mortgage. However, the High Court allowed 
the second appeal by restoring the preliminary decree for redemption of 
H the mortgage. Hence this appeal. 
172 
CHERIYAN SOSAMMA v. S. PILLAI S. AMMA 
173 
Allowing the appeal partly, this Court 
A 
"""tC . 
HELD : 1.1. The question whether upon redemption of usufructuary 
mortgagee a tenant-mortgage was required to deliver actual or physical 
possession of the mortgaged property to the lessor-mortgagor depends 
upon the intention of the parties at the time of the execution of the B 
... 
mortgage deed. There is no automatic merger of the interest of a lessee 
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with that of a mortgagee when the same person is the lessee as well as the 
mortgagee, in the absence of proof of surrender of the lease. Unless there 
is merger of both rights on redemption of the mortgage the plaintiff is not 
entitled to recover physical possession of the property. The right of lessee c 
to continue in possession would survive even after redemption. [178-A-B] 
1.2. The implied surrender of the lessee's right when the usufruc-
tuary mortgage was executed would depend upon what was the intention 
of the parties at the time of execution of the mortgage deed in favour of 
the siting tenant and the same has to be gathered from the terms and D 
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conditions of the mortgage transaction in the light of the surrounding 
y 
circumstances of the case. Unless there was surrender of leasehold rights 
at the time of execution of the mortgage, mortgagor would not be entitled 
to obtain delivery of physical possession of property on redemption of 
mortgage. [178-G-H; 179-B) 
E 
2. There can be no merger of a lease and a mortgage, even where the 
two transactions are in respect of the same property, it is well-settled that 
for a merger to arise, it is necessary that lesser estate and a higher estate 
should merge in one person at one and the same time and in the same 
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right and no interest in the property should remain outstanding. In the 
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case of a lease, the estate that is outstanding in the lessor is the reversion; 
in the case of a mortgage, the estate that is outstanding is the equity of 
redemption of the mortgagor. Accordingly, there cannot be a merger of a 
lease and a mortgage in respect of the same property since neither of them 
is a higher or lesser estate than the other. Even if the rights of the lessee G 
and the rights of the mortgagee in respect of a p
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