Bharoselal vs Daryao

A.H. Khan, J.—The plaintiff, who is a mortgagee, with possession, leased out the mortgaged property to the mortgagor, who is defendant in this case. The plaintiff sued the defendant for eviction and arrears of rent on the basis of a rent-note. The defendant admitted the execution of the rent-note, but resisted the suit on the ground that a previous suit, filed by the plaintiff as a mortgagee for sale of the mortgaged property, had been dismissed for default, and, that in consequence the mortgage had become extinguished and that the mortgagee was not now entitled to the possession of the mortgaged-property. It was also contended that the rent-note, being in lieu of interest no suit can lie on its basis. The trial Court held that because of the dismissal of the suit for the sale of the mortgaged property, the mortgage became extinguished and the present suit could not be maintained. This decision was affirmed by the first appellate Court. This is now plaintiff''s second appeal.

The mortgage in dispute was a usufructuary mortgage with possession and there was a further stipulation in the deed that the mortgagee could realise the debt by sale of the property. It, therefore, became what is known as an anomalous mortgage. By the dismissal of the suit for the sale of the property, the remedy provided for its sale came to an end, but the security for debt, namely, the usufructuary mortgage remained intact. The dismissal of the previous suit only barred an action of sale, it did not and cannot extinguish the security. The right of the usufructuary mortgagee to possess the property does not become extinguished; merely because another remedy provided for the sale of the property can not be availed of. In a usufructuary mortgage, the mortgagor authorises the mortgagee to retain possession until payment of the mortgage-money. It, therefore, follows that until the debt is liquidated as in the instant case, it has not been paid, the security remains unaffected. My learned brother Newaskar J. took a similar view in Gangaram Madhav Ahir and Another Vs. Dwarkibai, .

In Iqrar Ahmed Vs. Hulkey, I have held that it a mortgagor takes the property on lease, then the mortgagee as a landlord can file a suit on the basis of a rent-note. I still adhere to the same view and the suit is. therefore, maintainable.

For reasons stated above, the appeal is allowed and setting aside the judgment of both the courts below, the case is sent back to the trial Court for decision on the issues that remain undecided.