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2007 (2) PUNJAB LAW JOURNAL 0306

PUNJAB AND HARYANA HIGH COURT
Nirmal Yadav, J.
Regular Second Appeal No. 2024 of 1982, D/11.05.2007.
Jarnail Singh -Appellant
Vs
Nardev Singh & Others -Respondents
Transfer of Property Act, 1882, Section 76 - Mortgage - Lease of mortgaged property
by mortgagee - Implications - Mortgagee cannot act in a manner detrimental to the
mortgagor's interest during subsistence of mortgage - Cannot grant lease to any one which
may enable lessee to acquire permanent or occupancy right as tenant in the land and there by
defeating the mortgagor's right to possession. (Para 8)
Title - A person cannot by transfer or otherwise, confer better title on another than he
himself has. (Para 8)
Transfer of Property Act, 1882, Section 76 - Mortgage - Liabilities of mortgagee - (i)
Mortgagee cannot create an interest in the mortgage property which will enure beyond the
termination of his interest has mortgagee, (ii) Mortgagee in possession of mortgaged property
must manage it as a person of ordinary prudence would manage it if it were his own, (iii)
Mortgagee must not commit any act which is destructive or permanently injurious to the
property. (Para 8)
Transfer of Property Act, 1882, Section 72, 76 - Mortgage -Lease of mortgaged
property by mortgagee - Redemption of mortgage - Whether possession of tenant is
co-terminus with mortgagee - Relationship of lessor and lessee cannot subsist beyond the
mortagee's interest unless this relationship is agreed by mortgagor. (Para 10)
Transfer of Property Act, 1882, Section 72, 76 - Mortgage - Lease of mortgaged
property by mortgagee - Redemption - Possesion of tenant co-terminus with mortgagee -
Exception - Tenant can continue in possession dispite redemption by proving that - (i) tenancy
was created by mortagee as an act of prudent management, (ii) tenancy was protected by
statute, (iii) mortgagor consented to creation of tenancy by mortgagee. (Para 10 & 11)
Transfer of Property Act, 1882, Section 76 - Mortgage - Lease by mortgagee without
consent of mortgagor - Redemption of mortgage - Implications - Mortgagee's rights
extinguished by redemption of mortgaged property - Neither mortgagee nor tenant inducted by
him has right to been possession of mortgaged property - Tenant had no independant right to
continue in possession - His possession his akin to sub tenant, whose rights are coterminus with
those of tenant itself. (Para 11)
Cases referred:
1951 (3) SCR 775, Mahabir Gope v. Harbans Narain Singh 2001(1) R.C.R. (Rent) 4, Puran
Chand v. Kirpal Singh 1958 SCR 988 , Asa Ram v. Mst. Ram Kali AIR 1987 SC 2146,
Jadavji Purshottam v. Dhami Navnitbhai Amaratlal AIR 1989 SC 436, Pomal Kanji
Govindji v. Vrajlal Karsandas Purohit AIR 1988 SC 108: Om Prakash Garg v. Ganga Sahai
AIR 1989 SC 436, Om Prakash Garg v. Ganga Sahai AIR 1988 SC 299, Hanumant Kumar
Talesara v. Mohan Lal

ORDER

Nirmal Yadav, J. - Respondent No. 3 (Bachan Singh) was the owner of the land,
measuring 50 kanals 12 marlas, situated in the area of Village Jodhipur Pakhar. He mortgaged

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the suit property with possession to respondent No. 2 (Puran Singh), vide report dated
10.06.1968, for a consideration of Rs. 25, 000/-. On the basis of the said report, mutation No.
7386, was entered. Respondent No. 3 (Bachan Singh) alienated the suit land to the plaintiff-
respondent No. 1 (Nardev Singh), vide registered sale deed dated 27.05.1975, for a
consideration of Rs. 40, 000/-, out of which Rs. 15, 000/- were paid to Bachan Singh-vendor
(Respondent No.3) before the Sub Registrar and Rs. 25, 000/- were to be paid to respondent No.
2 (Puran Singh), as he had stepped into the shoes of Bachan Singh. According to plaintiff-
respondent No. 1 (Nardev Singh), he is ready and willing to pay the entire mortgage amount to
Puran Singh (Respondent No. 2), which he had already offered to him many a times, however,
he had been putting off. Respondent No. 2 (Puran Singh) further handed over the possession of
the suit land to appellant-Jarnail Singh; for the purposes of cultivation. Therefore, plaintiff-
Respondent No. 1 (Nardev Singh) filed a suit for possession by way of redemption of the
aforestated suit land. The trial Court, after taking into consideration the facts and
circumstances, decreed the plaintiffs suit for possession by redemption on payment of Rs. 25,
000/- to respondent (Puran Singh) subject to the possession of Jaranail Singh, a bonafide tenant
over the suit land. Plaintiff (Nardev Singh) was given three months time to deposit or pay the
requisite amount. Thereafter, Nardev Singh assailed the validity of the judgment and decree
dated 01.12.1980 passed by the trial Court on the issue No. 7-A, which read as under:-

'7A. Whether Jaranail Singh is a bona fide tenant under the mortgagee? If so, its effect?'

2. The first Appellate Court partly accepted the appeal and modified the judgment and
decree passed by the trial Court, granting a preliminary decree against Puran Singh, the mortgagee,
Banchan Singh, the mortgagor, and in favour of the plaintiff for possession by redemption of the suit
land on payment of Rs. 25, 000/- to Puran Singh, mortgagee, within three months from the date of
decree. It was further held that Jarnail Singh was not a bona fide tenant, therefore, he would be
legally bound to hand over the possession of the land to the plaintiff.

3. Since aggrieved against the judgment and decree passed by the first Appellate Court, the
appellant (Jarnail Singh) has filed the present second regular appeal in this court.

4. I have heard the learned counsel for the parties and have gone through the record of the
case.

5. The basic question of law as raised by learned counsel for the appellant, in this appeal, is
whether possession of the tenant is co-terminus with the mortgagee or he is entitled to protect his
possession, as the land was leased out to him by the mortgageee as a prudent manager? Learned
counsel for the appellant argued that, as a normal practice, the right of mortgagee's tenant to continue
in possession is co-terminus with the mortgagee's right on the principle that `no one can give a better
right than he himself has'. However, there is an exception to the above principle. According to it, a
lease created by the mortgagee, may be binding on the mortgagor in certain circumstances. In
support of his argument, learned counsel for the appellant has referred to a judgment of Hon'ble the
Supreme Court in Mahabir Gope and others v. Harbans Narain Singh and Others, 1951 (3) SCR 775,
wherein this exception has been recognized. Following passage explains the above mentioned
circumstances:-

'A permissible settlement by a mortgagee in possession with a tenant in the course of

prudent management and the springing up of rights in the tenant conferred or created by statute based
on the nature of the land and possession for the requisite period is a different matter altogether. It is
an exception to the general rule. The tenant cannot be ejected by the mortgagor even after the
redemption of the mortgage. He may become an occupancy raiyat in some cases and a
non-occupancy raiyat in other cases. But the settlement of the tenant by the mortgagee must have
been a bonafide one. This exception will not apply in a case where the terms of the mortgage prohibit
the mortgagee from making any settlement of tenants on the land either expressly or by necessary
implication.'

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6. From the above observations made by the Apex Court in Mahabir Gope Case's (supra), it
is evident that the exception will apply only when the mortgage deed expressly or by necessary
implication gives the mortgagee the power to execute the lease. In addition the tenancy should have
been created bona fide in the course of prudent management as provided under Section 76(1) of the
Transfer of Property Act, 1882, so that the right of the tenant must be protected by statute.

7. On the other hand, learned counsel for respondent No. 1 argued that the mortgagor had
not empowered the mortgagee to create a lease, which would be binding on him after the redemption
of the mortgage and the tenant's right, as a tenant, did not enlarge by means of any Tenancy
legislation, which came to be enacted after the lease was granted. The tenant could claim tenancy
right only against his landlord and not against the mortgagor. In support of his arguments, learned
counsel has referred to a Judgment in `Puran Chand (Dead) through Lrs. Vs. Kirpal Singh (Dead)',
2001(1) R.C.R. (Rent) 4. He further argued that as soon as the mortgagee's right was extinguished by
the redemption of the mortgage, neither he nor any one inducted by him has a right to be in
possession of the mortgaged property. Therefore, the mortgagor is entitled to seek ejectment of the
mortgagee and the tenant inducted by him. In support of his arguments, learned counsel for
respondent No. 1 has also referred to various judgments of Hon'ble the Supreme Court in Asa Ram v.
Mst. Ram Kali, 1958 SCR 988 and Jadavji Purshottam vs. Dhami Navnitbhai Amaratlal, AIR 1987
SC 2146.

8. On a careful consideration of the rival submissions, I do not find any ground to interfere
with the judgment and decree passed by the Court below. A perusal of the judgments, referred to
above, would clearly show that, as a general rule, a person cannot, by transfer or otherwise, confer a
better title on another than he himself has. A mortgagee, therefore, cannot create an interest in the
mortgaged property which will enure beyond the termination of his interest as mortgagee. He, who
takes possession of the mortgaged property, must manage it as a person of ordinary prudence, would
manage it if it were his own. He must not commit any act which is destructive or permanently
injurious to the property. He may grant lease (s) not extending beyond the period of the mortgage and
any lease granted by him beyond the said period must come to an end at redemption. It is well
established that a mortgagee cannot act in a manner detrimental to the mortgagor's interests during
the subsistence of the mortgage and he cannot grant lease to anyone which may enable him to
acquire permanent or occupancy rights as tenant in the suit land and thereby defeating the
mortgagor's right to possession.

9. In the present case, appellant Jarnail Singh did not press issues No. 1 to 6 and the only
argument raised was with regard to issue No. 7-A, reproduced above. The trial Court had decided
issues No. 1 to 6 against the defendants and in favour of the plaintiff. The onus to prove the said
issue was on Jarnail Singh (appellant). It is evident from the pleadings and the documents on record
that respondent No. 3 Bachan Singh had alienated the suit land in favour of plaintiff Nardev Singh,
vide registered sale deed dated 27.05.1975. He received consideration of Rs. 15, 000/- and Rs. 25,
000/- was to be paid to Puran Singh, to whom the land in suit had been mortgaged by Bachan Singh
for a consideration of Rs. 25, 000/-.

10. Admittedly, Puran Singh, the mortgagee, had inducted Jarnail Singh as a tenant,
however, it is not proved as to when was he inducted as a tenant over the suit land. The revenue
record pertaining to the year 1970 to the year 1974-75, do not indicate that Jarnail Singh was in
possession of the land as a tenant under Puran Singh, mortgagee. However, later on correction of the
said entries was made with regard to Khasra girdawari for the year 1970-71. There is no evidence on
record that Jarnail Singh had been inducted as bona fide tenant over the suit land by Puran Singh,
mortgagee. There is nothing on record to prove that the original owner had mortgaged the property
by giving an absolute right to the mortgagee to transfer or induct any tenant over the suit property.
The relationship of lessor and lessee cannot subsist beyond the mortgagee's interest unless this
relationship is agreed by the mortgagor. Bachan Singh as well as Puran Singh had appeared as
witnesses. According to Puran Singh, as per writing Ex. D1, he had given this land for cultivation
purposes to Jarnail Singh. However, it is nowhere stated that Jarnail Singh had been inducted as a

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bonafide tenant for the proper management of the property. The basic issue in the present case, is as
to whether appellant (Jarnail Singh) had been inducted as bonafide tenant by the mortgagee Puran
Singh and whether it was an act of prudent management? This issue has been considered threadbare
by the Apex court in Mahabir Gope and Others case's (supra) and the said case has further been
considered by the Apex court in number of decisions reported as Jadavji Purshottam vs. Dhami
Navnitbhai Amaratlal, AIR 1987 SC 2146; Pomal Kanji Govindji vs. Vrajlal Karsandas Purohit, AIR
1989 SC 436; Om Prakash Garg vs. Ganga Sahai, AIR 1988 SC 108 and Hanumant Kumar Talesara
vs. Mohan Lal, AIR 1988 SC 299. In all these cases, referred to above, it has been laid down that the
tenant can continue in possession despite redemption by proving (i) that the tenancy was created by
the mortgagee as an act of prudent management; and (ii) was protected by statute. The tenant has to
over-come the hurdle to establish the consent of the mortgagor to the creation of the tenancy by the
mortgagee and he has to further prove the ingredients of Section 76(1) of the Act, which provide that
the mortgagee must manage the property as a person of ordinary prudence would manage if it were
his own. In the present case, the appellant-tenant has failed to do the same. Even the appellant has
also not been able to prove that he is governed by any statutory protection to continue in occupation
as tenant despite the redemption of the mortgaged property. There is nothing on record to prove that
there was any concurrence or approval of the mortgagor for his continuing as a tenant after the expiry
or redemption of mortgaged property and, therefore, no landlord and tenant relation existed between
the tenant and the mortgagor. The Apex Court in Pomal Kanji Govindji case's (supra) has held that
except in cases where the leases specifically and categorically make exceptions in favour of the
tenants that they would continue to be in possession even after the expiry or termination of the
mortgage and those leases are an act of prudent management, the tenant inducted by the mortgagee
would be entitled to the protection under the Act after the redemption of the mortgaged property and
in no other case.

11. From above discussion, it is evident that it is not the case of the appellant-tenant that the
mortgagor had empowered the mortgagee to induct the tenant who would continue in possession
even after the redemption and expiry of the mortgage. As soon as the mortgagee's right was
extinguished by redemption of mortgaged property, neither he nor the appellant-tenant inducted by
him has a right to be in possession of the mortgaged property. The appellant- tenant had no
independent right to continue in possession of the suit property, as his possession is actually akin to a
sub tenant whose rights are co-terminus with those of the tenant itself. Both the Courts below have
clearly held that mortgagor Bachan Singh had not empowered the mortgagee to create a lease, which
would be binding on the owner after the redemption of the mortgaged property, therefore, the
appellant's right as a tenant was not enlarged by means of any tenancy legislation. The tenant can
claim the tenancy right only against its landlord i.e. Puran Singh, mortgagee or his successor-
in-interest. As soon as the mortgagee's right became extinguished by way of redemption of
mortgaged property, neither he nor anyone inducted by him has a right to be in possession of the
mortgaged property. The mortgagee, who puts the rights of the original owner in peril, cannot be
regarded as that of the prudent owner. Therefore, any exception to the established law that no person
can transfer property so as to confer on the transferee a title better than what he possesses, would not
be applicable in the present case. The action of Puran Singh, mortgagee, in leasing out the land to the
appellant was neither prudent nor bonafide, therefore, it would not be binding on the mortgagor or
his successor-in-interest. Plaintiff-respondent No.1 (Nardev Singh) had purchased the suit property
from Bachan Singh, original mortgagor, vide registered sale deed dated 27.05.1975. It is stated at the
Bar that Puran Singh, mortgagee, has already withdrawn the mortgage amount.

12. During pendency of present appeal, appellant Jarnail Singh was directed to pay the rent
at the rate of 1/3rd batai to Nardev Singh (respondent No. 1) with effect from the date, the mortgage
amount was deposited by Nardev Singh in the trial Court. Nardev Singh filed a civil miscellaneous
application, stating therein that appellant (Jarnail Singh) had complied with the order of this Court
only for some time and thereafter he had not deposited the amount, as directed by this Court and, as
such, he be directed to deposit the mesne profit for the period, which, he has not deposited. Appellant
is directed to deposit the arrears of rent within three months, after the same is assessed in accordance
with law, which would be paid to Respondent No.1 (Nardev Singh).

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13. Taking into consideration the above discussion, the appeal is dismissed with costs and
the appellant is directed to hand over the possession of the suit land to respondent No. 1 (Nardev
Singh) as well as the arrears of rent, as ordered above.

Appeal dismissed.

Appeal dismissed.
*****

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