Sunita Jugalkishore Gilda v. Ramanlal Udhoji Tanna (Dead) Through Lrs. And Others

K.S.P Radhakrishnan, J.— Leave granted. 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.

2. Gangabai, the grandmother-in-law of the appellant, was a mortgagee in respect of a three-storeyed 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 Respondents 2 and 3 for himself and as guardian of Respondent 2 on 24-3-1953. A partition deed was executed by Mohta and Respondents 2 and 3 on 11-1-1956.

3. Gangabai, on 1-9-1956, filed Civil Suit No. 3-A/1956 for enforcing the mortgage in the Court of the First Additional District Judge, Amravati. On 2-3-1960, Gangabai also purchased the half-share in the property belonging to Mohta, with the leave of the court in auction. The auction was confirmed by the court on 21-9-1960 in favour of Gangabai after rejecting the objections raised by Respondents 2 and 3. On 25-11-1960 Gangabai was placed in joint possession of the mortgaged property in execution by the civil court.

4. Gangabai then filed SCSs Nos. 1109 of 1961 and 1110 of 1961 against the two tenants for recovery of half-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 half-share in the rent. Gangabai, on 5-1-1963, filed SCS No. 33 of 1963 against all the tenants including Respondents 2 and 3 for a declaration and injunction that she was the owner of half-share in the property and entitled to half-share in the rent thereof from each of the tenants. SCS No. 33 of 1963 was later decreed by the Civil Court, Amravati on 23-3-1983 in favour of Gangabai, granting the reliefs sought for. Thereafter Respondents 2 and 3, without the consent of Gangabai, however, started recovering rent from Respondent 1 on the strength of some alleged rent receipts. Brij Lal, the real brother of Respondent 1, who was also one of the tenants/defendants in the abovementioned suit, left the decreed premises, without raising any claim.

5. First Appeal No. 40 of 1959, filed by Gangabai, was later withdrawn on 20-3-1967 since the final decree had already been passed. First Appeal No. 72 of 1959 filed by Respondents 2 and 3 was, however, allowed setting aside the preliminary decree dated 20-9-1958. Gangabai then preferred Civil Appeal No. 582 of 1969 before this Court against that order, which was allowed on 9-4-1974, the judgment of which is reported in Ganga Bai v. Vijay Kumar (1974) 2 SCC 393. This Court set aside the judgment of the High Court and restored that of the trial court.

6. Respondents 2 and 3 then filed SCS No. 76 of 1974 in October 1974 for setting aside the preliminary decree dated 20-9-1958 before the Civil Judge, Senior Division, Amravati. The suit was, however, dismissed with costs by the civil court on 31-1-1980. Respondents 2 and 3 then filed RCA No. 234 of 1980 before the District Court, Amravati. Before the District Court, Amravati, Gangabai and Respondents 2 and 3 filed a compromise application on 21-8-1987 and agreed to partition the suit property. The District Judge, Amravati vide his order dated 12-10-1988 passed a compromise decree disposing of RCA No. 234 of 1980 in view of the compromise application filed on 21-8-1987. In view of the compromise arrived at between Gangabai and Respondents 2 and 3, the suit property was partitioned and the area occupied by Respondent 1 came to the share of Gangabai. Respondents 2 and 3, however, filed Second Appeal No. 57 of 1989 challenging the compromise order dated 12-10-1988 before the Bombay High Court, Nagpur Bench. The second appeal was, however, dismissed by the High Court vide its judgment dated 31-8-1989.

7. Gangabai then issued legal notice to Respondent 1 on 5-10-1989 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 Respondents 2 and 3 in favour of Respondent 1 was hit by doctrine of lis pendens. Gangabai following the abovementioned 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 1 filed his written statement claiming that he was a tenant of the original owners, namely, Respondents 2 and 3. The trial court vide its judgment dated 26-10-1994 dismissed the suit filed by Gangabai on the ground that Respondents 2 and 3 being mortgagors were entitled to induct Respondent 1 as a tenant. The Court also recorded the finding that Respondent 1 was not a trespasser when he was initially inducted into the suit property. Gangabai then preferred RCA No. 7 of 1995 before the District Judge, Amravati, which was also dismissed on 21-7-2003 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.

8. 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 13-3-2007 against which this appeal has been preferred by special leave.

9. 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. The learned Senior Counsel submitted that it was during the pendency of the litigation that Respondent 1 was inducted into the property in question without consent and to the detriment of Gangabai as well as the appellant's interest and that Respondent 1 had full knowledge of the pending litigation between Gangabai, on the one hand, and Respondents 2 and 3, on the other. Gangabai had issued a notice to the tenant on 5-1-1989 calling upon him to vacate the suit premises and when 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.

10. The learned Senior Counsel also submitted that the premises in possession of Brij Lal were got vacated and thereafter in or about year 1965-1966 the first respondent entered into possession without the knowledge and consent of Gangabai. The 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 v. Thakur Taraknathji Tarkeshwar Math AIR 1967 SC 1390. The 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 the 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. The learned counsel also submitted that rent receipts produced by the first respondent would indicate that he was a legally inducted tenant. The learned counsel also submitted that by virtue of Section 65 of the Code of Civil Procedure, though sale of the joint half-share of the property in favour of Gangabai became absolute on 9-4-1974 yet it would be deemed that joint half-share of the property vested in her only in the year 1960. The learned counsel also submitted that even though the 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. The 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. The 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 1-9-1956 and that the preliminary decree later became final as against the share of Vijaysingh Mohta. Gangabai purchased half-share in the mortgaged property from Mohta on 2-3-1960 which was confirmed in her favour by the civil court and was placed in joint possession by the executing court on 25-11-1960. The 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, that the 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 the above statutory provisions and the precedents set by this Court.

13. The rule of lis pendens applies to suit by 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 Transfer of Property 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. The 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 the mortgaged suit so as to affect the right of a mortgagee or the purchaser.

14. This Court in Mangru Mahto AIR 1967 SC 1390 had an occasion to consider the scope of Section 52 of the TPA in that very context and held as follows: (AIR p. 1395, para 11)

“11. … 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 for recovery of possession of the lands.”

15. 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 the auction-purchaser.

16. Section 52 deals with cases of transfer or 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 v. Gyan Chand Jain (1981) 2 SCC 675, following the judgment in Mangru Mahto AIR 1967 SC 1390, 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.

17. The 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 (1987) 3 SCC 553, AIR 1988 SC 108. In this connection reference may also be made to the judgment of this Court in Carona Shoe Co. Ltd. v. K.C Bhaskaran Nair (1989) 2 SCC 395, AIR 1989 SC 1110.

18. In the abovementioned circumstances, we are of the view that the courts below have not appreciated the various legal issues and committed an error in nonsuiting 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.