Case Note & Summary
The case involves a second appeal arising from a suit for redemption of mortgage and possession filed by the original respondent (Shankar Krishna Bhagat-Patil) against the appellant (Nivruti Dnyanu Patil). The respondent executed a mortgage by conditional sale of suit premises in favor of the appellant on 24th December 1973 for Rs. 1500, with a term that the mortgage would be redeemed after five years. After expiry, the respondent demanded possession, but the appellant avoided. The respondent issued a notice on 11th August 1982, served on 12th August 1982, and filed suit when the appellant failed to comply. The appellant admitted execution but claimed he was a tenant and entitled to protection under the Bombay Rent Act. The trial court decreed the suit for redemption and possession, which was reversed by the first appellate court holding the transaction was a sale. The High Court allowed the second appeal, restoring the trial court's decree. The court analyzed the deed and found it was a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act, 1882, as the deed contained a reconveyance clause and the parties intended it as security. The court held that the right to redeem under Section 60 subsists until foreclosure or sale, and since neither occurred, the suit was maintainable. Regarding the tenancy claim, the court held that a lease by a mortgagee in possession does not bind the mortgagor after redemption unless the mortgagor accepts rent or attorns, which did not happen. Thus, the appellant could not claim protection under the Bombay Rent Act. The court set aside the appellate judgment and restored the trial court's decree for redemption and possession.
Headnote
A) Transfer of Property Act - Mortgage by Conditional Sale - Section 58(c) - The transaction was a mortgage by conditional sale, not an outright sale, as the deed contained a clause for reconveyance upon repayment within five years and the parties intended it as a security for loan. Held that the essential test is the existence of a debt and the right to redeem, which were present. (Paras 4-8) B) Transfer of Property Act - Right to Redeem - Section 60 - The mortgagor's right to redeem subsists until the mortgage is extinguished by sale or foreclosure. Since the mortgage was not foreclosed or sold, the right to redeem continues. Held that the suit for redemption was maintainable. (Paras 9-10) C) Transfer of Property Act - Lease by Mortgagee - Section 111(d) and Section 116 - A lease granted by a mortgagee in possession does not bind the mortgagor after redemption unless the mortgagor accepts rent or attorns. In this case, the mortgagor did not accept rent or create a tenancy, so no tenancy rights accrued to the mortgagee. Held that the appellant cannot claim protection under the Bombay Rent Act. (Paras 11-13)
Issue of Consideration
Whether the transaction dated 24th December, 1973 is a mortgage by conditional sale or an outright sale; whether the respondent is entitled to redemption and possession; whether the appellant can claim tenancy rights under the Bombay Rent Act.
Final Decision
The High Court allowed the second appeal, set aside the judgment and decree of the first appellate court, and restored the decree of the trial court dated 28th October 1985, which decreed the suit for redemption and possession. The civil application also stands disposed of.
Law Points
- Mortgage by conditional sale is a mortgage
- not a sale
- under Section 58(c) of Transfer of Property Act
- 1882
- right to redeem subsists until foreclosure or sale
- Section 60 of Transfer of Property Act
- Section 111(d) of Transfer of Property Act
- Section 116 of Transfer of Property Act
- Section 13 of Bombay Rents
- Hotel and Lodging House Rates Control Act
- 1947
