MATHURALAL versus KESHAR BAI AND ANOTHER

Citation: [1970] 3 S.C.R. 724 · Decided: 20-02-1970 · Supreme Court of India · Bench: S.M. SIKRI · Disposal: Dismissed

Judgment (excerpt)

MATHURALAL 
v. 
KESHAR BAI AND ANOTHER 
February 20, 1970 
[S. M. SIKRI, V. BHARGAVA AND G. K. MITTER, JJ.J: 
Mortgage-Mortgagee given possession of mortgaged house-Leasing 
house to mortgagor under rent note executed simultaneously with mortgage 
deed-Preliminary decree passed in suit. for enforcement of mortgage-.-
Application for final decree time barred-Subsequent suit for ejectment pf 
lnortgagor filed by niortgagee whether maintainable-Rights of mortgagee 
whether merged in 
preliminary 
decree-Relevance of Limitation 
ACt, 
1908, s. 28. 
On July 29, 1945 the predecessor-in-interest 
of the appellant mort-
gaged his house in Ratlam to K for a sum of Rs. 3,100 with possession. 
According to the deed of mortgage interest would run on the said sum at 
Rs. C>-10-0 per cent per annum till realisation. The period elf redemption 
was two years. 
Simultaneously with the mortgage a rent note was execut-
ed by and between the parties under which the mortgagor was to continue 
to occupy the premises at a rental of Rs. 20/ - per month. The rent note 
provided inter alia that if the executant (i.e. mortgagor) made default in 
payment of two months' rent the mortgagee would be entitled to get him 
evicted. 
The mortgagee was also entitled to increase or decrease the rent 
and the executant was to vacate the house whenever asked to do so. K filed 
a suit on his mortgage in 1954 and a preliminary decree was passed in hie 
favour. 
On his death his legal 
representatives 
were substituted in his 
place on record. 
For some reason no application for a final decree for 
sale of the property was made within the period fixed under the Limita-
tion Act. The application for this purpose made by the executors to the 
estate elf K was dismissed on July 29, 1960 as barred by limitation. On 
December 27, 1960 the said executors filed a suit for ejectment of the 
appellant alleging that the rent for the premises had remained unpaid from 
September 19, 1957 till November 28, 1960. The trial judge dismissed 
the suit. In first appeal the plaintiff's claim was allowed in full. The High 
C'.ourt in second appeal 
maintained the decree of the appellate court. 
Appeal by special leave was filed in this Court against the High Court's 
judgment. It was contended by the appellants that : (i) The rent note 
~~ecuted simultaneously with the mortgage was 
a mere device to secure 
payment of interest and did not represent 
an independent transaction. 
FL!rther it did not create any relationship of landlord and tenant; (ii) The 
plaintiffs'' right as mortgagee merged in the decree and execution thereof 
being barred by the Jaws di limitation the plaintiffs had lost all their rights; 
(iii) The mortgage being- extinguished the mortgagor could not bring a 
suit for redemption on account of s. 28 of the Limitation Act, 1908. 
HELD : The appeal must be dismissed. 
( 1) The contents of the documents executed 
by the parties showed 
that the relationship between the parties was not simply that of a mortgagee 
and mortgagor-the creditor also had 
the rights of a landlord qua his 
tenant besides other rights conferred 
on him 
which 
were greater than 
those possessed by an ordinary landlord. [728 F] 
In all such cases the leasing back of the property arises because of the 
mortgage with possession. It cannot however be held that the mortgagee 
724 
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MATHURALAL v. KESHAR BM tMitter, J.) 
725 
does not secure to himself any rights under the deed of lease but must 
proceed on his mortgage in case the amount secured to him under the 
deed of lease is not paid. If the security is good and considered to be 
sufficient by the mortgagee there is no reason why he should be driven .to 
file a .suit on his mortgage when he can file a suit for realisation of the' 
moneys due under the rent note. The position of the creditor is streng-
thened where as in the present case, the interest on the amount of the 
mortgagee is not the same as the rent fixed. If during the continuance of 
the security the mortgagee wanted to sue the mortgagor on the basis of 
the rent note and take possession himsel1I or to induct some other tenant 
thereby securing to himself the amount which the mortgagor had covenant-
ed to pay, there could be no legal objection to it. 
Under the provisions 
of 0.34 r. 4 of the Code of Civil Procedure he could deprive the mort-
gagor of his right to redeem excepting by proceeding on his mortgage. It 
m,ay be (without a f

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