Raman Pillai vs Bhaskara Panicker Sasikumar

P. Krishnamoorihy, J.—Plaintiff is the appellant. The suit is for redemption of a mortgage in respect of the plaint schedule property evidenced by Ext. A1 dated 8-7-1965. The above mortgage was executed by the plaintiff''s father Pandaram Pillai in favour of one Jayakrishnan Nair. The lather of the plaintiff Pandaram Pillai executed a gift Ext. A2 dated 17-3-1972 in favour of the plaintiff, his son in respect of the plaint schedule property. It is stated in the plaint that the defendant became entitled to the mortgage right by assignment and accordingly the suit is filed for redemption of the mortgage and recovery of possession of the property. Defendant filed a written statement admitting that the property belonged to the plaintiff''s father. He also admitted the mortgage deed in favour of Jayakrishnan Nair. But the case of the defendant is that Jayakrishnan Nair did not get possession of the property under Ext. A1 mortgage deed but under a leas; transaction. Defendant contended that at the time of Ext. A1 mortgage the property was outstanding on a lease executed by the plaintiffs father and the mortgagee in possession to one V.S. Krishna Pillai under Ext. B1 registered document dated 24-9-1952 That lease was a commercial lease for the purpose of establishing a petrol bunk by Krishna Pillai. In pursuance to Ext. B1 lease deed he constructed a petrol bank and was conducting the same. Defendant further contended that he came into possession of the property by getting an assignment of the above leasehold right and that he is not in possession under the mortgage right. He claimed fixity of tenure under Sec. 106 of the Kerala Land Reforms Act alleging that there was a commercial lease in favour of his predecessor who had constructed buildings in the property and as such he is entitled to fixity of tenure.

As the defendant claimed protection under Sec 106 of the Kerala Land Reforms Act the trial court referred the matter to the Land Tribunal. The Land Tribunal returned the finding holding that the defendant is entitled to protection given u/s 106 of the Kerala Land Reforms Act. Accepting that finding the trial court dismissed the suit against which plaintiff field an appeal before the Lower Appellate Court. Before the Lower Appellate Court the plaintiff contended that the mortgagee Jayakrishnan Nair, got an assignment of the leasehold right also under Ext. B2 assignment deed dated 27-3-1969 and accordingly there is a merger of the two rights of and possession of Jayakrishnan Nair can be said to be only that of a mortgagee and as such the plaintiff is entitled to redeem and recover possession. The Lower Appellate Court did not accept the contention of the plaintiff on the ground that there was no pleading that there was a merger of the mortgage right and leasehold right in favour of Jayakrishnan Nair. Accordingly the appeal was dismissed and the decree of the trial court was confirmed. Now the plaintiff has come up in appeal.

As stated earlier the Lower Appellate Court dismissed the appeal mainly on the ground that there was no pleading regarding the merger of the mortgage right and the leasehold right. Though the reasoning given by the Appellate Court is not proper in the circumstances of the case, on going through the documents in the case I am satisfied that the ultimate decree passed by the Courts below are correct. In order to decide the controversy in the case it is necessary to state the facts of the case in detail.

The property belonged to the, predecessor of the plaintiff one Pandaram Pillai. The property was outstanding on a mortgage with a mortgagee. While so Pandaram Pillai and the mortgagee together executed Ext. B1 a commercial lease deed dated 24-11-1952 in favour of one V. S Krishna Pillai for conducting a petrol bunk and for other business purposes by constructing necessary buildings, Accordingly, V. S. Krishna Pillai constructed buildings and was conducting a petrol bunk and other business concerns in the plaint property. If Ext. B1 stood by itself it is not disputed that the lessee under Ext. B1 will be entitled to protection u/s 106 of the Kerala Land Reforms Act.

While the property was thus outstanding with V. S. Krishna Pillai, Pandaram Pillai the father of the plaintiff executed Ext. A1 mortgage dated 8-7-1965 in favour of one Jayakrishnan Nair, in which it is stated that the property is outstanding on a lease with V. S. Krishna Pillai and the mortgagee Jayakrishnan Nair was directed to receive the rent from him directly and also to recover possession of the property directly from him. While so under Ext. B2 assignment deed dated 27-3-1969 Krishna Pillai assigned his leasehold right in favour of Jayakrishnan Nair, the mortgagee under Ext. A1, Under that document the leasehold right which Krishna Pillai obtained was assigned in favour of the mortgagee and there is no mention of the mortgage deed in favour of Jayakrishnan Nair, from the plaintiff''s father in that document. Under Ext. B7 dated 6-11-1973 Jayakrishnan Nair assigned the mortgage right under Ext. A1 in favour of one Sabu. On the same day under Ext. B3 dated 6-11-1973 he assigned his leasehold right in favour of one Prabhakaran for a consideration of Rs. 5,000/-. In Ext. B7 assignment of the mortgage right it is specifically stated that Prabhakaran the assignee of the leasehold right is in possession of the property on the basis of the assignment. Under Ext. B4 dated 2-2-1976 Prabhakaran assigned his leasehold right to one Sadhi and Sadhi assigned his leasehold right in favour of the defendant by Ext. B8 document dated 27-9-1976. On the same day the defendant also got an assignment of the mortgage right which Sabu obtained under Ext. B7 under document Ext. B5.

Counsel for the appellant contended that by Ext. B2 assignment of the leasehold right in favour of Jayakrishnan Nair, the mortgagee under Ext, A1, there is a merger of the leasehold right and the mortgage right in he same person; and that from the date of Ext. B2 assignment the lease is not in existence; and that the possession of Jayakrishnan Nair from that date is only as a mortgagee. It was also alternatively contended that by Exts. B5 and B8 documents dated 27-9-1976 the mortgage right as also the leasehold right under Ext. B1 came in the hands of the defendant and in any view of the matter there is a merger of both the rights in one person and the defendant is not entitled to resist redemption of the mortgage on the ground that he is a commercial lessee entitled to protection u/s 106 of the Kerala Land Reforms Act. In other words, the contention of the appellant is that when a person becomes entitled to the mortgage right as also the leasehold right in respect of the very same property there is a fusion of the rights and that he shall be deemed to be only a mortgagee from that date and the leasehold interest will come to an end from that date. According to him the mortgage right being a superior right the leasehold right which is the inferior right will merge in the superior right of mortgage and that when both the rights vest in the same person there is a merger and from that date the person in possession shall be deemed to be in possession only as a mortgagee But, I am not inclined to accept the contention of the plaintiff that the mortgage right is a superior right on the date of Ext. B2. As stated earlier, on the date of Ext. B2 viz. in 1969 the Kerala Land Reforms Act (Act 1 of 1964) had come into force and by virtue of Section 106 as existed on that date any person who is a commercial lessee and who has constructed a building for the above purpose before 18--12--1957 was entitled to protection under that section (such protection was extended even to persons who have constructed buildings before 20-5-1967 by/Act 35 of 1969 which came into force on 1-1-1970). Even without the amendment as per the original Act the lessee under Ext. B1 which came into the hands of Jayakrishnan Nair, by assignment Ext. B2, was entitled to fixity of tenure and certainly that was a superior right in 1969 and it cannot be said that a mortgage right was a superior right when compared to a leasehold right with fixity of tenure u/s 106 of the Kerala Land Reforms Act. So it cannot be said that there is a merger of a lower right in a higher right.

Even otherwise, even if a mortgage right and the leasehold right vests in the same person there cannot be any fusion. The identical question came up for consideration before their Lordships of the Supreme Court in Sambangi Applaswamy Naidu and Others Vs. Behara Venkataramanayya Patro and Others, : There a mortgage was executed in favour of a person who was already in possession of the property as a tenant and the question arose as to whether the lease will revive on the redemption of the mortgage. In that context their Lordships observed as follows:

There can be no merger of a lease and a mortgage, even where the two transactions are in respect of the same property. It is well settled that for a merger to arise, it is necessary that lesser estate and a higher estate should merge in one person at one and the same time and in the same right and no interest in the property should remain outstanding. In the case of a lease, the estate that is outstanding in the lessor is the reversion; in the case of a mortgage, the estate that is outstanding is the equity of redemption of the mortgagor, Accordingly, there cannot be a merger of a lease and a mortgage in respect of the same property since neither of them is a higher or lesser estate than the other. Even if the rights of the lessee and the rights of the mortgagee in respect of a property were to be united in one person the reversion in regard to the lease and the equity of redemption in regard to the mortgage, would be outstanding in the owner of the property and accordingly, there would not be a complete fusion of all the rights of ownership in one person.

The answer to the question as to whether upon redemption of a usufructuary mortgage a tenant-mortgagee could be directed to deliver actual or physical possession of the mortgaged property to the lessor-mortgagor must depend upon whether there was an implied surrender of the lessee''s rights when the usufructuary mortgage was executed in his favour by the lessor-mortgagor. And this obviously depends upon what was the intention of the parties at the time of the execution of the mortgage deed in favour of the sitting tenant to be gathered from the terms and conditions of the mortgage transaction in the light of the surrounding circumstances of the case. It all depends upon whether by executing a possessory or usufructuary mortgage in favour of a sitting tenant the parties intended that there should be a surrender of lessee''s rights or not, and only if an implied surrender of lessee''s rights could be inferred then the mortgagor would be entitled to have delivery of physical possession upon redemption but not otherwise.

In this case admittedly when the mortgage was executed in favour of Jayakrishnan Nair the property was outstanding with the lessee V.S. Krishna Pillai. Both the rights vested in the same person only from 1969 when the mortgagee got an assignment of the leasehold right under Ext. B2 In these circumstances, there cannot be any merger of the leasehold right and the mortgage right and the right of Jayakrishnan Nair as an assignee of the leasehold right cannot he affected by the mere fact that he was a mortgagee of the property under Ext. At. There cannot be any surrender of the leasehold right also because the landowner or the owner of the property was not a party to any of the subsequent documents executed by the parties. The conduct of the defendant and his predecessor Jayarishknan Nair also show that they were treating the mortgage right and the leasehold right as separate as could be seen from the various documents executed by them. The leasehold right under Ext. B1 of the year 1952 vested in the defendant by successive assignment and by the fact that he became a mortgagee under Ext. A1 also will not take away the right and protection which he is entitled to as a lessee of the property u/s 106 of the Land Reforms Act. Even if the plaintiff is allowed to redeem Ext. A1 mortgage, actual possession cannot be delivered to the plaintiff as the defendant is entitled to lixity of tenure u/s 106 of the Kerala Land Reforms Act.

In the result, though for different reasons. I agree with the Lower Appellate Court that the plaintiff is not entitled to any relief in the suit and accordingly the appeal is dismissed, but, in the circumstances, without any order as to costs.