vil Appeal No 1006 ot 1980
From the Judgment and Order dated 1321980 of the Karnataka High Court in CRP No 1287 of 1977
RB Datar for the Appellant
SS Javali and Ravi P Wadhwani for the Respondents
The Judgment of the Court was delivered by NATARAJAN J
Does a mortgagee with possession stand on a par with an owner of a building to seek the eviction of a tenant under Section 21lh 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 Iegal representatives is before us in appeal
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 2l1h 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 th In they were bona fide in need of another building to run their business
In such circumstance they had advanced a sum of Rs25000 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 PG NO 508 by the Appellate Court and the High Court
In this appeal there is no challenge to the findings that the respondents were bona fide in need of another shop to run their business and that they had obtained an usufructuary mortagage of the tenanted premises from the owner Nanjappa
However the contention of the appellants is that a usufructuary mortgagee cannot be equated with the mortgagorlandlord for seeking the tenant s eviction under Section 211h on the ground of bona fide requirement of the leased premises for his own use
The argument of Mr Datar learned counsel for the appellant was that the Act is a beneficial piece of legislation intended to protect the tenants from unreasonable evictions and as such the provisions of Section 21 have to be construed in such a manner that the right of the tenants are not taken away beyond the limits of the Section
It was urged by the learned counsel that if Section 211h is to be liberally construed so as to equate a usufructuary mortgagee with the owner of a building and enable him to seek eviction of a tenant under Section 211h then it would give a handle for scheming landlords who cannot themselves obtain an order of eviction against their tenants under Section 211h to crate a nominal deed of usufructuary mortgage and have their tenants evicted with the help of the mortgagee and then secure possession of the leased premises for themselves
In this eontext it was pointed out by Mr Datar that the usufructuary mortgage in favour of the respondents was only for a period of 30 months and therefore the mortgage should be treated as a colourable transaction
Before we examine the merit of these contentions we may refer to the relevant provisions of the Act
The term landlord  is defined in Clause h of Section 3 of the Act as under Landlord Landlord means any person who is for the time being receiving or entitled to receive rent in respect of any premises whether on his own account or on account or on behalf of or for the benefit of any other person or as a trustee guardian or receiver for any other person or who would so receive the rent or be entitled to receive the rent if the premises were let to a tenant and includes any person not being a tenant who from time to time derives title under a landlord and further includes in respect of his sub tenant who has sub let any premises Section 211h under which the eviction petition was filed reads as under PG NO 509 21 Ih that the premises are reasonably and bona fide required by the landlord for occupation by himself or any person for whose benefit the premises are held or where the landlord is a trustee of a public charitable trust that the premises are required for occupation for the purpose of the trust
On a reading of Section 3h it may be seen that it is an inclusive definition and takes within the fold of landlord not only the owner of the premises but any person who for the time being is receiving or is entitled to receive the rent whether on his own account or on account of or on behalf of or for the benefit of any other person or as a trustees guardian or receiver for any other person etc
A usufructuary mortgagee as per Section 58d of the Transfer of Property Act is entitled to be in possession of the mortgage property or to receive the rents and profits either in full or in part accruing from the property and appropriate the rents and profits in lieu of interest or in payment of the mortgage money or partly in lieu of interest or partly in payment of the mortgage money
By reason of his entitlement to receive the rent of the mortgage property
a mortgagee with possession will undoubtedly constitute a landlord within the meaning of Section 3h of the Act
The appellant s counsel did not dispute this position
He would however say that even so Section 21 Ih should be read down so as to restrict the meaning of the word landlord in that clause to the owner of the premises alone and not to a usufructuary mortgagee
Before considering the matter we may refer to some of the decisions where the same question has been considered
A learned single judge of the Madras High Court has held in V Baluswamy Servai vs N Raju Servai that a usufructuary mortgagee of a building in the occupation of a tenant would undoubtedly constitute a landlord within the meaning of Section 26 of the Madras Buildings lease  Rent Control Act 1960 as he is entitled to receive the rent o the building on is Own account and therefore he would be entitled to evict a tenant under Section 103ai of the Act on he ground of bona fide requirement of the premises for his personal occupation
This ratio was followed in T Ezhumalai vs Padmavathi Ammal The same view was taken by a learned single judge of the Karnataka High Court also in a case arising under the Karnataka Rent Control Act in Aswatharamiah vs Special Deputy Commissioner However a Division Bench of the Karnataka High Court took a different view in SSubramanayaswamy vs Deputy Commissioner PG NO 510 Bangalore AIR 1981 Karnataka 190 and held that though a mortgagee with possession may satisfy he definition of landlord  under Section 3h of the Karnataka Act he would not be entitled to claim priority in the matter of allotment of the mortgage premises to himself under Section 5 as the benefit of the Section could be availed of only by the ownerlandlord
As the decision in section Subramanayaswamy supra conflicted with some of the earlier decisions of the High Court a reference was made to a Full Bench in R Vijendra vs HR  AC ILR for settlement of law on the question formulated as under Whether an usufructuary mortgagee is a landlord for purposes of Part II of the Karnataka Rent Control Act 1961
 The Full Bench answered the reference in the affirmative and held that since delivery of possession is a necessary concomitant of a usufructuary mortagage and since the concomitant entitles the usufructuary mortgagee to claim possession of the property to the exclusion of all other including the mortgagor the mortgagee is for all intents and purposes the owner himself as he steps into the shoes of owner and by reason of it he acquires the status of a landlord under Section 3h as well as the provisions in Part II for claiming possession of the mortgage premises for is personal occupation
On a consideration of the matter we find ourselves in agreement with the view taken by the Full Bench
We may now give the reasons for our view
The definition of landlord  in Section 3h 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 3h 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 3h had realised the need to limit PG NO 511 the operation of the definition in so far as eviction petitions under Section 211h are concerned
Section 211 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 211h 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 211h 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 211 of the Act
Thirdly a mortgagee with possession is enjoined by Section 76a 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 mortgage 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 Mathur Lal vs Keshar Bai  Anr  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 3h 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 s case supra is the correct view to be taken
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 211h 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 211h 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 211h 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
For all these reasons the appeal deserves to fail and will accordingly stand dismissed
The appellant is however given six months time from today to vacate the leased premises subject to the appellant filing an undertaking in the usual terms within four weeks from today
There will be no order as to costs
HSK Appeal dismissed


Summary:
Industrial Court Duty of Must give an opportunity to applicants to explain the delay if the complaints are barred by limitation
The respondents were earlier the employees of an organisation called the Maharashtra State Cooperative Marketing Federation Limited Marketing Federation
Later a new organisation namely the Maharashtra State Cooperative Cotton Growers Marketing Federation Ltd the appellant herein was formed and some of the activities of the Marketing Federation were assigned to it
By letter dated l0th August 1984 the Government directed the Marketing Federation that the Services of the seasonal staff should be terminated and those of the regular staff be placed at the disposal of the new organisation
As the Marketing Federation and the appellant failed and neglected to give them the permanent status the respondents made a complaint before the Industrial Court complaining of unfair labour practices on the part of the Marketing Federation as also the appellant herein as contained in Items 6 and 9 of the Schedule IV of the Act
The workers stated that even when there was an award in their favour by the Industrial Tribunal declaring them as permanent employees yet the Marketing Federation and the appellant did not give them the status of permanent employees
The Industrial Court took the view i that the complaints made by the respondents did not come under items nos
6 and 9 but they came under item No I and as such he could not decide the complaints in view of PG NO 472 PG NO 473 section 5d of the Act ii that there was no unfair labour practice on the part of the Marketing Federation or the appellant and iii that the complaints were barred by limitation
The Industrial Court dismissed the complaints of the respondents
Feeling aggrieved the respondents filed writ petitions before the High Court and the same were allowed
Hence these appeals by special leave
The appellant contended that the award of the Industrial Court was not binding on them
Dismissing the appeals this Court HELD In view of the Award it must be held that the respondents were the permanent employees of the Marketing Federation and that after the constitution of the appellant and the transfer ot the employees of the Marketing Federation to the appellant the appellant was bound to accept the respondents as permanent employees and not to treat them as seasonal employees or temporary employees
This act on the part of the appellant amounts to unfair labour practice
476E F There is no justification for the finding of the Industrial Court that the complaints made by the respondents do not come within the purview of Items Nos 6 and 9 of the Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act 1971
No reason has been given by the Industrial Court why the complaints come within Item No I of Schedule IV and as such can be decided only by the labour Court and not by the Industrial Tribunal
The complaints made by the respondents are clear and specific and there was no scope for categorising them as complaints under Item No I of Schedule IV
476G H477 It has been assumed 1 the Industrial Tribunal that the respondents came to now That they were being appointed as seasonal employees on the respective dates of their appointment letters
There is however no material on record to show on what dates the appointment letters were served on the respondents
In the circumstances the Industrial Court was not at all Justified in holding than the complaints filed by the respondents were barred by limitation
Even assuming that the complaints were barred by limitation as held by the Industrial Court the Industrial Court should have given an opportunity to the respondents for explaining the delay
No such opportunity has been given to the respondents
Accordingly this Court is unable to subscribe to the view of the Industrial Court that the complaints filed by the respondents were barred by limitation
477B D