Kusum Ramesh Shrike v. Kashinath Anna Jaigude

15) Plaintiff-Ramesh Anandrao Shirke did not challenge the Trial Court’s decree and accordingly, the finding that he is not a tenant of the suit property has attained finality. Thus, possession of Ramesh Anandrao Shirke in respect of the suit property is not in the capacity as tenant and will have to be assumed in the capacity of a gratuitous licensee or a permissive user. It is settled law that an owner is entitled to seek recovery of possession from a gratuitous licensee or from a person, who is in mere permissive possession of suit property and can never seek an injunction against the true owner. The law in this regard is well settled by three Judge Bench decision of the Apex Court in Maria Margarida Sequeria Fernandes Vs. Erasmo Jack de Sequeria[4]. The issue here however is whether Defendant is the owner of the suit property.

16) Before I go into the issue of the right of Defendant-Kashinath Anna Jaigude to recover possession of the suit property from the Plaintiff, it is necessary to make a quick reference to the dismissal of Regular Civil Suit Nos. 97 of 1995 and 343 of 1999. As observed above, the Trial Court held that Plaintiff-Ramesh Anandrao Shirke was not a tenant of the suit property. The Trial Court also noted the factual position that the house was beyond repairs and had broken down during pendency of the Suit. Accordingly, the Trial Court dismissed Regular Civil Suit No. 97 of 1995 and 343 of 1999 which were filed by Ramesh Shirke for seeking permission to repair the house. Dismissal of the said two suits was not questioned by Ramesh Shirke and the decree dated 29 June 2012 qua Regular Civil Suit Nos. 97 of 1995 and 343 of 1999 has attained finality.

17) Now I turn to the hotbed of controversy between the parties about Defendant’s right to recover possession of suit property from Plaintiff. After the claim of tenancy of Ramesh Shirke being rejected by the Trial Court, his possession would remain as that of a gratuitous licensee or a permissive user. However, Defendant’s right to seek recovery of possession is questioned by the Appellants by casting doubts about his ownership claim. Though the Defendant’s Appeals are allowed by the First Appellate Court, his claim of ownership over the suit property is repelled. The Respondent is held to be merely a mortgagee in respect of the suit property. These findings AIR 1971 SC 1727 rejecting ownership claim and holding him to be a mere mortgagee are not questioned by the Defendant and have accordingly attained finality.

18) Thus, the factual position that stands as today as a result of the Orders passed by Trial Court and the First Appellate Court is as under: i) Plaintiff/his heirs remain in possession of the suit property as a gratuitous licensee or as a permissive user. ii) Defendant/his heirs are not owner(s) of the suit property. iii) Defendant/his heirs are merely mortgagee in respect of the suit property.

19) Now the moot point that remains for determination is whether a mortgagee is entitled to seek recovery of possession from a permissive user. Mr. Talkute has relied upon provisions of Section 76 of the Transfer of Property Act, 1882, which reads thus: "76. Liabilities of mortgagee in possession.- When, during the continuance of the mortgage, the mortgagee takes possession of the mortgaged property,- (a) he must manage the property as a person of ordinary prudence would manage it if were his own; (b) he must use his best endeavours to collect the rents and profits thereof;

(c) he must, in the absence of a contract to the contrary, out of the income of the property, pay the Government-revenue, all other charges of a public nature [and all rent] accruing due in respect thereof during such possession, and any arrears of rent in default of payment of which the- property may be summarily sold;

(d) he must, in the absence of a contract to the contrary, make such necessary repairs of the property as he can pay for out of the rents and profits thereof after deducting from such rents and profits the payments mentioned in clause (c)and the interest on the principal money; (e) he must not commit any act which is destructive or permanently injurious to the property; (f) where he has insured the whole or any part of the property against loss or damage by fire, he must, in case of such loss or damage, apply any money which he actually receives under the policy or so much thereof as may be necessary, in reinstating the property, or, if the mortgagor so directs, in reduction or discharge of the mortgage-money; (g) he must keep clear, full and accurate accounts of all sums received and spent by him as mortgagee, and, at any time during the continuance of the mortgage, give the mortgagor, at his request and cost, true copies of such accounts and of the vouchers by which they are supported; (h) his receipts from the mortgaged property, or, where such property is personally occupied by him a fair occupation-rent in respect thereof shall, after deducting the expenses [properly incurred for the management of the property and the collection of rents and profits and the other expenses] mentioned in clauses (c) and (d), and interest thereon, be debited against him in reduction of the amount (if any) from time to time due to him on account of interest and, so far as such receipts exceed any interest due, in reduction or discharge of the mortgage-money; the surplus, if any, shall be paid to the mortgagor;

(i) when the mortgagor tenders, or deposits in manner hereinafter provided, the amount for the time being due on the mortgage, the mortgagee must, notwithstanding the provisions in the other clauses of this section, account for his receipts from the mortgaged property from the date of the tender or from the earliest time when he could take such amount out of Court, as the case may be [and shall not be entitled to deduct any amount therefrom on account of any expenses incurred after such date or time in connection with the mortgaged property]. Loss occasioned by his default.—If the mortgagee fail to perform any of the duties imposed upon him by this section, he may, when accounts are taken in pursuance of a decree made under this Chapter, be debited with the loss, if any, occasioned by such failure."

20) Thus, under Section 76 (a) of the Transfer of Property Act, a mortgagee in possession is entitled to manage the property as a man of ordinary prudence would manage as it was his own. The Apex Court has held in S. B. Abdul Azeez (supra) that a mortgagee in possession stands on par with the owner of the building to seek eviction of a tenant. The Apex Court has held in para 1, 2, 7, and 8 as under: "1. Does a mortgagee with possession stand on a par with an owner of a building to seek the eviction of a tenant under Section 21(l)(h) of the Karnataka Rent Control Act, 1961 (for short the Act' hereinafter) for his bona fide requirement of the tenanted premises for residential or business needs is the question for determination in this appeal by special leave by a tenant. The Trial Court, the Appellate Court and the High Court in revision have answered the question in the affirmative and the aggrieved tenant, now represented by his legal representatives is before us in appeal.

2. The tenanted shop to one Nanjappa and the appellant had taken the same on rent for running a cycle shop. On the foot of an usufructuary mortgage executed in their favour, the respondents, who are partners, sought the eviction of the appellant under Section 2l(1)(h) of the Act. Their case was that they were also running a cycle shop in a rented premises but since their landlord had obtained an order of eviction against them they were bona fide in need of another building to run their business. In such circumstance they had advanced a sum of Rs.25,000 to the appellant's landlord Nanjappa and obtained a usufructuary mortgage of the tenanted premises and thus having stepped into the shoes of the landlord, they were seeking the eviction of the appellant. The appellant's defence was that the usufructuary mortgage was a sham and nominal translation created by the landlord with an oblique motive because he had refused to pay higher rent for the premises and secondly the mortgagees were not bona fide in need of the petition premises for their business. The Trial Court rejected both the defences and ordered eviction and the said order has been affirmed by the Appellate Court and the High Court.

7. The definition of `landlord' in Section 3(h), as we have already seen in an inclusive definition and would take within its fold any person who for the time being is receiving or is entitled to receive the rent in respect of the leased premises. The person receiving or entitled to receive the rent may do so either on his own account or on account of or on behalf of or or the benefit of any other person or as a trustee, guardian or receiver for any other person. A mortgagee with possession undoubtedly falls under the first category as he is entitled to receive the rent on his own account and this factor makes the usufructuary mortgagee stand on a higher and different footing than other persons accorded the status of a landlord under Section 3 (h) because their entitlement to receive rent is on behalf of or for the benefit of others and not on their own account. Secondly it is of significance that the legislature being alive to the expansive nature of the definition of the term `landlord' in Section 3 (h) had realised the need to limit the operation of the definition in so far as eviction petitions under Section 21 (1) (h) are concerned. Section 21 (1) sets out various grounds on which the eviction of a tenant can be sought for. The grounds may pertain to the omissions or commissions of the tenant or to the bona fide requirement of the premises by the landlord in various situations. The legislature has taken care to see that in so far as clause (h) is concerned viz the premises being reasonably and bona fide required by the landlord for his own occupation or for the benefit of any person for whom the premises are held, the status of a landlord should be denied to a Rent Collector or an Estate Manager. The exclusion is to be found in the Explanation to Clause 4 of Section 21 in the following terms: "For the purpose of clause (h) of the proviso to sub- section (1), expression `landlord' shall not include a Collector or Estate Manager." It therefore follows that if the legislature had wanted that a mortgagee with possession should not be equated with the owner of the premises and should be denied the benefit of seeking a tenant's eviction under Section 21 (1) (h) the Legislature would have undoubtedly categorised a mortgagee with possession also as one of the excluded class of landlord lords for the Purposes of Section 21 (1) (h) of the Act. Obviously therefore the legislature has not wanted a mortgagee with possession to be excluded of his right to seek eviction of a tenant from the mortgaged premises under Section 21 (1) of the Act. Thirdly, a mortgagee with possession is enjoined by Section 76 (a) of the Transfer of Property Act manage the property as a man of ordinary prudence would manage it if it were his own. As such the mortgagee's acts, it prudently done, could bind the mortgagor even after the redemption of the mortgage. A mortgagee with possession, steps into the shoes of the mortgagor and becomes entitled to all the rights of the mortgagor and the only right left with the mortgagor is the right of redemption. A mortgagee with possession is entitled to be in possession of the mortgage property as long as it is not redeemed. If the mortgagee with possession leases back the property to the mortgagor, he acquires the rights of a lessor and is entitled to enforce the terms of the lease against the mortgagor (vide Mathuralal v. Keshar Bai). On account of all these factors there can be no doubt that a mortgagee with possession stands very differently from other kinds of landlords envisaged under Section 3 (h) of the Act. He is therefore entitled, as much as the owner himself, to seek recovery of possession of the leased premises from a tenant for his own bona fide requirements of use. For all these reasons we hold PG NO 512 that the view taken by the single judges in the cases referred to above and the Full Bench in R. Vijendra case (supra) is the correct view to be taken.

8. As regards the contention of Mr. Datar that a scheming landlord can adopt the devious method of creating a sham deed of usufructuary mortgage in order to have a tenant evicted, when he himself cannot sustain such an action, the argument fails to note that an order of eviction under Section 21 (1) (h) would not be passed by the Court for the mere asking because, the mortgagee with possession has first get to prove that the premises are reasonably and bona fide required by him for occupation by himself. Without the reasonable and bona fide requirement being proved to the satisfaction of the Court, no order for eviction will be passed. Nextly, even if the mortgagee with possession satisfies the above test, he has to pass the further test laid down by sub-section 4 of Section 21 which provides that a tenant shall not be evicted under Section 21(1)(h) if the Court is satisfied that the tenant would be put to greater hardship by an order of eviction being passed than the hardship that would be caused to the landlord by refusal to pass an order of eviction in his favour. These things apart, it is inconceivable every landlord who would not be able to evict his tenant by resort to Section 21 (1) (h) would be able to readily find a willing accessory who will be prepared to play the role of a usufructuary mortgagee and institute eviction proceedings against the tenant in order to secure the possession of the leased premises and then hand over possession to the owner of the building." (emphasis supplied)

21) Mr. Shah has attempted to distinguish the judgment of

S. B. Abdul Azeez (supra) by contending that the mortgagee in the case before the Apex Court was in possession and the case involved a usufructuary mortgage, whereas the Defendant in the present case was not put in possession of the suit property and this is not a case of usufructuary mortgage. He has relied upon a covenant in the Sale Deed dated 29 December 1993 which clearly records that the vendor himself was never in possession of the suit property. Mr. Talkute on the other hand contends that even a mortgagee, who is not in possession of the suit property is entitled to seek recovery of possession under Section 76 of the Transfer of Property Act. Mr. Talkute has relied upon the Division Bench judgment of this Court in Barjorji Shapurji (supra), in which this Court has held as under: "1. The plaintiff in this case gave notice to the defendant to vacate the lands in suit in November, 1920. According to that notice, he was required to give up the lands on March 31, 1921. The plaintiff claimed to be a mortgagee from the original Inamdars. The defendant was on the land as a tenant of the mortgagors. The defendant pleaded that he was a permanent tenant; that the mortgagors were necessary parties; and that the plaintiff was neither entitled to possession nor to enhance the rent. The first issue raised was whether the plea that the defendant was a permanent tenant was res judicata in consequence of the finding in the previous litigation between the same parties in Suit No. 48 of

1915.

12. As regards the second question that a mortgagee cannot determine the tenancy of an annual tenant in respect of land which forms part of the mortgaged property without the consent of the mortgagor, no authority has been cited. On principle the contention seems to be untenable. A mortgagee in possession has his own right of managing the lands; and he is not in any sense dependent upon the consent of the mortgagor in determining as to what rent he should reasonably seek from an annual question was left open in the previous litigation, it seems to me that contention o the defendant must be disallowed."

22) In Barjorji Shapurji Defendant therein was a tenant of the mortgagor and plaintiff therein was a mortgagee. Thus before the mortgage was created, defendant was already in occupation of the premises as tenant of the mortgagor. Thus, the mortgagee was not put in physical possession of the suit premises, which were being occupied by the tenant. In the light of this factual position, the division bench upheld the right of the mortgagee to file suit to recover possession from the tenant. In my view therefore for asserting the right to recover possession of the property, it is not necessary for the mortgagee to prove that he was put in possession of the mortgaged property at the time of execution of the mortgage deed. On the same principle, the submission of Mr. Shah that the mortgagee can seek recovery of possession only from the mortgagee's tenant and not the mortgagor's tenant deserves rejection.

23) Upon a query being asked by the Court about the extent of enquiry to be conducted by a Court into the title of Defendant/Respondent at the behest of someone who is merely a gratuitous licensee or permissive user, Mr. Shah has relied upon the judgment of the Apex Court in Vinay Eknath Lad (supra) to contend that tenant is entitled to challenge the title of a landlord who claims a derivative title. He has placed reliance on para 11 and 13 of the judgment which reads thus: "11. We accept the plaintiffs’ stand that the principle of estoppel bars a tenant from questioning the title landlords. This is incorporated in Section 116 of the Evidence Act. But this principle cannot be made applicable in the present case straightaway as the main defence set up by the tenant is that he had acknowledged the said partnership firm as the landlord but questioned the locus standi of the plaintiffs, who operated under the same trade name. In absence of attornment or public notice of dissolution, the defendant had no way of having knowledge of change of landlord of the subject-premises from partnership firm to a co- ownership concern. The co-ownership firm admittedly was not the defendant’s landlord at the time of commencement of the lease. Thus, identity of the landlord stood altered, though the seventeen individuals continued to operate under the same trade name. For this reason, the very fact that rent was continued to be paid to Sri Sabari Corporation cannot constitute acceptance of the original plaintiffs as the landlord by the defendant. On the question of attornment, learned counsel for the appellants have argued before us that title could be acquired in terms of Section 109 of the Transfer of Property Act and in such a situation, attornment would not be necessary. The said provision reads:- "109. Rights of lessor’s transferee.--If the lessor transfers the property leased, or any part thereof, or any part of his interest therein, the transferee, in the absence of a contract to the contrary, shall possess all the rights, and, if the lessee so elects, be subject to all the liabilities of the lessor as to the property or part transferred so long as he is the owner of it; but the lessor shall not, by reason only of such transfer cease to be subject to any of the liabilities imposed upon him by the lease, unless the lessee elects to treat the transferee as the person liable to him: Provided that the transferee is not entitled to arrears of rent due before the transfer, and that, if the lessee, not having reason to believe that such transfer has been made, pays rent to the lessor, the lessee shall not be liable to pay such rent over again to the transferee. The lessor, the transferee and the lessee may determine what proportion of the premium or rent reserved by the lease is payable in respect of the part so transferred, and, in case they disagree, such determination may be made by any Court having jurisdiction to entertain a suit for the possession of the property leased.”

13. This authority has been followed in a later case, Apollo Zipper (India) Ltd. v. W. Newman & Co. Ltd. It has been held in this case: (SCC p. 754, para 42) “42... Similarly, the law relating to derivative title to the landlord and when the tenant challenges it during subsistence of his tenancy in relation to the demised property is also fairly well settled. Though by virtue of Section 116 of the Evidence Act, the tenant is estopped from challenging the title of his landlord, yet the tenant is entitled to challenge the derivative title of an assignee of the original landlord of the demised property in an action brought by the assignee against the tenant for his eviction under the rent laws. However, this right of a tenant is subject to one caveat that the tenant has not attorned to the assignee. If the tenant pays rent to the assignee or otherwise accepts the assignee’s title over the demised property, then it results in creation of the attornment which, in turn, deprives the tenant to challenge the derivative title of the landlord.”

24) However, in para 16 of the judgment, the Apex Court has quoted a passage from its judgment in Apollo Zipper (India) Ltd. Vs. W. Newman & Co. Ltd.[5] and has held as under:

2018 (6) SCC 744 laws, when the issue of title over the tenanted premises is raised, the landlord is not expected to prove his title like what he is required to prove in a title suit." Two earlier authorities, Sheela v. Firm Prahlad Rai Prem Prakash and Boorugu Mahadev & Sons v. Sirigiri Narasing Rao broadly lay down the same principle of law. It is not the law that in a landlord-tenant suit the landlord cannot be called upon at all to prove his ownership of a premises, but onus is not on him to establish perfect title of the suit property."

25) Thus even in a Suit for recovery of possession from a tenant, the extent of inquiry into title of landlord cannot be on par with a inquiry between competing claims of two persons claiming ownership. In the present case, the Plaintiff is not even a tenant in respect of the suit property, and he is merely a gratuitous licensee/ permissive user. In my view therefore the Trial Court was not expected to institute a detailed enquiry into the title of Defendant while deciding the suit for recovery of possession from Plaintiff. Plaintiff has lost in his claim of tenancy. He does not claim ownership of the suit property. He does not have a legal authority to defeat a decree for possession. Defendant on the other hand is armed with a Sale Deed in his name. Plaintiff questioned acquisition of title by Defendant through the Sale Deed. The Appellate Court, though did not hold Defendant to be the owner, upheld his claim of being a mortgagee. Thus to some extent, interest in the property is established by Defendant as against absence of legal authority of Plaintiff to continue in possession. His long-settled possession may entitle him to the limited relief against dispossession by use of force. This is the reason why Defendant filed suit for recovery of possession by lawful means. In a litigation of this nature, in my view, the extent of inquiry into the title of Defendant and his right to seek recovery of possession need not be extensive.

26) I accordingly proceed to answer the substantial questions of law as under: i. Even in absence of ownership, Defendant is entitled to seek a decree for recovery of possession of suit property from the Plaintiff. ii. A mortgagee is entitled to seek recovery of possession from gratuitous licensee or a trespasser. iii. In a suit filed by the Defendant for recovery of possession from Plaintiff in his capacity as gratuitous licensee, the Court can conduct enquiry into Defendant’s title in respect of the suit property, but that inquiry would not be on par with inquiry into contesting claims of two persons claiming ownership. iv. It is not necessary for the mortgagee to prove prior possession of the suit property for the purpose of seeking a decree of recovery of possession from a licensee or a trespasser. v. The First Appellate Court was justified in reversing the decree passed by the Trial Court and in directing recovery of possession of the suit property from Plaintiff in favour of Defendant even though the Defendant failed to prove his ownership in respect thereof.

27) After having answered the questions formulated as above, I do not see any valid ground to interfere in the Order passed by the First Appellate Court. Second Appeals are accordingly dismissed with costs.

28) In view of disposal of Second Appeals, Interim Application NO. 18607 Of 2022 and Interim Application No. 18610 Of 2022 do not survive, the same also stand disposed of. [SANDEEP V. MARNE J.] After the Judgment is pronounced, Mr. Shah the learned counsel appearing for Appellant would pray for stay of the decree of the First Appellate Court. The request is opposed by Mr. Talkute, the learned counsel appearing for Respondent submitting that the suit house no longer exists on the suit property as the same was beyond repairs at the time when the suits were decided. In that view of the matter, request for stay to the decree is rejected. [SANDEEP V. MARNE J.]