HASTHIMAL AND SONS AND ORS. versus P. TEJ RAJ SHARMA

Citation: [2007] 10 S.C.R. 537 · Decided: 04-10-2007 · Supreme Court of India · Bench: A.K. MATHUR · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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HASTHIMAL AND SONS AND ORS. 
A 
v. 
P. TEJ RAJ SHARMA 
OCTOBER 04, 2007 
B 
[A.K. MATHUR AND MARKANDEY KAT JU, JJ.) 
Transfer of Property Act, 1882: 
Mortgage of suit property with tenant-Mortgage deed providing c 
that on redemption of mortgage, mortgagee would become tenant of 
the mortgagor automatically as he was, prior to mortgage-Claim for 
possession by vendee of the mortgaged property on expiry of mortgage 
period-Held: Not maintainable as mortgagee is reverted as tenant-
Vendee to approach appropriate forum for eviction of tenant. 
D 
Pre-emption-Mortgage of property-Another agreement 
whereby mortgagor undertaking to give first option to purchase, to 
mortgagee-Held: It operates as clog on right of redemption of vendee 
from the mortgagor. 
E 
The suit property was mortgaged under a regist~red mortgage 
deed dated 19.3.1980 to the lessee-mortgagee. The mortgage deed 
specifically mentioned that on redemption of the mortgage, the 
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mortgagee would become the lessee of the mortgagor automatically as 
he was prior to the mortgage. After the mortgage deed, a partial release 
F 
deed was signed between the parties on 21.9.1981 by which mortgagor 
had undertaken to give the first option to purchase, to the mortgagee. 
On demand of redemption, mortgagee refused and the purchaser 
of the property filed the suit for redemption of mortgage and for G 
possession of the mortgaged property. 
During pendency of the suit, the purchaser filed application under 
0.12 r.6 CPC for decree on the basis of admission by the mortgagee 
537 
H 
538 
SUPREME COURT REPORTS 
[2007] 10 S.C.R. 
A that mortgage was for 20 years which had expired in 2000. Trial Court 
rejected the application, however High Court allowed the same and 
decreed the suit under 0.12, r.6 CPC. 
In appeal to this Court, two points were iuvolved (1) Whether the 
B. plaintiff had a right to get possession on redemption of his mortgage 
and (2) whether the provision in the agreem'ent dated 21.9.1981 that 
the mortgagee will have a right of pre-emption operates as a clog on 
the right ofredemption oftlie mortgagor. 
c 
Allowing the appeal, the Court 
HELD: 1. Where one of the terms arranged between the mortgagor 
and the mortgagee was that the mortgagee should have a right of pre-
emption in case the mortgagor wishes to transfer the property to a third 
party, such a condition operates as a clog on the right ofredemption of 
D the vendee from the mortgagor. Thus second point is decided in. favour 
ofrespondentwho is vendee. [Para 7] (540-F, G] 
Lewis v. Frank Love Ltd, [1961] All E.R. 446, referred to. 
2. Even before the mortgage deed was executed on 19.3.1980, the 
E mortgagee was in actual physical possession as a tenant, and this 
possession continued with him as a mortgagee. Hence, when the 
mortgage was redeemed, it did not follow that the erstwhile mortgagee 
could be straightway evicted. When the mortgage comes to an end, the 
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A. 
appellant reverted as a tenant, particularly since there was a specific· 
.A 
F term in the mortgage deed that on redemption of the mortgage the 
mortgagee will be a lessee as previous to the mortgage. This was a term 
agreed upon between the parties and the respondent cannot resile from 
this term. [Paras 9and10] [541-A, B, C] 
G 
Gopalan Krishnakutty v. Kunjamma Pillai Sarojini Amma, (1996] 
H 
3 SCC 424; Cheriyan Sosamma and Ors. v. Sundaressan Pillai Saraswathy 
r 
Amma and Ors. [1999] 3 SCC 25 and Narayan Vishnu Hendre and Ors. 
v. Baburao Savalaram Kothawal, [1995] 6 SCC 6Q8, relied on. 
Shah Mathuradas Mangan/al and Co. v. Nagappa Shankarappa 
HASTHIMAL AND SONS v. P. TEJ RAJ SHARMA 
539 
[KATJU, J.] 
Ma/age and Ors., (1976] 3 SCC 660, distinguished. 
A 
3. The mere fact that the owner creates a mortgage, in favour of 
the lessee is not by itself decisive to hold that the prior lease was 
surrendered and the possession of the earlier lessee is only that of a 
mortgagee on creation of the mortgage, and it depends upon the intention B 
of the parties at the time of the execution of the mortgage. There was 
a specific term in the mortgage deed dated 19.3.1980 that on redemption 
of the mortgage, the mortgagee shall become the lessee of the 
mortgagor automatically as previous to the mortgage deed. Hence, there 
was a clear intention between the parties that the tenancy will continue C 
when the mortgage is redeemed. It would, however, be open to the 
respondent to file a suit or proceeding for eviction of the app
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