NIRMAL CHANDRA versus VIMALCHAND

Citation: [2001] 3 S.C.R. 571 · Decided: 08-05-2001 · Supreme Court of India · Bench: D.P. MOHAPATRA · Disposal: Dismissed

Judgment (excerpt)

' I 
NIRMAL CHANDRA 
A 
v. 
VIMALCHAND 
~ 
MAY 8, 2001 
[D.P. MOHAPATRA AND BRIJESH KUMAR, JJ.] 
B 
Transfer of Property Act, 1882-S.83-Landlord--Mortgage of leased 
property in favour of tenant-Redemption of mortgage-Termination of 
tenancy rights-Whether automatic?-Held, No-There can be no automatic 
merger of mortgage and lease and both operate independent of each other- c 
Unless there is express or implied intention to the contrary, on redemption 
of mortgage, lease would revive and tenant entitled to continue in possession-
... 
:Moreover, relief of possession cannot be granted to landlord under S. 83-
Landlord has to file eviction suit under the relevant provisions of Rent 
Control Act-Madhya Pradesh Accommodation Control Act, 1961-S.12. 
D 
Appellant-landlord executed a registered mortgage deed in respect of 
a shop in favour of respondent-tenant According to the terms & conditions 
x 
of the mortgage, appellant was entitled to get the mortgage redeemed on 
expiry of ten years. Condition no. 1 of the Mortgage deed laid down that the 
interest on mortgage money and rent would be equal. Whereas Condition no. E 
4 provided that after redemption of mortgage, the mortgagor/lessor would 
use the shop for his own purpose for at least three years and if in case it 
was given on rent, the mortgagee shall have the right to take back possession 
_., 
in his capacity as tenant On completion of stipulated period, appellant-landlord 
::..._ 
made a request for redemption of the mortgage and served a notice to that F 
effect without any avail Thereafter, respondent-landlord filed a petition under 
Section 83 of the Transfer of Property Act, which was allowed by Trial Court 
directing respondent-tenant to hand over the possession of the property. 
However, on Revision Single Judge of High Court set aside the order of trial 
Court holding that tenancy rights had not been surrendered and on redemption 
of mortgage, the respondent-tenant would be entitled to continue in possession G 
as tenant of the premises; tenancy rights could be brought to an end only 
under the provisions of Madhya Pradesh Accommodation Control Act Hence 
the present appeal. 
·' 
~ 
Dismissing the appeal, the Court 
H 
571 
572 
SUPREME COURT REPORTS 
[2001] 3 S.C.R. 
A 
HELD : 1.1. There is no automatic merger of mortgage and lease rights 
where mortgage is executed in favour of a ten?Jlt and on redemption of 
mortgage, the tenancy rights kept in abeyance would revive and entitle the 
+ 
tenant to continue in possession even after the redemption of the mortgage. 
On execution of mortgage, tenancy rights would terminate ~nly if it is clear 
B expressly or impliedly by conduct or other related circumstances that the 
parties had intended so, which would be a question of fact. Thus, as a normal . 
rule except if intention being to the contrary, mortgage and lease operate 
independent of each other and on mortgage coming to an end by redemption, 
tenancy would revive. [577-B-C] 
C 
Gambangi Appa/aswamy Naidu and Ors. v. Behara Venkataramanayya 
D 
Patro, AJR (1984) SC 1728; Gopal Krishnankutty v. Kunjamma Pillai Sarojini 
Arna and Ors., AIR (1996) SC 1659; Narayan Vishnu Hindre and Ors. v. 
Baburao Savalaram Kathawale, [1995] 6 SCC 608; Nemi Chand v. Onkar 
Lal, AIR (1991) SC 2046 and Nand Lal and Ors. v. Sukh Dev andAnr., (1987] 
Supp. SCC 87, relied on. 
1.2. In the instant case, Condition No. 1 of the mortgage deed provides 
that the payment of rent is kept alive. It is sought to be adjusted by the 
amount of interest payable by the mortgagor-lessor to the lessee. Thus, it 
is quite clear that element of tenancy and payment of rent operated through-
E out the period of mortgage. It is not denied that during all this period, the 
tenant remained in actual possession. His status as a tenant never ceased 
as amount of interest to which he was entitled to was adjusted towards rent 
payable by him as a tenant of the accommodation to the landlord. Where rent . 
is kept alive, it runs contrary to the intention or conduct of the parties 
leading to any inference of surrender of lease. Further Condition no. 4 nowhere 
F speaks of surrender of tenancy by the lessee. It only provides that for at least 
three years shop will be in personal use of the landlord failing which there 
would be revival of the mortgagee's capacity as tenant. Such a condition 
cannot be said to be a clear intention of surrounding the lease rights in the 
property. [577-G-H; 578-A~C] 
G 
2. H

Excerpt shown. Read the full judgment & AI analysis in Lexace.