LexJADAVJI PURSHOTIAM versus DHAMI NAVNITBHAI AMARATLAL & ORS.
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A JADAVJI PURSHOTIAM v. DHAMI NAVNITBHAI AMARATLAL & ORS. SEPTEMBER 9, 1987. 13 [SABYASACHI MUKHARJI AND S. NATARAJAN, JJ.) Saurashtra Rent Control Act, 1951: Lease of mortgaged premises by mortgagee beyond the term of the mortgage-Mortgagee not autho- rised to create such tenancy-Whether mortgagors entitled to possession on redemption-Tenant whether necessary party to execution appli· C cation-Whether tenancy rights protected under the Rent Act. Transfer of Property Act, 1882: s. 98-Anomalous mortgage- Rights of parties. The respondents mortgaged a house property in Bhavnagar with II> possession to a business firm in July, 1947. The ground floor of the house was already in the occupation of a tenant and hence the mort- gagors endorsed the rent deed to the mortgagee for the remaining period of the lease. Clause 5 of the mortgage deed gave option to the mortgagee to give the house property on rent to anyone and made the mortgagors acconntable for loss of rental income. Clause 7 empowered E the mortgagee to keep the property in his possession till the mortgage debt was repaid. Clause 10 entitled the mortgagors to redeem the mort- gage at any time and stated that as soon as redemption took place, the mortgagee should return the documents of title and re-deliver posses- sion of the house to the mortgagors. Notwithstanding the mortgage purporting to be possessory the deed provided for payment of interest, F and for the mortgagee to demand repayment of the mortgage amount at any time it deemed fit. When the existing tenant vacated the portion occupied by him, in November, 1956, the mortgagee inducted the appellant as a tenant. The Saurashtra Rent Control Act, 1951 had in the meantime come into G force. This was replaced by the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 with effect from I.1.1964. The eject- ment proceedings initiated by the mortgagee against the tenant- appellant were pending when the mortgage was discharged in October, k 1972 in terms of the memo of compromise, which stated that the ground floor of the house had been given on rent to the appellant, that the H mortgagee had filed a case against him, that in such circumstances the 76 - < ~ ~ JADAVJI PURSHOITAM v. D.N. AMARATLAL 77 vacant possession of the ground floor could not be delivered, and that the mortgagors were entitled to obtain vacant possession of the said portion from the appellant. In the execution proceedings taken out by the mortgagors thereafter the executing court held that they were en- titled to get only symbolic delivery and not physical possession of the leased property. The High Court held that as the mortgage was an anomalous mortgage, the rights of the mortgagee have to be determined with refe- rence to the terms of the mortgage deed, that though the mortgage deed permitted the mortgagee to create tenancies, the said permission did not extend to granting lease beyond the term of the mortgage and it was subject to the stipulation in the mortgage deed that the mortgagee should deliver possession whenever the mortgage was redeemed, and hence when the mortgagee's right to possession came to an end, he ceased to be a lessor and the appellant was bound to surrender possession and he had no right to invoke the provisions of the Rent Acts to continue his tenancy, and that the appellant was not a necessary party to the suit or the execution application, as his possession was akin to that of a sub-lessee and the execution application was therefore legally maintain- able against him. In this appeal by certificate it was contended for the appellant- tenant that his tenancy rights were protected under the Saurashtra Rent Act and the Bombay Rent Act, that the mortgagors had given an unrestricted power to the mortgagee to create a tenancy for any length of time, and were therefore, bound to accept the lease transaction even after the redemption of the mortgage deed, that his tenancy rights became enlarged by the subsequent legislation enacted for affording protection to tenants, and that by reason of the authority given to the mortgagee to create tenancy the mortgagors had constituted the mort- gagee as their agent and hence they as principals were bound by the acts of their agent. Dismissing the appeal, HELD: I.I A tenancy created by a mortgagee in possession may be binding even after the termination of the title of the mort- gagee in possession if the mortga
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