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

Facts relevant to the question may be stated: One Behara Audinarayana Patro, the original owner of suit property executed two usufructuary mortgage deeds dated 30.8.1939 and 25.8.1942 in favour of the first defendant Sambangi Thavitinaidu, who was then a sitting tenant of that property. I n 1951 the mortgagor filed a suit for redemption of the mortgages and obtained a preliminary decree on 31.12.1952. Subsequently, the mortgagor died and the respondents were brought on record as his legal representatives. On 21 .10.1963 the respondents filed an application for passing a final decree by way of ascertainment of the amount due and for delivery of possession upon deposit of entire dues so ascertained. The application was resisted by the first defendant and other defendants (the appellants before us) on several grounds. Inter alia the appellants contended that even after depositing the entire amount found due to them no decree directing delivery of actual or physical possession in favour of the respondents should be passed but delivery of symbolical possession alone should be ordered insomuch as the appellants possession of the suit property as a tenant or lessee could not be disturbed. In other words, the appellants contended that on redemption the original relationship of landlord and tenant would revive which needed to be protected. The learned District Munsif, Parvatipuram took the view that the relationship of landlord and tenant had ceased to subsist after the mortgages came into existence, that the mortgage-bonds did not provide that the said relationship would be restored or revived upon redemption and that therefore the respondents were entitled to delivery of physical possession upon their depositing the entire dues payable to the appellants. The tenant-mortagees (the defendants) preferred an appeal against the order of the learned District Munsif and the learned Additional District Judge Srikakulam who heard the appeal took the contrary view relying upon a decision of Andhra Pradesh High Court in Varada Bangar Raju v. Kirthali Avatharam & others and held that the defendants-mortgagees were sitting tenants of the mortgaged property at th e time of the execution of the mortgage deeds, that there was nothing in those deeds to suggest that their rights as lessees were extinguished either by merger or implied surrender, that the landlord-tenant relationship continued to exist after termination of mortgagor-mortgagee relationship and therefore the respondents were not entitled to delivery of physical possession; he, therefore, allowed the appeal.The respondents preferred a second appeal to the Andhra Pradesh High Court and the learned Single Judge relying upon a subsequent decision in P. Satyanarayana v. Janardhan Chetty which had distinguished the earlier decision, reversed the view of the learned Addl. District Judge and restored the decree passed by the District Munsif. The learned Judge took the view that the question whether the relationship of landlord and tenant would subsist even after the execution of the usufructuary mortgage depended upon the intention of the parties to be gathered from the terms of the mortgage transaction and held that on the terms of mortgage-deeds there was no doubt that the landlord-tenant relationship had ceased to exist after the relationship of mortgagor and mortgagee came into existen ce and the mortgage bonds had not specifically provided that the landlord and tenant relationship would be restored after the redemption of the mortgages. A Letters Patent Appeal preferred by the tenant-mortgagees to the Division Bench of the Hig h Court failed and hence this appeal to this Court.

Court's reasoning:
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.