ivil Appeal No 1065 of 1987
From the Judgment and Order dated 21101986 of the Kerala High Court in SA No 491 of 1980
G Vishwanatha Iyer section Balakrishnan and MKD Namboo dri for the Appellants
TS Krishnamoorthy Iyer AK Srivastava and SC Birla for the Respondent
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
This appeal by leave is from the judgment and order of the High Court of Kerala dated 21st October 1986
It arises in the following circumstances The building in question which is a shop building No TC 887 MG Road Pazhavangadi Trivandrum is part of a pucca three storeyed building belonging to one MP Philip and as per his settlement the disputed shop building and two other rooms devolved on one of his sons MM Philip
While this disputed shop building was in the possession of a tenant under the owner the owner mortgaged the disputed building and the remaining portions to the first defendant with a direction to receive the rent from the tenant
The mortgagor directed the tenant also to attorn to this mortga gee
The first defendant subsequently in the course of his management of the mortgaged property gave the building on lease to the appellants for a higher rent when the former tenant vacated the same
Subsequently the owner executed a subsequent mortgage with a direction to redeem the mortgage in favour of the first defendant and before the subsequent mortgagee took steps to redeem the mortgage the owner assigned his equity of redemption to the respondent
The respondent and the subsequent mortgagee together as plain tiffs 1 and 2 filed a suit to redeem the mortgage of the first defendant impleading the appel 977 lants as well as respondents and claimed recovery of the khas possession of the building
The appellants contended that they are tenants of the building inducted into posses sion by the mortgagee as a mode of enjoyment that the mort gage deed authorised the mortgagee to enjoy the building by letting it out and they were not liable to be evicted through a decree of court in a redemption suit without an order under the Kerala Building Lease  Rent Control Act 1965 hereinafter referred to as the Act 
The trial court decreed the suit and directed recovery of possession of the shop building on the ground that the mortgagee could not induct a tenant and give him any right to continue in pos session even after the redemption of the mortgage
On appeal by the appellants the first appellate court held that the disputed building was a shop building which was never in the enjoyment of the owner and the mode of enjoyment of the owner of the property was by letting it out and when the mortgagee enjoyed the property in that manner by letting it out the person put in possession as a tenant was entitled to continue in possession even after redemption until evicted under the Rent Control Act
The first appellate court further found that the mortgage deed impliedly autho rised the mortgagee to let out the building
In that view the decree for khas possession of the shop building in possession of the appellants was denied to the respondent
The respondent filed a second appeal before the High Court raising the following three contentions 1 Whether under section 76a of the Trans fer of Property Act 1882 a tenancy created by the mortgagee in possession of an urban immovable property would be binding on the mortgagor after redemption of the mortgage assuming that the tenancy was such as a pru dent owner of property would have granted in the usual course of management
2 Whether a tenancy created in exercise of a general power to grant a lease expressly or impliedly conferred on the mort gagee would survive the redemption of the mortgage in view of Sec
111c of the Trans fer of Property Act 1882 and 3 Whether a tenant inducted on the property by a mortgagee with possession would after redemption of the mortgage be protected under the provisions of section 111 of the Act
The High Court was of the view that as the appellants had not pleaded that they were inducted into possession by the mortgagee as 978 prudent act of management it was not open to the appellants to contend that they could continue in possession even after redemption
Further the High Court was of the view that it was not open to the mortgagee to induct a person into pos session which conferred any right on the tenant to continue in possession even after redemption
The High Court categorically came to the conclusion that protection under section 76a of the was never claimed in the written statement
On the other hand it was contended by the appellants that this was a pure question of law unconnected with the question of fact and therefore no pleadings were necessary and even without pleading such contention could be raised and considered by the Court at the time of argument
Whether a particular lease is bona fide or prudent act of management is primari ly a question of fact though whether on account of the bona fide or prudent act of the mortgagor his lessee was entitled to continue even after the mortgage was determined is a question of law
The High Court was of the view that the decision on the question of law is dependent on the question of fact whether the lease was bona fide or a prudent act of a person of ordinary prudence who would manage it as if it were his own
On that question of fact there should be definite pleading so that the plaintiff must have an oppor tunity of meeting the claim and adduce evidence in rebuttal
The High Court therefore could not sustain the right of the tenant under section 76a of the  as a matter of prudent management
There was no issue in this respect and the judgment of the trial court did not show according to the High Court that such a contention was raised
The only contention that was raised was that the lease was with the knowledge or consent of the mortgagor
The High Court further came to the conclusion that there was no evidence in support of that contention
The finding of the District Judge that the mortgagee had implied authority of the mortgagor to let out was not only lacking in plead ings or issue but it was also not warranted by the provi sion of the mortgage deed or the evidence
The High Court relied on several decisions and came to the conclusion that the provision of Sec
76a of the  which was an exception to the general rule embodied in Sec
111c applies in appro priate cases ordinarily only to the management of agricul tural lands and had seldom been extended to urban property so as to tie up in the hands of lessee or to confer on him rights under special statutes
The High Court further came to the conclusion that the general 979 proposition of law is that no man can convey a better fight than he himself has
Therefore a mortgagee in possession cannot create tenancy with a right to continue in possession beyond the period of redemption
Normally lease by the mortgagee is determined when the mortgage is redeemed since there is no privity between the mortgagor and the lessee
The question of prudent management under Sec
76a of the by granting of lease or otherwise normally arises only in rural agricultural lands and not in urban immovable property
The High Court further came to the conclusion that a mere authorisation to the mortgagee to lease the property itself does not amount to any intention to allow expressly the creation of a tenancy beyond the term of the mortgage
Only where the words of the mortgage deed clearly and expressly allowed creation of tenancy beyond the term of the mortgage that the lease would be binding on the mortgagor
In that view of the matter the High Court held that the learned District Judge was wrong in holding that the defendants Nos 2  3 were not liable to be evicted in this suit and that they could be evicted only through an order of a competent Rent Controller
In the premises the second appeal was allowed and a decree for eviction was passed
Aggrieved thereby the appellants have come up before this Court
The question is was the High Court right
The first contention of Sri Vishwanatha Iyer learned counsel for the appellants was that in view of the terms of the mortgage in the instant case the appellants were enti tled to be in possession after redemption of mortgage as against the mortgagor
He drew our attention to the mortgage deed dated 4th July 1960
The mortgagor in that mortgage deed stated that he was the absolute owner of the property and therefore he was mortgaging the property
Thereafter the deed proceeded to state as follows This property is hereby secured to you on otti for a term of 2 years for Rs7000 which I have received as recited hereunder
There fore you may possess and enjoy the property by collecting the rent from the tenants and after the expiry of two years I shall pay you the sum of Rs7000 and get a release of the otti ands the expenses for the release should be shared by us
 The mortgagee was to enjoy the property by collecting the rent from the tenants
This mortgage was renewed for the second time on 980 17th August 1977
The second mortgage deed recited that the shop in Item I which was in possession of Carona Shoe Compa ny was given for enjoyment
Therefore the fact that the tenant was there is accepted
It was contended that as no amount was being paid as interest the mortgagee was entitled to the benefit that is to say the rent from the premises in question
It was contended that the High Court was wrong in holding that it was not an act of prudent management
Sri Iyer referred to the document dated 3rd June 1977 which recited as follows But the portion where the Ringal shop was situate alone was given possession to you and the remaining portion forming upstairs to the shop previously Ringal Shop now Carona Shoe Mart and the shed portion behind it was let out to Chellamma Pillai by the mortgagor and she is occupying it while so the mortgagor has executed a subsequent mortgage and an agree ment for sale to Chellamma Pillai and she is entitled to redeem you and recover posses sion of the building These contentions in our opinion are concluded by the decision of this Court in PomaI Kanji Gvoindji  Ors
vs Vrajlal Karsandas Purohit  Ors 1988 4 Jmt
Today SC 307 wherein it was held that except in cases where the leases specifically and categorically make exceptions in favour of the tenants that they would continue to be in possession even after the expiry or termination of the mortgage and those leases are acts of prudent management the tenants inducted by the mortgage would be entitled to the protection under the Rent Act after the redemption of mortgage and in no other cases
Sri Iyer in our opinion is wrong in contending that in the instant case the mortgage deed specifically empowered the mortgagor to induct tenant who would continue to be in possession even after the redemption or end of the mortgage
It is true that the mortgage deed recited that the tenants were there
It is also true that the mortgage deed also enjoined that the method of realisation of the rent as the method of having the usufruct of the mortgage by the mortga gee
But it must be understood that so long as the mortgage subsisted there was relationship of tenant and landlord
It could not be so after the mortgage was redeemed
There is nothing in the mortgage deed in the instant case which warranted the conclusion that the mortgagee could 981 induct tenants who Would continue beyond the term of the existence of the mortgage or who would be given rights even after the expiry of the mortgage
Sri Iyer then submitted that this Court in the aforesaid decision had referred to another decision of this Court namely Jadavji Purshottam vs Dhami Navnitbhai Amaratlal  Ors where it was held that if the lease granted to the tenant by the mortgagee had the approval or concurrence of the mortgagor the same would entitle the tenant to claim tenancy rights even as against the mortgagor after he had redeemed the mortgage then in such a case such tenants would continue to be in possession
Sri Iyer drew our attention to the observations of this Court in the aforesaid decision at para 13 of page 236 of the report
With reference to the term of the mortgage in the instant case and the communications between the parties Sri Iyer tried to contend that the lease granted in favour of the appellants by the mortgagee had the approval or concurrence of the mortgagor
We are however unable to accept or find in the correspondence any such approval or concurrence
We have referred to the mort gage deed and the sale deed as mentioned hereinbefore
Sri Iyer drew our attention to a letter dated 7th October 1977 addressed to the Rent Controller with a copy to the General Manager Carona Shoe Co Ltd Therein the respondent had negotiated or made an offer and expressed preference for the appellant company
The letter contained the following state ments Under the circumstances I have now finally decided to settle all the issues and start the construction of the rear portion as early as possible as I have two more offers other than yours for renting out the entire ground floor about 1500 sq
ft which includes the space now occupied by you and a portion of the first floor
I am writing this letter to you because my first preference is for your company
The main reason is that you are conducting the business in the same shop for some years
Second thing is that I have already agreed to you at the discussion even though there was no written consent
In the light of the above I give below my terms and conditions for renting out the shop with additional space annexed if you are interested to continue the business in my building
Of course the expenses portion for the same will have to be borne by you
But I will provide you with a very good show room considering your requirements
Necessary bathroom lavatory office cabin etc
will also be provided in consulta 982 tion with your representative
I had a discus sion with Mr LW Baaker ARIBA The British Architect who is doing so many artis tic modern buildings and show room etc
throughout India including the Chitralekha Film Studio and the article Director and Interi or Decorator of our Studio regarding the subject
 Thereafter certain terms and conditions of the proposed lease were suggested
Ultimately however no such lease was executed
This communication strictly in our opinion negates the submission that there was any concurrence or approval of the mortgagor of the continuance of the appel lant s as tenants after the expiry or redemption of the mortgage
It was then submitted by Sri Iyer that in view of the provisions of the Act it was not possible for the respond ents to execute the decree
After an exhaustive discussion of the relevant authorities it has been held by this Court in Pomal Kanji Govindji s case supra that in respect of the urban immovable properties the tenants do not get any protection after the redemption of mortgage
Sri Iyer however drew our attention to Sec 11 of the Act to contend that notwithstanding anything contained in any other law or contract a tenant shall not be evicted whether in execu tion of a decree or otherwise except in accordance with the provisions of the Act
He drew our attention to the defini tion of tenant  under sec
26 of the Act which defines a tenant as a person by whom or on whose account rent is payable for a building and includes the heir or heirs of a deceased tenant and a person continuing in possession after the termination of the tenancy m his favour
Similarly landlord is defined under section 23 of the Act as follows 3 landlord includes the person who is receiving or is entitled to receive the rent of a building whether on his own account or on behalf of another or on behalf of himself and other or as an agent trustee executor administrator receiver or guardian or who would so receive the rent or be entitled to receive the rent if the building were let to a tenant
 But in view of the said definitions we are of the opinion that between the appellants and the respondent there was never any landlord or tenant relationship
The appellants were never the tenants of the respondent
Sri Iyer drew our attention to the observations of this 983 Court in Raj Brij Krishna  Anr
SK Shaw  Bros  where it was held that the non obstante clause would be applicable
Our attention was drawn to the observa tions of Fazal Ali J at page 150 of the report
There the Court observed that Section 11 of the Bihar Buildings Lease Rent  Eviction Control Act 1947 was a self con tained section and it was wholly unnecessary to go outside the Act for determining whether a tenant was liable to be evicted or not and under what conditions he could be evict ed
But in the instant case the appellants were not the tenants
The respondent the original mortgagor would never after the redemption of the mortgage have treated the appel lants to be tenants
There was no relationship ever between the appellants and the respondent
The mortgagor had a separate and distinct interest which was wiped out on the redemption of the mortgage or expiry of the period of mort gage
The mortgagor on redemption of mortgage gets back his own right he is not the successor in interest of the mort gagee
Interest if any created by the mortgagee on the mortgagor s right must disappear on ceasing of interest of the mortgagee
In that view of the matter in our opinion thus the said observations would not be of any relevance to the present case
Similarly reliance was placed on the observations of this Court by Sri Iyer in Ms Raval  Co vs
KG Ramachandran  Ors  The observa tions that the definitions of landlord  and tenant  might apply even if the contractual tenancy has come to an end
But that is not the situation here in the instant case
In the said case Bhagwati J as the Chief Justice then was in his judgment at page 439 of the report observed that sub section 1 of section 4 of the Act in question ie Tamil Nadu Buildings Lease  Rent Control Act 1960 con templated that an application for fixation of fair rent of a building might be made by the tenant or the landlord
The definition of tenant  it was observed included contractu al tenant as well as tenant remaining in possession of the building after determination of the contractual tenancy ie statutory tenant and both contractual tenant and statutory tenant could therefore apply
It was therefore submitted in this case that on the analogy of the contractu al tenant the appellants were entitled to the protection of the Act
We are unable to agree
It is not a question of a contractual tenancy coming to an end
The limited estate created in favour of the mortgagee having disappeared all rights emanating from that limited estate disappear and the superior fight of the mortgagor comes not in place of the mortgagee but as a result of an independent title and as such the mortgagor cannot be bound by any act created or any relationship contracted between the mortgagee and the ten ant unless it is permitted by the mortgage deed Reliance was also placed on certain observations of 984 this Court in V Dhanpal Chettiar vs Yesodai Ammal 14
Therein it was held that under the State Rent Acts the concept of contractual tenancy has lost much of its significance and force
Therefore giving of the notice was a mere surplusage and unlike the law under the  it does not entitle the landlord to evict the tenant
In our opinion the observations of the said decision cannot have any assistance or significance for the purpose of the issues involved in the present controver sy
Our attention was also drawn to the observations of this Court in Pomal Kanji Govindji s case supra at para 42 of page 326 and it was contended that in this case impliedly the mortgage deed specifically and categorically made an exception in favour of the tenants that they would continue in possession even after the termination or redemption of the mortgage and that these leases were acts of prudent management
In this connection reference may be made to Section 60 of the 
It is this which gives the mortgagor right to redeem after the date fixed for payment
The mortgagor s right of redemption and the mortga gee s right of foreclosure or sale are co extensive
Simi larly Section 76a of the which determines the liabilities of the mortgagee and imposes the obligation to manage the property as a person of ordinary prudence
In the instant case it has been held by the High Court that the induction of the appellants as tenant was not an act of prudent management
Our attention was also drawn by Sri Iyer to the observa tion of this Court in Gian Devi Anand vs Jeevan Kumar  Ors  in support of his submission that in the emerging jurisprudence of tenancy legislation the dis tinction between statutory tenant and contractual tenant has disappeared
The said view in our opinion would be of no avail as the respondent is not the successor in interest and does not come in place of the mortgagee but by virtue of its independent title
Reliance was also placed on the observations of this Court in G Ponniah Thevar vs Nalleyam Perumal Pillai  Ors  That decision in our opinion has no application
The person inducting the tenant appellant was a co widow who had a life interest in the lands
It was observed that the terms of the statutory protection applied clearly to all tenancies governed by the Madras Cultivating Tenants Protection Act irrespective of the nature of fights of the person who leased the land so long as the lessor was entitled to create a tenancy
In our opinion the said observations would not be applic 985 able
The said decision deals with the right of the co widow in the land
Reference may be made to the facts of that case at page 504 para 10
In our opinion in view of the said facts the decision would not apply to the facts of the instant case
On the other hand in view of the facts and ratio of the principle of the decisions in Jadavji Purshot tam supra and PomaIii Govindji supra we are of the opinion that the contentions of Sri Iyer cannot be sus tained
The non obstante clause in Section 11a of the Act is applicable only to a decree for eviction obtained by a landlord against a tenant
The appellants were never the tenants of the respondent
In the aforesaid view of the matter we are unable to accept the submissions urged in this case and therefore the appeal must fail
But in view of the fact that the appellants have been carrying on the business for some time in the premises in question in order to enable them to adjust their business we direct that the order for eviction of the appellants should not be executed upon 31st October 1989 if the appellants give an undertaking within a period of four weeks from this date to give vacant possession in a peaceful manner on 3 1st October 1989 and also containing the usual terms of undertaking
In default of such undertak ing being given within the time aforesaid the decree will be forthwith executed
The appeal is accordingly dismissed with costs
YL Appeal dis missed


Summary:
The respondent was carrying on business as an excise con tractor in the Civil and Military Station of Bangalore in the State of Mysore called the retroceded area
The jurisdiction  over this area was originally exercised by the Governor General in Council by virtue of an agreement with the Maharaja of Mysore and the income tax law applicable was the Indian Income tax Act 1922
On July 26 1947 the retroceded area was given back to the State of Mysore but the income tax law in force in that area prior to that date continued to have effect and be operative till June 30 1948 on which date was promulgated the Mysore Income tax Act and Excess Profits Tax Application to the Retroceded Area Emergency Act 1948 the effect of which was that the Indian Income tax Act 1922 stood repealed and the Mysore Income tax Act 1923 came into force subject to certain saving provisions
On August 5 1948 was promulgated the Retroceded Area Application of Laws Act 1948
Between 1947 and 1950 there were political and constitutional changes which ultimately resulted in Mysore becoming a Part B State within the Constitution of India
The legal effect of these changes was that the income tax law applicable to the retroceded area till June 30 1948 was the Indian Income tax Act 1922  from July 1 1948 the Mysore Income tax Act 1923 became applicable except that the Indian Income tax Act continued to apply in respect of the total income chargeable to income tax in the retroceded area prior to July 1 1948 and the provisions of that Act as in force in the retroceded area prior to that date applied to all proceedings relating to the assessment of such income upto the stage of assessment and determination of income tax payable thereon
This position continued till April 1 1950 when the Finance Act 1950 came into force and as a result the Indian Income tax Act 1922 became applicable again to the retroceded area subject to the saving provisions of section 131 of the former Act
In respect of the assessment for the four years between 1945 and 1949 the respondent was assessed to income tax under the law then in force in that area subsequently in 1954 the Income tax Officer served a notice on the respondent under section 34 of the Indian Income tax Act 1922 for the purpose of assessing  escaped  or  under assessed  income chargeable to income tax for the said years
The respondent challenged the jurisdiction of the Income tax Officer to take proceedings under section 34 or to make an order of re assessment on the grounds inter alia 1 that section 34 Of the Indian Income tax Act 1922 was not saved by section 131 of the Finance Act 1950 because what was saved was the prior law  for the purposes of the levy assessment and collection of income tax  which expression did not include re assessment proceedings 2 that the 787 financial agreement made between the President of India and the Rajpramukh of Mysore dated February 28 1950 rendered the impugned proceedings unconstitutional and void 3 that the Indian Income tax Act 1922 as in force in the retroceded area stood repealed on June 30 1948 by the Mysore Income tax and Excess Profits Application to the Retroceded Area Emergency Act 1948 and the saving provisions in section 5b thereof or in para 2 sub para b of Sch
A to the Retroceded Area Application of Laws Act 1948 did not save section 34 in so far as it permitted re assessment proceedings in respect of years in which there had been an assessment already and 4 that after June 30 1948 and until April 1 1950 the Income tax Officer in the retroceded area could re open the assessment under section 34 Of the Mysore Income tax Act 1923 within a period of four years specified therein but there was no authority to re open the assessment under section 34 Of the Indian Income tax Act
Held  1 that the expression  levy assessment and collection of income tax  in section 131 Of the Finance Act 1950 was wide enough to comprehend re assessment proceedings under section 34 Of the Indian Income tax Act 1922 and that the financial agreement between the President of India and the Rajpramukh of Mysore on a true construction of the recommendations of the Indian States Finance Enquiry Committee did not render the impugned proceedings unconstitutional or void  Lakshmana Shenoy vs The Incomc tax Officer Ernakulam 1959 SCR 751 followed
2 that the saving provisions in the Mysore Income tax and Excess Profits Application to the Retroceded Area Emergency Act 1948 and the Retroceded Area Application of Laws Act 1948 made the prior law available in all cases in which the income was assessed or was assessable according to that law before July 1 1948 and therefore they saved section 34 of the Indian Income tax Act 1922 with regard to re assessment proceedings  City Tobacco Mart and Others vs Income tax Officer Urban Circle Bangalore AIR 1955 Mys
49 overruled
Hirjibhai Tribhuwandas vs Income tax Officer Rajnandgaon and another AIR 1957 M P 171 approved
3 that the Income tax Officer had the authority to re open the assessments in the present case because the period of limitation was that laid down in section 34 of the Indian Income tax Act as it was in force in the retroceded area prior to July 1 1948