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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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