Case: Sambangi Applaswamy Naidu and Others Vs. Behara Venkataramanayya Patro and Others

deed to suggest that there was an implied surrender of the lessees rights while in the later case the court held that the terms of the mortgage deed showed that the lessee had impliedly surrendered his rights. In other words, 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 su rrender of lessees rights or not, and only if an implied surrender of lessees rights could be inferred then the mortgagor would be entitled to have delivery of physical possession upon redemption but not otherwise.In the instant ca se the earlier usufructuary mortgage deed of 1939 is not on record before us but the parties have produced a copy of Exhibit A-3 which is the later usufructuary mortgage deed dated 23.8.1942, the terms thereof are required to be construe d. It runs thus: Exhibit A-3"Deed of mortgage of land accompanied by delivery of possession of land for Rs. 250 (in words two hundred and fifty rupees) executed on 23rd August, 1942 in favour of Sambangi Taviti Naidu, son of late Jogi Naidu of Koppula Velama Caste, living by cultivation, resident of Dathivalasa village, hamlet of Tummalavalasa of Parvatipuram Sub District by Behara Adinarayana Patro, son of late Behera Narayana Patro Sista Karnam, Inamdar resident of Markonduputti village of the same Sub District. The amount of principal and interest due on the promissory note executed by me in your favour previously on 24th April, 1940 for my necessity, the amount paid by you on my behalf to the Estate towards the cist etc., due on this land and the amounts borrowed from you by me in installments subsequent thereto-all those amounts are found to be Rs. 200 and I have found due to you in this sum. The amount borrowed now for paying the cist to the Estate and for my own maintenance is Rs. 50. In all, Rs. 250 (in words two hundred and fifty rupees). I shall pay interest at the rate of Rs. 0-4-0 (four anna) per cent per mensum and shall discharge the principal and interest. For this, the produce of all kinds of crops raised on the half share of the lands previously being cultivated by you as my sub-tenant on condition of paying 1/4 (?) share out of the Jarayathi dry and wet lands bearing No. 1 and know as "Tummulamanu Polam" which passed to me as my self-acquired property, which has been in my possession and enjoyment till this day, which is situate in Tummalavalasa village and the boundaries etc. of which are given hereunder, shall be utilised for paying interest due on this deed and the interest due on the deed executed previously on 30th August, 1939 and get registered in the office of the Sub Registrar of Parvatipuram as No. 1148/39 and for paying the cist due to the Govt. on my behalf and obtaining receipt in my name. The remaining a mount shall be paid to me by 15th January of every year and the receipt obtained from me. When the above mentioned principal and interest are paid to you in full, payment shall be endorsed on this deed and this deed shall be returned and the land mentioned herein shall be delivered possession of to me." Three or four things become amply clear on a fair reading of the aforesaid document (1) that though the deed commences by reciting that possession of the land has been delivered thereunder it refers to the fact that the original mortgage (1st defendant) was actually cultivating the lands as a tenant of the mortgagor on crop share basis; that is to say the rental was payable by the tenant in the shape of a crop share; (2) that the mortgagor had agreed to pay interest at the specified rate on the total loan of Rs. 250 and had undertaken to discharge the principal and interest; (3) that the rental of the land payable by the 1st defendant was t o be adjusted against the interest payable by the mortgagor under this deed as well as the earlier deed and the cist payable by him to the Government; and excess, if any, to be paid to mortgagor; (4) that when the principal and interest are fully repaid such payment was to be endorsed on this deed and the deed as also the land shall be "delivered to the possession of mortgagor". It may be noted that the last portion of the document is equivocal in that it does not mention whether on redemption physical possession is to be delivered or symbolical possession is to be delivered to the mortgagor. But under the terms of the deed one thing is clear that during the currency of the mortgage the liability to pay rent to the lessor mortgagor (albeit to be discharged by adjustment) is kept alive. If anything such a term clearly runs counter to any implied surrender of the lessees rights. Secondly, there is no term fixed for redemption of mortgage property which means that it was open to the mortgagor to redeem the mortgage at any time that is to say even within a very short time and if that be so, would a sitting tenant cultivating the lands under a lease, who has obliged his lessor by advancing monies to him to tide over his financial difficulties give up his rights as a lessee no sooner redemption takes place? In our view, it does not stand to reason that he would do so. This circumstance coupled with a fact that the mortgage deed keeps alive the lessees liability to pay rent during the currency of the mortgage clearly suggests that no implied surrender was intended by the parties.In the result, we are of the view that the only effect of the execution of usufructuary mortgage deeds in this case was that the lessees rights were kept in abeyance and they revived upon the redemption of mortgage.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]In our view the answer to the question raised in this appeal must depend upon whether there was an implied surrender of the lessees 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 light of the surrounding circumstances of the case. It may be stated that in both the decisions of the Andhra Pradesh High Court on which reliance was placed by the respective counsel of the parties in support of his own contention the question was ultimately decided on proper construction of the terms and conditions of the mortgage transactions; in the earlier decision the court took the view that there was nothing in the mortgage deed to suggest that there was an implied surrender of the lessees rights while in the later case the court held that the terms of the mortgage deed showed that the lessee had impliedly surrendered his rightsIt may be noted that the last portion of the document is equivocal in that it does not mention whether on redemption physical possession is to be delivered or symbolical possession is to be delivered to the mortgagor. But under the terms of the deed one thing is clear that during the currency of the mortgage the liability to pay rent to the lessor mortgagor (albeit to be discharged by adjustment) is kept alive. If anything such a term clearly runs counter to any implied surrender of the lessees rights. Secondly, there is no term fixed for redemption of mortgage property which means that it was open to the mortgagor to redeem the mortgage at any time that is to say even within a very short time and if that be so, would a sitting tenant cultivating the lands under a lease, who has obliged his lessor by advancing monies to him to tide over his financial difficulties give up his rights as a lessee no sooner redemption takes place? In our view, it does not stand to reason that he would do so. This circumstance coupled with a fact that the mortgage deed keeps alive the lessees liability to pay rent during the currency of the mortgage clearly suggests that no implied surrender was intended by the parties.In the result, we are of the view that the only effect of the execution of usufructuary mortgage deeds in this case was that the lessees rights were kept in abeyance and they revived upon the redemption of mortgage.