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Wednesday, August 21, 2013

Mortgage & Section 52 of the Transfer of Property Act, 1882= whether the mortgagor can induct a person as tenant in a mortgaged property, to the prejudice of the mortgagee, pendente lite, in violation of Section 52 of the Transfer of Property Act, 1882. - No = Section 52 of the TPA prevents a mortgagor from creating any lease during the pendency of mortgaged suit so as to effect the right of a mortgagee or the purchaser. This Court in Mangru Mahto and others (supra) had -an occasion to consider the scope of Section 52 of the TPA in that very context and held as follows: “……………..But in view of Section 52 of the Transfer of Property Act, if the mortgagor grants such a lease during the pendency of a suit for sale by the mortgagee, the lessee is bound by the result of the litigation. If the property is sold in execution of the decree passed in the suit, the lessee cannot resist a claim for possession by the auction-purchaser. The lessee could apply for being joined as a party to the suit and ask for an opportunity to redeem the property. But if he allows the property to be sold in execution of the mortgage decree and they have now lost the present case, the lessees allowed the suit lands to be sold in execution of the mortgage decree and they have now lost the right of redemption. They cannot resist the claim of the auction purchaser of recovery of possession of the lands.”- Section 65-A of the TPA deals with the mortgagee’s powers to lease. However, in view of Section 52, if the mortgagor grants such a lease during the pendency of a suit for sale by the mortgagee, the lessee is bound by the result of litigation and if the property is sold in execution of the decree, the lessee cannot resist a claim for possession by auction purchaser.- A tenant who is inducted during the subsistence of the mortgage is not entitled to get the protection of the Maharashtra Rent Act. This legal position has been settled by this Court in Om Prakash Garg v. Ganga Sahai and others AIR 1988 -SC 108. - In the above-mentioned circumstances, we are of the view that the courts below have not appreciated the various legal issues and committed an error in non-suiting the appellant. We answer those questions in favour of the appellant and hold that the appellant is entitled to get a decree, as prayed for, since the original first respondent was inducted illegally and to the prejudice of the original mortgagee. Consequently, the judgments of the courts below are set aside and the suit is decreed, however, without any mesne profits. The appeal is allowed, but without any order as to costs.

                               published in    http://judis.nic.in/supremecourt/imgst.aspx?filename=40663           
                    REPORTABLE
                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION
                        CIVIL APPEAL No. 6966 OF 2013
                [Arising out of SLP (Civil) No.12731 of 2007)


Sunita Jugalkishore Gilda                              .. Appellant
                                   Versus
Ramanlal Udhoji Tanna (Dead)
Thr. Lrs. and others                                    .. Respondents



                               J U D G M E N T


K. S. Radhakrishnan, J




       Leave granted.




2.    The  question  that  arises  for  our  consideration  is
whether  the
mortgagor can induct a person as tenant in  a  mortgaged  property,  to  the prejudice of the mortgagee, pendente lite, in violation  of  Section  52  of the Transfer of Property Act, 1882.


3.    Gangabai, the grand mother-in-law of the appellant,  was  a  mortgagee
in respect of a three storied building,  popularly  known  as  -Gowardhandas
Mathurdas Mohta, along with the suit premises and  open  space  situated  at
Nazrul Plot Nos. which was executed  by  one  Vijaysingh  Mohta,  father  of
Respondent Nos.2 and 3 for himself and as guardian  of  Respondent  No.2  on
24.03.1953.  A partition deed was executed by  Mohta  and  Respondent  Nos.2
and 3 on 11.1.1956.

4.    Gangabai, on 01.09.1956, filed a civil suit No.3-A/1956 for  enforcing
the mortgage in the court of the First Additional District Judge,  Amravati.
 On 02.03.1960,  Gangabai  also  purchased  the  ½  share  in  the  property
belonging to Mohta, with the leave of the court  in  auction.   The  auction
was confirmed by the  court  on  21.09.1960  in  favour  of  Gangabai  after
rejecting the objections raised by Respondent Nos.2 and  3.   On  25.11.1960
Gangabai was placed  in  joint  possession  of  the  mortgaged  property  in
execution by the civil court.


5.    Gangabai then filed a SCS No.1109 of 1961 and  1110  of  1961  against
two tenants for recovery of ½ share in  rent,  which  suits  were,  however,
dismissed by the trial court.  Gangabai, later, filed a revision before  the
High Court, which was allowed decreeing her claim for ½ share in  the  rent.
Gangabai, on 05.01.1963, filed a SCS -No.33 of 1963 against all the  tenants
including Respondent Nos.2 and 3 for a declaration and injunction  that  she
was the owner of ½ share in the property and entitled  to1/2  share  in  the
rent thereof from each of the tenants.  SCS No.33 of 1963 was later  decreed
by the civil court, Amravati on 23.03.1983 in favour of  Gangabai,  granting
the reliefs sought for.  Thereafter Respondent  Nos.2  and  3,  without  the
consent of Gangabai, however, started recovering rent from  Respondent  No.1
on the strength of some alleged rent receipts.  Brij Lal, the  real  brother
of Respondent No.1, who was also one of the tenants/defendants in the above-
mentioned suit, left the decreed premises, without raising any claim.


6.    The  First  Appeal  No.40  of  1959,  filed  by  Gangabai,  was  later
withdrawn on 20.03.1967 since final decree had  already  been  passed.   The
First Appeal No.72 of 1959 filed by Respondent Nos.2  and  3  was,  however,
allowed setting aside the preliminary  decree  dated  20.09.1958.   Gangabai
then preferred civil appeal No.582 of 1969 before this  Court  against  that
order, which was allowed on 09.04.1974, the judgment of  which  is  reported
in Smt. Gangabai  vs. Vijay Kumar and others (1974) 2 SCC 393.   This  Court
set -aside the judgment of the High Court and restored  that  of  the  trial
court.


7.    Respondent Nos.2 and 3 then filed SCS No.76 of 1974  in  October  1974
for setting aside the preliminary decree dated 20.09.1958 before  the  Civil
Judge, Senior Division, Amravati.  The suit  was,  however,  dismissed  with
costs by the civil court on 31.01.1980.  Respondent Nos.2 and 3  then  filed
RCA No.234  of  1980  before  the  District  Court,  Amravati.   Before  the
District Court, Amravati, Gangabai  and  Respondent  Nos.2  and  3  filed  a
compromise application and  21.08.1987 and  agreed  to  partition  the  suit
property.  District Judge, Amravati vide its order dated  12.10.1988  passed
a compromise decree  disposing  of  RCA  No.234  of  1980  in  view  of  the
compromise application  filed  on21.08.1987.   In  view  of  the  compromise
arrived at between Gangabai and Respondent Nos.2 and 3,  the  suit  property
was partitioned and the area occupied by Respondent No.1 came to  the  share
of Gangabai.  Respondent Nos.2 and 3, however, filed Second Appeal No.57  of
1989 challenging the compromise order dated  12.10.1989  before  the  Bombay
High Court, Nagpur Bench.  The second appeal was, -
however, dismissed by the High Court vide its judgment dated 31.08.1989.


8.    Gangabai then issued legal notice to  Respondent  No.1  on  05.10.1989
asking him to vacate the suit property contending that he was  a  trespasser
and had been occupying  the  suit  property  without  her  consent  and  the
transfer of interest made by Respondent No.2 and 3 in favour  of  Respondent
No.1 was hit by doctrine of lis  pendens.   Gangabai  following  the  above-
mentioned notice, preferred SCS No.6 of 1990  against  the  respondents  for
recovery of possession, damages for use  and  occupation  before  the  Civil
Judge,  Senior  Division,  Amravati.   Respondent  No.1  filed  his  written
statement claiming that he was a tenant  of  the  original  owners,  namely,
Respondent Nos.2 and 3.  The trial court vide its judgment dated  26.10.1994
dismissed the suit filed by Gangabai on the  ground  that  Respondent  Nos.2
and 3 being mortgagors were entitled to induct Respondent No.1 as a  tenant.
 The Court also  recorded  the  finding  that  Respondent  No.1  was  not  a
trespasser when he was initially  inducted  into  suit  property.   Gangabai
then preferred RCA No.7 of 1995 before the District Judge,  Amravati,  which
was also dismissed on 21.07.2003 on the  ground  that  -Section  44  of  the
Transfer of Property Act (for short the TPA) did not debar a  co-owner  from
inducting a tenant and Section 65 of the Act was inapplicable as  there  was
no relationship of mortgagor-mortgagee.


9.     Gangabai  later  bequeathed  the  suit  property  in  favour  of  the
appellant.  Consequently the appellant filed Second Appeal  No.548  of  2003
challenging the findings recorded by the trial  court  as  well  as  by  the
District  Court.   The  High  Court  by  the  impugned  judgment  found   no
substantial question of law which arose for its consideration and  dismissed
the appeal on 13.03.2007 against which this appeal  has  been  preferred  by
special leave.


10.   Shri V.A. Mohta, learned senior counsel appearing  for  the  appellant
submitted that the courts below  have  committed  a  serious  error  in  not
answering various substantial questions of law which were raised  for  their
consideration.  Learned senior counsel submitted  that  it  was  during  the
pendency of the litigation  that  Respondent  No.1  was  inducted  into  the
property in question without consent and to the  detriment  of  Gangabai  as
well as appellant’s interest and that Respondent No.1 had full knowledge of-

the pending litigation between Gangabai, on the  one  hand,  and  Respondent
Nos.2 and 3, on the other.  Gangabai had issued a notice to  the  tenant  on
05.01.1989 calling upon him to vacate the  suit  premises  and  he  did  not
vacate the premises consequently Gangabai had  to  file  a  civil  suit  for
possession and damages for use and occupation against the first  respondent.
 Learned senior counsel also submitted that the premises  in  possession  of
Brij Lal were got vacated and thereafter in  or  about  year  1965-66  first
respondent entered into possession without  the  knowledge  and  consent  of
Gangabai.  Learned senior counsel submitted that in view of  the  provisions
of Section 52 of the TPA a mortgagor  cannot  be  permitted  to  induct  any
person as a tenant in the mortgaged property which is the subject matter  of
litigation between the mortgagor and the mortgagee, to the prejudice of  the
mortgagee.  In support  of  his  contention,  reliance  was  placed  on  the
Judgment of this Court in Mangru Mahto and others v. Thakur  Math  AIR  1967
SC 1390.  Learned senior counsel submitted that the questions of law  raised
were not properly appreciated or considered by the courts  below  and  hence
calls for interference by this Court.


-
11.   Shri D.K. Pradhan, learned counsel appearing for the  respondents,  on
the other hand, submitted that first respondent was occupying  the  premises
as a  legally  inducted  tenant  peacefully  for  over  40  years  from  the
mortgagor and the mortgagor and the mortgagee being co-owners, there  is  no
bar in one co-owner, inducting a tenant in the  property.   Learned  counsel
also submitted that rent receipts produced by  the  first  respondent  would
indicate that he was  a  legally  inducted  tenant.   Learned  counsel  also
submitted that by virtue of Section 65  of  the  Code  of  Civil  Procedure,
though sale of the joint ½ share of  the  property  in  favour  of  Gangabai
became absolute on 09.04.1974 yet it would be deemed that joint ½  share  of
the property vested in her only in the  year  1960.   Learned  counsel  also
submitted that even though sale in question became absolute at a later  date
by assumption of law, the right in  property  purchased  was  deemed  to  be
vested in the purchaser only from the date of sale.   Learned  counsel  also
submitted that all these aspects and legal issues  were  considered  by  all
the courts below  and  they  have  concurrently  found  that  the  plaintiff
Gangabai or the appellant could not establish her right over  -the  property
in  question.   Learned  counsel,  therefore,  prays  that  the  appeal   be
dismissed with costs.


12.   We have narrated the facts in  detail  to  indicate  as  to  when  the
rights had been accrued to Gangabai.  Gangabai, as already stated, became  a
mortgagee of the property as early as in 1953 by a registered mortgage  deed
and the suit filed by Gangabai for enforcing the  mortgage  was  decreed  by
the civil court on 01.09.1956  and  that  preliminary  decree  later  became
final as against the share of Vijaysingh Mohta.  Gangabai purchased ½  share
in the mortgaged property from Mohta on 02.03.1960 which  was  confirmed  in
her favour by the civil court and was placed  in  joint  possession  by  the
executing court on 25.11.1960.  Facts would clearly indicate that the  first
respondent was inducted  as  a  tenant  while  all  these  proceedings  were
pending before the court and that the entry of  the  first  respondent  into
the suit property was not with the consent and knowledge  of  Gangabai  even
though she was a mortgagee of a portion of the property from  1953  onwards.
Several civil  suits  were  also  pending  between  the  mortgagor  and  the
mortgagee and it is during  the  course  of  those  proceedings,  evidently,
first respondent was inducted as a tenant.  The question  -is  whether  such
induction was in violation of Sections 52 and 65  of  the  TPA  and  to  the
prejudice of the mortgagee Gangabai.  On facts, we are  convinced  that  the
induction of the respondent was during the subsistence of the  mortgage  and
pendency of court proceedings and the legality of  that  action  has  to  be
tested on the touchstone of above statutory provisions  and  the  precedents
set by this Court.


13.   Rule of lis pendens applies  to  suit  on  mortgagee  as  well.   Lord
Justice Turner has succinctly dealt with this principle in the leading  case
of Bellamy v. Sabine (1857) 1 De G J 566 (Courtesy Mulla on T.P. Act).
  The
doctrine is intended to prevent one party to a  suit  making  an  assignment
inconsistent with the rights which may be decided  in  the  suit  and  which
might require a further party to be impleaded in  order  to  make  effectual
the court’s  decree.
 Law  is  well  settled  that  a  mortgagee,  who  has
purchased a mortgaged property  in  execution  of  his  mortgage  decree  is
entitled to  avoid a transfer on the ground that it  was  mortgaged  by  the
mortgagor during the pendency of a mortgage suit.
Section  52  of  the  TPA
prevents a  mortgagor  from  creating  any  lease  during  the  pendency  of
mortgaged suit so as to effect the right of a mortgagee  or  the  purchaser.
This Court in Mangru Mahto and others (supra) had -an occasion  to  consider
the scope of Section 52 of  the  TPA  in  that  very  context  and  held  as
follows:

      “……………..But in view of Section 52 of the Transfer of Property Act,  if
      the mortgagor grants such a lease during the pendency of  a  suit  for
      sale by the mortgagee, the lessee  is  bound  by  the  result  of  the
      litigation. If the property is sold in execution of the decree  passed
      in the suit, the lessee cannot resist a claim for  possession  by  the
      auction-purchaser. The lessee could apply for being joined as a  party
      to the suit and ask for an opportunity to redeem the property. But  if
      he allows the property to be sold in execution of the mortgage  decree
      and they have now lost the present case, the lessees allowed the  suit
      lands to be sold in execution of the mortgage decree and they have now
      lost the right of redemption. They cannot  resist  the  claim  of  the
      auction purchaser of recovery of possession of the lands.”


14.   Section 65-A of the TPA deals with the mortgagee’s  powers  to  lease.
However, in view of Section 52, if the mortgagor grants such a lease  during
the pendency of a suit for sale by the mortgagee, the  lessee  is  bound  by
the result of litigation and if the property is sold  in  execution  of  the
decree,  the  lessee  cannot  resist  a  claim  for  possession  by  auction
purchaser.


15.   Section 52 deals with cases of transfer of anything otherwise  dealing
with any immovable property after any suit or proceeding in which any  right
to such immovable property is directly and  -specifically  in  question  has
been filed.
Section 65-A of the TPA deals with the powers of the  mortgagor
to grant a lease of mortgaged  property,  while  the  mortgagor  remains  in
lawful possession of the same.
In Dev Raj Dogra and Others  v.  Gyan  Chand
Jain and Others  (1981) 2 SCC 675, following the judgment  in  Mangru  Mahto
and others (supra), this Court held that if the  mortgagor  grants  a  lease
during the pendency of a suit for sale  by  the  mortgagee,  the  lessee  is
bound by the result of the litigation.


16.   Above legal proposition, in our  view,  will  squarely  apply  to  the
facts of this case.  On facts, we have already found that the  induction  of
the first respondent was during the subsistence of  the  mortgage  and  also
subsistence of the various legal proceedings pending before various  courts.
 A plea was raised by the counsel for the respondent that he is entitled  to
get the protection of the Maharashtra Rent Act.  In our view, this plea  has
no basis in the facts of this case.  A tenant who  is  inducted  during  the
subsistence of the mortgage is not entitled to get  the  protection  of  the Maharashtra Rent Act.  This legal position has been settled  by  this  Court in Om Prakash Garg v. Ganga Sahai and others AIR  1988  -SC  108.
 In  this
connection reference may also be made to  the  Judgment  of  this  Court  in
Carona Shoe Co. Ltd. And another  v. K.C. Bhaskaran Nair  AIR 1989 SC 1110.


17.   In the above-mentioned circumstances, we are  of  the  view  that  the
courts below have not appreciated the various legal issues and committed  an
error in non-suiting the appellant.  
We answer those questions in favour  of
the appellant and hold that the appellant is entitled to get  a  decree,  as prayed for, since the original first respondent was inducted  illegally  and to the prejudice of the original mortgagee.  Consequently, the judgments  of
the courts below are set aside and the suit  is  decreed,  however,  without
any mesne profits.   The appeal is allowed, but  without  any  order  as  to
costs.


                                                             ……………………………..J.
                                             (K.S. Radhakrishnan)




                                                             ……………………………..J.
                                             (A.K. Sikri)
New Delhi,
|August 21, 2013                                     |              |
|                                                    |              |



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