SAMBANGI APPLASWAMY NAIDU & OTHERS versus BEHARA VENKATARAMANAYYA PATRO AND OTHERS

Citation: [1985] 1 S.C.R. 651 · Decided: 28-08-1984 · Supreme Court of India · Bench: V.D. TULZAPURKAR · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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SAMBANGI APPLASWAMY NAIDU & OTHERS 
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. BEHARA VENKATARAMANAYYA PATRO AND OTHERS 
August 28, 1984 
[V.D. TULZAPURKAR AND M.P.TAAKKAR, JJ.] 
·Landlord and tenant relationship-Whether upon redemption of uSufruc. 
tuary mortgage a tenant mortgage could be directed to deliver the actual ond-
phys;cal possession of the mortgaged property to the /essor-Mortgagor-}Jerger 
ofa lease and a mortgage ;n respect oft he same property, whether there can be-
Trnnsfer pf property Act, 1882 Sections 58, 101 and /OS-Interpretation of 
deeds. 
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RespoDdent9, predecessor Behara Venkataramanayya Patro executed 
two deeds dated 30.8-1939 and 25.8-1942 in favour of one Sambaagi Thaviti-
naidoe, who was then a sitting tenant of the property. In 1951 the mortgagor 
filed a suit for redemption of the mortgages and obtained a preliminary decree 
on 31-12-1952. Subsequently, the mortgagor died and the-present respondents 
were brought on re~ord as his legal representatives. On 21-10-1963 the res-
pondent filed an application for pas,ing a final decree by way of ascertainment 
of the amount due and for delivery of possession upon deposit of entire dues 
so ascertained. The application was resisted by the appeliants on several 
grounds .. According to them, on redemption, relationship of landlord and 
tenant would revive which needed to be protected and the delivery should be 
of aymbolical possession only. The learned trial judge allowed the application 
' -but on arl appeal preferred, the Additional District Judge SrikakuJam took 
a cOntrary view relying upon Varada Bangar Raju's case AIR (l96S) A.P. 86. The 
respondents, therefore, preferred a second appeal and the fearned Single 
Judge of the A.P. High Court relying upon a subsequent decision in P. Satya. 
narayana•s case ILR (1967) A.P. 1341 set aside the decision of the first 
Appellate Court. Letters Patent Appeal p!eferred by the te_nant mortgag~es 
to the Division Bench of the High Court failed and hence this appeal by Spe-
cial Leave to this Court. 
Allowing the appeal. the Court 
HELD : 1 : 1 There can be no merger of a lease and a mortgage, even 
where the twO transactions are in respect of the sam~ property. [6SSC] 
1 : 2 It is well-settled that for a merger to arise. it is necessary that 
less.er estate ·and a - higher estate should merge in one person at one and the 
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s1me time and in the s:i ne ri3ht and no interest in the proverty should remain 
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B 
652 
SUPREME COURT REPORTS 
( 1985] 1 S.C.R. 
outstanding. Jn the t:ase of a lease, the es tale 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 n1erger 
of a lease and a mortgage in respect of the sa1ne property since neither of them 
is a higher or lesser estate than the other. Even, if the rights of the lessee and 
the rights of the mortgagee in respect of a property were to be united in one 
person the reversion in regard to the lease and the equity of redemption in 
regard to the mortgage, would be outstanding in the owner of th<: property and 
accordingly, there would not be a co1nplete fusion of all the rights of ownership 
in one person. [6SSD·F] 
Shah Mathurdas Magan/al & Ca, v, Naogappa Shankarappa & Ors.A.l.R 
1976 S.C. 1565 followed. Narayana Dogra Shetty v. Ramchandra Shivrarn 
C 
Hingne 65 Born. L.R. 449, approved. 
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2. Whether upon redemption of usufructuary mortgage a tenant mort-
gagee could be directed to deliver actual or physical possession of the mortga. 
ged property to the lessor mortgagor and whether the original re ationship of 
landlord and tenant would revive upon redemption of usufructuary mortgage 
by a tenant mortgagee in possession of the n1ortgaged property by delivering 
possession to the lessor mortgagor, will deper.d upon whether there was an 
implied surrender of the Jessee's right when the usufructuary mortgage was 
execcutcd which in turn depends upon \vhat was the intention of the parties at 
the time of the execution of the mortgage deed in favour of the sitting tcn<'lnt 
to be gathered from the terms of and conditions of the mortgage transaction in 
light of the surrounding circumstance of the case. 
[656C.D 655G-H; 656A] 
2 : 2 
In the instant case, the only effe:;t of the execution of usufr1.1c-
tary mortgage deeds \Vas that the lessee's right wer.;: kept in abeyance and they 
revive upon red
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