Case: Mangru Mahto &amp; Ors Vs. Shri Thakur Taraknathji Tarakeshwar Math &amp; Ors

Kishore, 21 Cal WN 88 at p. 92: (AIR 1917 Cal 222 at p. 225) Mookerjee J. held that a mortgagor in possession may grant a lease conformable to usage in the ordinary course of management, for instance he may create a tenancy from year to year in the case of agricultural lands or from month to month in the case of houses. But he is not competent to grant a lease on unusual terms or to alter the character of the land or to authorise its use in a manner or for a purpose different from the mode in which he himself had used before he granted the mortgage. This view of the law as it stood before the enactment of S. 65-A was approved in Raja Kamakshya Narayan Singh v Chohan Ram 1953 SCR 108 at p. 118: (AIR 1952 SC 401 at pp. 404-405) and this Court held that the question whether the mortgagor in possession has power to lease the mortgaged property must be determined with reference to the authority of the mortgagor as the bailiff or agent for the mortgagee to deal with the property in the usual course of management. In Gobinda Chandra Saha v. Sasadhar Mandal, AIR 1947 Cal 73 at p. 75 B. K. Mukherjea, J., pointed out that normally a permanent lease with rent fixed in perpetuity is not sanctioned by the ordinary course of management. He observed:-"The mortgagor might be within his rights to create a lease which is from month to month or from year to year as the case might be but he cannot grant a permanent lease with a rent fixed in perpetuity. This amounts to an alienation of his right to increase the rent in future and is as good as the sale of the property itself. This is not sanctioned by the ordinary course of management as has been mentioned above nor is it warranted by the previous user of this particular property." 9. In the present case, defendants 2-7 were lessees under five leases granted by the mortgagor in June 1934. All these defendants claimed to be permanent lessees with rent fixed in perpetuity. Four of the leases were granted by registered pattas. In respect of four leases the mortgagor received nazrana or premium. All the leases were created after the property was advertised for sale in execution of the mortgage decree. The High Court has found that the leases were created by the mortgagor in bad faith with a view to cause loss to the mortgagee-decree-holder. The leases were not in the ordinary course of management by the mortgagor as the agent or bailiff of the mortgagee and were not binding on the mortgagee. 10. On behalf of the appellants it was argued that the leases might not be binding on Kashinath while he was the mortgagee, but after he purchased the property he ceased to be a mortgagee and he could not thereafter assert that the leases were not binding on him. This novel argument is ingenious but unsound. An auction-purchaser at a sale held in execution of a mortgage decree buys not only the interest of the mortgagor but also the interest of the mortgagee. If the lease does not bind the mortgagee, it does not equally bind the auction-purchaser. It is interesting to notice that in Rust v. Goodale 1957-1 Ch 33 at pp. 42, 43 Harman J., held that the right of the mortgagee to treat a tenant of the mortgagor as a trespasser was a right which passed on sale or foreclosure to his assignee. 11. A lease granted by the mortgagor, out of the ordinary course of management, though not binding on the mortgagee, is binding as between the mortgagor and the lessee. Such a lesser acquires an interest in the right of redemption and is entitled to redeem. If such a lease is created before the institution of a suit relating to the mortgage the lessee must be joined as a party to the suit under O. 34, R. 1, C. P. C., otherwise he will not be bound by the decree passed in the suit and will continue to retain his right of redemption. But in view of S. 52 of the Transfer of Property Act, if the mortgagor grants such a lease during the pendency of a suit for sale by the mortgagee, the lessee is bound by the result of the litigation. If the property is sold in execution of the decree passed in the suit, the lessee cannot resist a claim for possession by the auction-purchaser. The lessee could apply for being joined as a party to the suit and ask for an opportunity to redeem the property. But if he allows the property to be sold in execution of the decree, he loses his right of redemption. In the present case, the lessees allowed the suit lands to be sold in execution of the mortgage decree and they have now lost the right of redemption. They cannot resist the claim of the auction-purchaser for recovery of possession of the lands. 12. If a mortgagor in possession of the mortgaged property executes a lease of the property in the ordinary course of management as the agent or bailiff of the mortgagee during the pendency of a suit by the mortgagee to enforce the mortgage, a question may arise whether such a lease is in the eye of the law a lease granted by the mortgagee through his agent and therefore binding on him. But in the present case, that question does not arise as the leases were not granted by the mortgagor in the ordinary course of management as the bailiff or agent of the mortgagee. 13. The High Court held that the leases were steam transactions. We do not think it necessary to decide this question. Even assuming that the leases were not sham transactions they were not binding on Kashinath and the deity. The High Court rightly decreed the suit

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]We think that this contention should be rejected. In view of the orders passed against Kashinath in the claim proceedings and his failure to institute suits under O. 21, R. 63, C. P. C., Kashinath was precluded from claiming that he had the right to attach the suit lands execution of his money decree, but he was not precluded from claiming that he had the right to sell the lands in execution of his mortgage decree. Rules 58 to 62 of Order 21, C. P. C., provide for a summary investigation of the claims and objections to the attachment of any property attached in execution of a decreeA claim proceeding under R. 58 is not a suit or a proceeding analogous to a suit. An order in the claim proceeding does not operate as res judicata. It is because of Rule 63 that the order becomes conclusive. The effect of R 63 is that unless a suit is brought as provided by the rule, the party against whom the order in the claim proceeding is made or any person claiming through him cannot re-agitate in any other suit or proceeding against the other party or any person claiming through him the question whether the property was or was not liable to attachment and sale in execution of the decree out of which the claim proceeding arose, but the bar of Rule 63 extends no furtherBut we cannot agree with those observations. The order in the summary proceeding under R. 58 does not operate as res judicata. The reason why the garnishee could not re-agitate his objections was that in view of R. 63 he was precluded from asserting that the decree-holder was entitled to attach and sell the particular debt on the footing that it was due to the judgment-debtorThe observation that the party dissatisfied with the order made under S. 278 of theCode of Civil Procedure, 1882, could have appealed from the order, seems to have been made per incuriam. It seems that no appeal lay from such an order. The reason why Lalji Lal was precluded from contending that the property was liable to be attached and sold in execution of the decree obtained by him was that in the absence of a suit under S. 283 of C. P. C. of 1882, he and Sarju Prasad claiming title under him, could not subsequently contend that the property was liable to be sold in execution of the decree. In the two cases discussed above, the adverse orders in the claim proceeding became conclusive on the question whether the property was liable to attachment and sale in execution of the particular decree then sought to be executed. Equally, in the absence of any suit under O. 21, R. 63, C. P. C., the adverse orders passed against Kashinath conclusively decided that the suit lands were not liable to be sold in execution of the money decree obtained by him against Ramtahal Pandey. But those orders were not conclusive on the question whether the lands were liable to be sold in execution of the mortgage decree obtained by Kashinath against Ramanandan LalThis novel argument is ingenious but unsound. An auction-purchaser at a sale held in execution of a mortgage decree buys not only the interest of the mortgagor but also the interest of the mortgagee. If the lease does not bind the mortgagee, it does not equally bind the auction-purchaserIn the present case, the lessees allowed the suit lands to be sold in execution of the mortgage decree and they have now lost the right of redemption. They cannot resist the claim of the auction-purchaser for recovery of possession of the lands12. If a mortgagor in possession of the mortgaged property executes a lease of the property in the ordinary course of management as the agent or bailiff of the mortgagee during the pendency of a suit by the mortgagee to enforce the mortgage, a question may arise whether such a lease is in the eye of the law a lease granted by the mortgagee through his agent and therefore binding on him. But in the present case, that question does not arise as the leases were not granted by the mortgagor in the ordinary course of management as the bailiff or agent of the mortgagee13. The High Court held that the leases were steam transactions. We do not think it necessary to decide this question. Even assuming that the leases were not sham transactions they were not binding on Kashinath and the deity. The High Court rightly decreed the suit