Case: Shah Mathuradas Maganlal and Company Vs. Nagappa Shankarappa Malage and Others

to exist only up to 6 November, 1953. On the redemption of the mortgage the respondent had a right to recover possession both on the terms of the mortgage deed and under section 62 of the transfer of Property Act.The second feature in the Mortgage Deed is that the appellant was given power to sub-let. Section 15 of the Bombay, Rents, Hotel and Lodging House Rates Control Act, 1947 as it stood in 1953 forbade any sub-letting. In 1959 the words but subject to any contract to the contrary were introduced into the said section 15, with the result that in the absence of the contract to the contrary, the tenant is not to sub-let or transfer. Before 1959 there could be no subletting. In the Mortgage Deed, there is provision for sub-letting. The provision for sub-letting shows that the character of tenant is lost.Third, the mortgagor is to do repair works and is also to undertake repairs.Fourth, the possession was to be under the agreement. Though the Mortgage Deed was made on 21 May, 1953, the tenancy was continued till about 7 November, 1953. The possession of the appellant as mortgagee was confirmed from 7 November, 1953. This is rightly held to be unequivocal conduct showing that no tenancy was to exist from 7 November, 1953 but the relationship was that of mortgagor and mortgagee. If the intention of the parties was to revive the tenancy there was no necessity of a term that the appellant might let out the property to any one.The contention of the appellant was that there was no surrender and there was marger of the interest of the mortgagee and the tenant. Ordinarily, the doctrine of marger applies to extinction of mortgage security. This occurs by the marger of a lower in a higher security and by the merger of a lesser estate in greater estate. Where the capacity in which a person in possession of the mortgagees rights is something quite different from the capacity in which he is in possession of the equity of redemption, the mere fact that the two capacities are united in the same physical person cannot result in a marger."For a marger to arise, it is necessary that a lesser e state and a higher estate should merge in one person at one and the same time and in the same right, and no interest in the property should remain outsion. In the case of a lease the estate that is in the lessor is a reversion. In the case of a mortgage the estate that is outstanding is the equity of redemption of the mortgagtor. Therefore, there cannot be a merger of lease and mortgage in respect of the same property since neither of them is a higher or leaser estate. than the other. The view expressed in Narayan v. Ramchandra (1) is correct.6. Section 111 of the Transfer of Property Act is clauses (e) and (f) deal with surrender, and in clause (d) with merger. Clause (d) states that lease in movable properties determines in case t he interest of the lessee or the lessor in the whole of the property becomes vested at the same time in one person in the same right. When a leasehold and a reversion coincide there is a merger of a lesser estate in the greater. The leasehold is t he lesser estate, for it is carved out of the estate of the owner, which is the reversion. The lesser estate is merged in the greater. The lease determines and merges in the reversion. If the lessor purchases the lessees interest, the lease is extinguished, as the same man cannot be at the same time both landlord and tenant. The interests of the lessor and of the lessee must be in the whole of the property, otherwise there is no merger. The interest of the lessor and the lessee in the whole of the property should become vested at the same time in one person in the same right. Thus a lease is not extinguished because the lessee purchases a part of the reversion.A surrender under clauses (e) and (f) of section 111 of the Transfer of Property Act, is an yielding up of the term of the lessees interest to him who has the immediate reversion or the lessors interest. It takes effect like a contract by mutual consent on the lessors acceptance of the act of the lessee. The lessee cannot, therefore, surrender unless the term is vested in him; and the surrender must be to a person in whom the immediate reversion expectant on the term is vested. Implied surrender by operation of law occurs by the creation of a new relationship, or by relinquishment of possession. It the lessee accepts a new lease that in itself is a surrender. Surrender can also be implied from the consent of the parties or from such facts as the relinquishment of pos session by the lessee and taking over possession by the lessor. Relinquishment of possession operates as an implied surrender. There must be a taking of possession, not necessarily a physical taking, but something amounting to a virtual taking of possession. Whether this has occurred is a question of fact. In the present case if the mortgagor was not able to redeem the appellant mortgagee was to enjoy the property in accordance with the terms of the mortgage and also to sell the property for recovery of debts. This feature shows that appellant surrendered the tenancy from 7 November, 1953.7. In the present case the terms of the deed show that the mortgagee undertook to deliver possession of the property to the mortgagor on the expiry of a period of 10 years. The Mortgage Deed shows that the tenancy was surrendered on 7 November, 1963 and thereafter the possession was only that of mortgagor. There would be no question of the tenancy being kept in abeyance or the tenancy reviving on the expiration of the period of mortgage.

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

Reasoning from the judgment:
0[ds]For a marger to arise, it is necessary that a lesser e state and a higher estate should merge in one person at one and the same time and in the same right, and no interest in the property should remain outsion. In the case of a lease the estate that is in the lessor is a reversion. In the case of a mortgage the estate that is outstanding is the equity of redemption of the mortgagtor. Therefore, there cannot be a merger of lease and mortgage in respect of the same property since neither of them is a higher or leaser estate. than the other. The view expressed in Narayan v. Ramchandra (1) is111 of the Transfer of Property Act is clauses (e) and (f) deal with surrender, and in clause (d) with merger. Clause (d) states that lease in movable properties determines in case t he interest of the lessee or the lessor in the whole of the property becomes vested at the same time in one person in the same right. When a leasehold and a reversion coincide there is a merger of a lesser estate in the greater. The leasehold is t he lesser estate, for it is carved out of the estate of the owner, which is the reversion. The lesser estate is merged in the greater. The lease determines and merges in the reversion. If the lessor purchases the lessees interest, the lease is extinguished, as the same man cannot be at the same time both landlord and tenant. The interests of the lessor and of the lessee must be in the whole of the property, otherwise there is no merger. The interest of the lessor and the lessee in the whole of the property should become vested at the same time in one person in the same right. Thus a lease is not extinguished because the lessee purchases a part of the reversion.A surrender under clauses (e) and (f) of section 111 of the Transfer of Property Act, is an yielding up of the term of the lessees interest to him who has the immediate reversion or the lessors interest. It takes effect like a contract by mutual consent on the lessors acceptance of the act of the lessee. The lessee cannot, therefore, surrender unless the term is vested in him; and the surrender must be to a person in whom the immediate reversion expectant on the term is vested. Implied surrender by operation of law occurs by the creation of a new relationship, or by relinquishment of possession. It the lessee accepts a new lease that in itself is a surrender. Surrender can also be implied from the consent of the parties or from such facts as the relinquishment of pos session by the lessee and taking over possession by the lessor. Relinquishment of possession operates as an implied surrender. There must be a taking of possession, not necessarily a physical taking, but something amounting to a virtual taking of possession. Whether this has occurred is a question of fact. In the present case if the mortgagor was not able to redeem the appellant mortgagee was to enjoy the property in accordance with the terms of the mortgage and also to sell the property for recovery of debts. This feature shows that appellant surrendered the tenancy from 7 November,the present case the terms of the deed show that the mortgagee undertook to deliver possession of the property to the mortgagor on the expiry of a period of 10 years. The Mortgage Deed shows that the tenancy was surrendered on 7 November, 1963 and thereafter the possession was only that of mortgagor. There would be no question of the tenancy being kept in abeyance or the tenancy reviving on the expiration of the period of mortgage.