Full Judgment Text
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PETITIONER:
DEV RAJ DOGRA AND ORS.
Vs.
RESPONDENT:
GYAN CHAND JAIN AND ORS.
DATE OF JUDGMENT10/03/1981
BENCH:
SEN, AMARENDRA NATH (J)
BENCH:
SEN, AMARENDRA NATH (J)
FAZALALI, SYED MURTAZA
VARADARAJAN, A. (J)
CITATION:
1981 AIR 981 1981 SCR (3) 174
1981 SCC (2) 675 1981 SCALE (1)663
ACT:
Code of Civil Procedure 1908, Order XXI Rules 95 and 96
and Transfer of Property Act 1882, Ss 52, 58 and 65A-
Mortgage-Consent decree passed in suit for money due-
property let out by owner to tenants-property sold in court
auction Auction purchaser applying to court for delivery of
possession of property-Whether entitled to actual physical
possession or symbolic possession.
HEADNOTE:
Order XXI Rules 95 and 96 of the Code of Civil
Procedure enable a purchaser of immovable property in a
Court sale, to apply for delivery of possession. Rule 95
provides for actual physical possession and rule 96 provides
for symbolic possession. A purchaser will be entitled to
physical possession of the property purchased if the
property sold is in the occupation of the judgment-debtor,
of some person on behalf of the judgment debtor or some
person claiming under a title created by the judgment-debtor
subsequent to the attachment of the property. If the
property sold is in the possession of a tenant or other
person entitled to occupy the same, symbolic possession is
to be made over to the purchaser under Rule 96.
The first respondent was an auction purchaser of
property, of which the three appellants were tenants
occupying different portions. The property was mortgaged by
its owner with a Bank. As the amount due was not paid, the
Bank instituted a suit for its recovery. A decree was passed
by consent of the parties which provided that if the amount
was not paid within two years, the Bank could enforce the
decree by sale of the property. After the compromise decree
was passed, the owner leased out different portions of the
property to the appellants. As the owner failed to make
payment of the decreetal dues, the property was sold by
Court auction and the first respondent, whose bid was the
highest, was declared to be the purchaser of the premises,
and the sale in his favour was confirmed.
The first respondent/auction-purchaser filed an
application under Order XXI, Rules 95 and 96 read with
Section 151 of the Code of Civil Procedure in the High
Court, for delivery of vacant physical possession of the
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entire property and prayed that if it was not possible to
grant vacant physical possession of any part of the
property, symbolic possession of that part may be granted.
This application was contested by the three
appellants/tenants.
A Single Judge of the High Court holding that the
tenancies in favour of the appellants having been created
after the institution of the suit by the Bank and after the
passing of the compromise decree in the said suit, and the
said tenancies would have no effect on the rights acquired
by the auction-purchaser in view of Section 52 of the
Transfer of Property Act, and relying on the Division Bench
Judgments of the Bombay High Court in Ramdas Popat Patil v.
Fakira Patil and Ors. AIR 1959 Bom 19 and of the Gujarat
High Court in Jagjiwandas a Firm v.
175
Lakhiram Haridasmal and Ors. AIR 1968 Guj 193 passed an
order for delivery of physical possession of the portions in
the respective occupation of the appellants.
In appeal it was contended that the Full Bench decision
of the Bombay High Court in Anaji Thamaji Patil v. Ragho
Bhivraj Patil and Anr. AIR 1973 Bom 75, over-ruled the
Bombay Division Bench decision and doubted the correctness
of the Gujarat decision, but the Division Bench of the High
Court dismissed the appeal accepting the contention put
forward on behalf of the respondent-purchaser that the
decision of this Court in M/s Supreme General Films Exchange
Ltd. v. His Highness Maharaja Sir Brijnath [1976] 1 SCR 237
concluded the controversy.
In the appeal to this Court, it was contend on behalf
of the appellants that:
(1) Section 52 of the Transfer of Property Act has no
application to the facts and circumstances of this case as
the conditions laid down therein for its applicability are
not satisfied.
(ii) The right that the mortgagee had was only to put
the property to sale in the event of the mortgagor failing
to pay the decreetal amount in terms of the provisions of
the compromise decree, and this right cannot be said to be a
right to immovable property directly and specifically in
question in the suit.
(iii) Section 65A of the Transfer of Property Act
should be read alongwith Section 52 and both these sections
have been incorporated with the object of preserving the
interest of the mortgagee by making suitable provisions so
that the security of the mortgagee might not in any way be
affected by any act done by the mortgagor after the creation
of the mortgage and also after the institution of any suit
for enforcement of the mortgage.
(iv) Section 52 makes provisions for the parties to the
suit or proceeding and can have no application to any
auction purchaser who is not a party to the suit or
proceeding and who only acquires his right after the sale in
execution of the decree has been confirmed.
(v) The right of the third party auction-purchaser to
get physical possession of the property purchased at the
auction sale was not considered by the Supreme Court in M/s
Supreme General Films Exchange Ltd. v. His Highness Maharaja
Sir Brijnath Singhji Deo of Maihar and Ors. and Jayaram
Mudaliar v. Ayya Swami and Ors. AIR 1973 SCR 569.
(vi) Order XXI, Rule 95 and Rule 96 of the Code of
Civil Procedure provides that the rights of an auction-
purchaser are governed by the provisions contained therein
and that the auction purchaser cannot claim physical
possession of the portions in the occupation of the
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appellants even though they might have been inducted as
tenants after the compromise decree in the suit had been
passed.
On behalf of the first respondent auction-purchaser it
was submitted that (1) as the tenants were inducted not only
after the institution of the suit for enforcement of the
mortgage but also after the compromise decree that has been
passed therein, Section 52 of the Transfer of Property Act
must be held to be applicable
176
and it must be held that the tenancies were illegal and were
created in breach of these provisions. S.(2) 65A the
Transfer of Property Act does not in any way control section
52. S 65A makes provisions with regard to the powers of the
mortgagor to grant leases of the mortgaged property after
the creation of the mortgage but before the institution of
suit, while S. 32 makes provisions for cases of transfer or
otherwise dealing with any property after the institution of
a suit or proceeding and S. 52 imposes a complete ban on the
transfer of any kind or dealing with immovable property
except with the authority of the Court during the pendency
of the suit or proceeding so that the rights of any part may
not be affected when any decree or order is passed.
3. Section 58 of the Transfer of Property Act provides
that a mortgage is a transfer of an interest in specific
immovable property for the purpose of securing the payment
of money advanced or to be advanced by way of loan. In a
suit for the enforcement of a mortgage, the right to
immovable property is directly and specifically in question
and after the decree for sale is passed, the mortgagor loses
even his right to redeem the property. The tenancies in the
instant case having been created long after the compromise
decree, are illegal and void and in contravention of S. 52
of the Act.
4. The decisions of this Court in M/s Supreme General
Films Exchange Ltd. Manager Mahto and Ors. and Jayaram
Mudaliar conclude the question involved in the appeal.
On the question whether the 1st Respondent as auction
purchaser in an application under Or. XXI, rules 95 and 96,
of the Code of Civil Procedure is entitled to recover actual
physical possession of the portions in the occupation of the
appellants as lessees, the lease in respect of which were
created after the decree in the mortgage suit by consent
between the parties had been passed.
Allowing the appeal
^
HELD 1. The Judgment and Order passed by the High Court
directing physical possession of the portions in the
occupation of the appellants to be made over to the auction-
purchaser Respondent No. 1 is set aside. Symbolic possession
of the portions in occupation of the appellants to be made
over to the auction-purchaser respondent. [194 D]
2. In the case of M/s Supreme General Films Exchange
Ltd., the validity of the lease had been questioned by the
mortgagee decree holder in a suit for declaration. The claim
was not for possession by a third party auction-purchaser in
a proceeding, under rules 95 and 96 of order XXI of the Code
of Civil Procedure and the merits of such an application and
the scope and effect of the said provisions of the Code did
not come up for consideration. In Mangru Matho and Ors. v.
Shri Thakur Taraknath Tarakeshwar Math and Ors. a suit was
instituted by the mortgagee auction-purchaser for recovery
of possession of mortgaged property sold in execution of the
mortgage decree and purchased by the mortgagee himself and
the decision rested mainly on the basis that the lease was
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not granted by the mortgagor in the usual course of
business. This case was also not concerned with an
application by an outsider-auction purchaser for physical
possession of the property purchased by him in an
application made under order XXI Rules 95 and 96 of the Code
of Civil Procedure. These two decisions do not therefore
conclude the question involved in the present appeal.[190 A-
B, 191 H-192 C]
177
3. The auction-purchaser derives his right to obtain
possession only after the sale in his favour has become
absolute and sale certificate has been obtained by him. The
mode and manner of obtaining such possession are regulated
by Rules 95 and 96 of the Code of Civil Procedure.[193 F]
In the instant case a third party auction-purchaser is
seeking recovery of the physical possession of the property
purchased by him at the auction from the appellants who are
in possession of different portions of the said premises as
tenants of the said portions. The auction-purchaser was not
the mortgagee and he was no party to the suit in which the
compromise decree was passed. The auction purchaser in view
of the provisions contained in Rule 95 which regulate the
rights of the auction-purchaser to obtain physical
possession of the property, is not entitled to the recover
the physical possession of the portions in the occupation of
the appellants as tenants. The appellants are not the
judgment-debtors. They are not in occupation of the property
on behalf of the judgment-debt or. They are also not
claiming to be in occupation under a title created by the
judgment-debtors subsequent to any attachment of the
property. There is no question of any attachment in the
case. The appellants are in the occupation of their
respective portions as tenants and they claim to occupy the
same as such. The auction purchaser must therefore be held
to be entitled to only symbolic possession in terms of the
provisions contained in Or XXI rule 96 in respect of the
portions in occupation of the appellants. [192 H-193 A, 193
H-194 A, C]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1653 of
1979.
Appeal by special leave from the Judgment and Order
dated 23.5.1979 of the Delhi High Court in E.F.A. No. 8/76.
Madan Bhatia and Sushil Kumar for the Appellant.
S N. Kacker, S.K.Mehta, P.N. Puri, E.M.S. Anam and M.K.
Dua for the Respondents.
The Judgment of the Court was delivered by
A.N. SEN J. The principal question which falls for
determination in this appeal by Special Leave granted by
this Court, is whether Gyan Chand Jain, the Respondent No. 1
in this appeal, who purchased a two and half storeyed
Bungalow at No. 5-C/96, W.E.A. Karol Bagh, New Delhi, at an
auction sale held pursuant to the terms of the compromise
decree between the morgagor and the morgagee, is entitled to
recover actual physical possession of the portions in the
occupation of the appellants as lessees, the leases in
respect of which were created after the decree in the
mortgage suit by consent between the parties had been
passed, in an application made by the auction purchaser Gyan
Chand Jain under O.XXI, rules 95 & 96 of the Code of Civil
Procedure.
There is no serious dispute with regard to the facts
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material for the purpose of appeal. Des Raj Agarwal, the
sole proprietor of M/s.
178
Raj Kumar & Co., mortgaged the 2/1/2 storeyed bungalow
No.5-C/96, WEA. Karol Bagh, New Delhi (herein-after referred
to as the premises) along with various other properties with
Oriental Bank of Commerce (hereinafter referred as the Bank)
on 28.6.1960 by deposit of title deeds. The Bank filed a
suit to recover its dues on the mortgage on 6.11.1962. On
3.9.1963, a decree was passed by consent of the parties in
favour of the plaintiff-mortgagee for the sum of Rs.
479177.49 with costs and future interest at 6% till
realisation of the decretal amount. The other relevant terms
of the consent decree which are contained in clauses 8 and 9
of the compromise are to the following effects:
"8. If the judgment debtor pay Rs. 479177.49 less
costs and interest as after March, 1961 within two
years of the decree, then whole of the decree shall
stand satisfied.
9. If full amount of the decree with costs and
interest is not paid as agreed above, within two years
of the decree, then the decree-holder shall be free to
enforce the decree against the property mortgaged which
shall be sold in execution of the same and the decree
holder shall be entitled to proceed against other
property and person of the judgment-debtor in the case
of the proceeds of the property not being sufficient to
satisfy the decree".
After the decree had been passed on 3.9.1963, it appears
that the judgement-debtor leased out different portions of
the premises to Dev Raj Dogra, Ish Kumar Khosla and Balwant
Singh, the appellants herein, 1966, 1967 and 1970
respectively. The judgment debtor failed to make payment of
the decreetal dues in terms of the provisions contained in
the consent decree and the premises in question resold by
public auction on 28.10.1971. Gyan Chand Jain whose bid was
the highest, was declared to be the purchaser of the
premises and the sale in his favour was confirmed on
6.8.1973. On 25.10.76 an application was made on behalf on
Gyan Chand Jain, the auction purchaser, in the Delhi High
Court under O. XXI rules 95 and 96 and also S.151 of the
Code of Civil Procedure for the following reliefs:-
(i) Warrants of possession with the direction that
vacant physical possession of the entire property
be delivered to the applicant, be issued and
vacant physical possession of the entire property
be got delivered to the applicant;
179
(ii) in case the Hon’ble Court comes to a conclusion
that the applicant is not entitled to vacate
physical possession of any part of the property
symbolic possession of that part of the property
be granted to him;
(iii) notices be issued to the persons mentioned in para
9 above to show cause why vacant physical
possession of the portion of the property in their
occupation be not delivered to the applicant.
The three tenant who were in possession of the respective
portions leased out to them and on whom notices had been
served, contested the said application. A learned Single
Judge of the Delhi High Court passed an order of physical
possession of the said portions in the respective occupation
of the tenants, the appellants before us, to be made over to
the auction purchaser Gyan Chand Jain. The Learned Judge
held that the tenancies in favour of the tenants had been
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created after institution of the suit by the Bank and after
the passing of the compromise decree in the said suit; and,
the said tenancies would have no effect on the rights
acquired by the auction purchaser, in view of the provisions
contained in S. 52 of the Transfer of property Act. The
Learned Judge had relied on the judgment of a Division Bench
of the Bombay High Court in the case of Ramdas Popat Patil
v. Fakira Pandu Patil and Ors.(1) and also on decision of
Division Bench of the Gujarat High Court in case Jagjiwandas
a Firm v. Lakhiram Haridasmal and Ors.(2) The tenants
preferred an appeal against the said order of the learned
Judge. Before the Division Bench of the Delhi High Court, it
was urged on behalf of the tenants that the decision of the
Division Bench relied on by the learned Single Judge had
been subsequently over-ruled by a decision of the Full Bench
of the Bombay High Court in case of Anaji Thamaji Patil v.
Ragho Bhivraj Patil and Anr.(3) and the correctness of the
decision of the Gujarat High Court had also been questioned
in this Full Bench judgment. Various other arguments were
also advanced before the Division Bench on behalf of the
tenants and the said arguments have been noted in the
judgment of the Division Bench. The Division Bench however,
dismissed the appeal, accepting the contention put forward
on behalf of the respondent auction-purchaser that the
decision of this Court in the case of M/s Supreme General
Films Exchange Ltd. v. His Highness Maharaja Sir Brijnath
Singhji.
180
Deo of Maihar and Ors., concludes the controversy. The
Division Bench also referred to the decision of this Court
in case Jayaram Mudaliar v. Avva Swami and Ors.(2) Against
the judgment and decision of the Delhi High Court the
tenants have preferred this appeal after obtaining special
leave from this Court.
Mr. Bhatia, learned counsel appearing on behalf of the
tenants the appellants before us, has urged that S. 52 of
the Transfer of Property Act has no application to the facts
and circumstances of this case, as the conditions laid down
in the said Section for the applicability of the said
section are not satisfied. It is the argument of Mr. Bhatia
that the requirements of the said Section are-(1) there must
be a suit or proceeding which is not a collusive one and any
right to immovable property must be directly and
specifically in question in the said suit or proceeding and
(2) transfer or otherwise dealing with the property by any
party to the suit or proceeding must affect the right of any
other party thereto under any decree or order which may be
passed therein. Mr. Bhatia has contended that in the instant
case the right that the mortgagee had was only to put the
property to sale in the event of the mortgagor failing to
pay the decreetal amount in terms of the provisions of the
compromise decree. It is his contention that the right to
put the property to sale cannot be said to be a right to
immovable property directly and specifically in question in
the suit. He also referred to S. 65A of the Transfer of
Property Act which empowers the mortgagor while lawfully in
possession of the mortgaged property to grant lease in terms
of the provisions contained in the said Section. He has
submitted that S. 65A should be read along with S. 52 and
both these sections have been incorporated with the object
of preserving the interest of the mortgagee by making
suitable provisions so that the security of the mortgagee
might not in any way be affected by any act done by the
mortgagor after the creation of the mortgage and also after
the institution of any suit for enforcement of the mortgage.
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It is his submission that in S. 65A of the Transfer of
Property Act the Legislature has made it manifestly clear
that the mortgagor will be entitled to grant a lease of the
property in conformity with the provisions of the said
Section and he submits that when a mortgagor grants a lease
of the mortgaged property in terms of the provisions of
Section 65-A of the Transfer of Property Act, it cannot be
said that the granting of any such lease affects the right
of the mortgagee. Mr. Bhatia has next contended that in any
event S.52 makes provisions for the
181
parties to the suit or proceeding and can have no
application to any outside auction purchaser who is not a
party to the suit or proceeding and who only acquires his
right after the sale in execution of the decree has been
confirmed. Mr. Bhatia argues that the judgment of the
learned Single Judge of the Delhi High Court must be held to
be wrong, as the learned Single Judge came to his decision
relying on the decision of the Division Bench of the Bombay
High Court in the case of Ramdas Popat Patil v. Fakira Pandu
Patil and Ors. (supra) and the decision of the Gujarat High
Court in the case of Jagjiwandas a Firm v. Lakhiram
Haridasmal and Ors. (supra) and the decision of the Division
Bench of the Bombay High Court in Ramdas Popat Patil’s case
has been over ruled by the Ful Bench decision of the Bombay
High Court in Anaji Thamaji Patil v. Ragho Bhivraj Patil and
Anr. (supra) in which the correctness of the decision of the
Gujarat High Court has also been questioned. Mr. Bhatia has
commented that the decisions of this Court in the case of
M/s. Supreme General Films Exchange Ltd. v. His Highness
Maharaja Sir Brijnath Singhji Deo of Maihar and Ors. (supra)
and in the case of Jayaram Mudaliar v. Ayya Swami and Ors.
(supra) do not conclude the question involved in the instant
case. He has submitted that the rights of a third party
auction-purchaser to get physical possession of the property
purchased at the auction sale was not considered by the
Supreme Court in any of these two decisions; and he has
further submitted that in these two cases the Supreme Court
had indeed proceeded on the assumption that S. 52 of the
Transfer of Property Act was applicable without considering
whether the requirements of the said Section had been
complied with or not, as these aspects were not argued
before the Supreme Court in these two cases. Mr. Bhatia has
drawn our attention to O.XXI, rule 95 and also to rule 96 of
the Code of Civil Procedure and has submitted that the
rights of an auction purchaser are governed by the
provisions contained therein. It is the argument of Mr.
Bhatia that in view of the provisions contained therein, the
auction purchaser cannot claim physical possession of the
portions in the occupation of the appellants, even though
the appellants might have been inducted as tenants after the
compromise decree in the suit had been passed.
Mr. Kakkar, learned counsel appearing on behalf of the
auction purchaser, has submitted that as the tenants in the
instant case were inducted not only after the institution of
the suit for enforcement of the mortgage but also after the
compromise decree had been passed, therein S. 52 of the
Transfer of Property Act must be held to be applicable and
it must be held that the tenancies were illegal and were
created in breach of the provisions contained in S. 52 of
the
182
Transfer of Property Act. Mr. Kakkar has argued that S. 65-A
of the Transfer of Property Act does not, in any way,
control S. 52 of the said Act. It is his argument that S.
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65-A makes provisions with regard to the powers of the
mortgagor to grant leases of the mortgaged property after
the creation of the mortgage but before the institution of
suit, while, on the other hand S. 52 makes provisions for
cases of transfer or otherwise dealing with any property
after the institution of a suit or proceeding and S. 52
imposes a complete ban on the transfer of any kind or
dealing with immovable property except with the authority of
the Court during the pendency of the suit or proceeding in
which any right to immovable property is directly or
specifically in question so that the rights of any party may
not be affected when any decree or order is passed in the
suit or in the proceeding. Mr. Kakkar has referred to S.58
of the Transfer of Property Act in support of his contention
that in case of a mortgage, there is a transfer of an
interest in specific immovable property for the purpose of
securing of the payment of money advanced or to be advanced
by way of loan. He has argued that in a suit for the
enforcement of mortgage it must, therefore, be held that the
right to immovable property is directly and specifically in
question; and he has further argued that after the decree
for sale is passed in a mortgage suit the mortgagor loses
even his right to redeem the property. He has submitted that
in the instant case tenancies have been created long after
the compromise decree in which provision for sale of the
mortgaged property had been made and the right of the
mortgagee decree-holder to put up the mortgaged property to
sale had also arisen for failure on the part of the
mortgagor judgment-debtor to pay the decretal dues in terms
of the compromise decree and the tenancies created by the
mortgagor must be held to be illegal and void as they are
clearly in contravention of the provisions contained in S.
52 of the Transfer of Property Act. He submits that there
cannot be any manner of doubt, that the creation of a
tenancy affects the value of the property and to that extent
affects the security, even though it may be said that the
Legislature in its wisdom has thought it fit to permit the
mortgagor to grant leases of the mortgaged property in terms
of the provisions contained in S. 65-A of the Transfer of
Property Act. It is his argument that the Legislature has
thought it fit not to impose any kind of absolute
prohibition in respect of the dealing with any property by
the mortgagor after the creation of a mortgage and has
imposed only such restrictions which the Legislature thought
would not prejudicially effect the security of the
mortgagee; but the Legislature, however, in S. 52 of the Act
has thought fit to impose complete ban on the transfer
183
of or otherwise dealing with any property after the
institution of a suit or proceeding in which the right to
property is directly or specifically in question, so that
the rights of any party thereto may not be affected under a
decree or order which may be made in the suit or proceeding.
Mr. Kakkar has next submitted that the auction purchaser at
the Court sale acquires all the right, title and interest of
the mortgagor and also of the mortagee as a result of the
purchase and the auction-purchaser, therefore, steps into
the shoes of the mortgagee and becomes entitled to obtain
physical possession of the property purchased in the same
manner as the mortgagee himself would have been able to do.
Mr. Kakkar in this connection has referred to the decision
of this Court in the case Mangru Mahto and Ors. v. Shri
Thakur Taraknath Tarakeshwar Math and Ors.(1); and also to
the decision of the Supreme Court in M/s. Supreme General
Films Exchange Ltd. v. His Highness Maharaja Sir Brijnath
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Singhji Deo of Maihar and Ors. (supra) It is the submission
of Mr. Kakkar that the decisions of this Court in the case
of M/s. Supreme General Films Exchange Ltd. (supra) and also
in the case of Jayaram Mudaliar (supra) conclude the
question involved in the present appeal and the Division
Bench rightly dismissed the appeal relying on the said
decisions.
Before we proceed to deal with the respective
contentions of the parties, it will be convenient to
consider the material provisions of the relevant statutes to
which we were referred in the course of submissions made
from the bar. Section 52 of the Transfer of Property Act
reads as follows:-
"During the pendency in any Court having authority
within the limits of India excluding the State of Jammu
and Kashmir or established beyond such limits by the
Central Government of any suit or proceeding which is
not collusive and in which any right to immovable
property is directly and specifically in question, the
property cannot be transferred or otherwise dealt with
by any party to the suit or proceeding so as to affect
the rights of any other party thereto under any decree
or order which may be made therein, except under the
authority of the Court and on such terms as it may
impose.
[Explanation-For the purposes of this section, the
pendency of a suit or proceeding shall be deemed to
commence from the date of the presentation of the
plaint or the institu-
184
tion of the proceeding in a Court of competent
jurisdiction, and to continue until the suit or
proceeding has been disposed of by a final decree or
order, and complete satisfaction or discharge of such
decree or order has been obtained, or has be come
unobtainable by reason of the expiration of any period
of limitation prescribed for the execution thereof by
any law for the time being in force.]"
Material provisions of S. 58 (a) and (b) of the said Act are
in the following terms:-
"(a) A Mortgage is the transfer of an interest in
specific immovable property for the purpose of securing
the payment of money advanced or to be advanced by way
of loan, an existing or future debt, or the performance
of an engagement which may give rise to a pecuniary
liability.
The transferor is called a mortgagor, the
transferee a mortgagee; the principal money and
interest of which payment is secured for the time being
are called the mortgage-money, and the instrument (if
any) by which the transfer is effected is called a
mortgage-deed.
(b) Where, without delivering possession of the
mortgaged property, the mortgagor binds himself
personally to pay the mortgage-money, and agrees,
expressly or impliedly, that, in the event of his
failing to pay according to his contract, the mortgagee
shall have a right to cause the mortgaged property to
be sold and the proceeds of sale to be applied so far
as may be necessary, in payment of the mortgage-money,
the transaction is called a simple mortgage and the
mortgagee a simple mortgagee."
S. 65A which was subsequently introduced into the Act by S.
30 of the Transfer of Property (Amendment) Act, 1929
provides:-
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"(1) Subject to the provisions of sub-section (2), a
mortgagor, while lawfully in possession of the
mortgaged property, shall have power to make leases
thereof which shall be binding on the mortgagee.
(2) (a) Every such lease shall be such as would be
made in the ordinary course of management of
the property concerned, and in accordance
with any local law, custom or usage.
185
(b) Every such lease shall reserve the best rent
that can reasonably be obtained, and no
premium shall be paid or promised and no rent
shall be payable in advance.
(c) No such lease shall contain a covenant for
renewal.
(d) Every such lease shall take effect from a
date not later than six months from the date
on which it is made.
(e) In the case of a lease of buildings, whether
leased with or without the land on which they
stand, the duration of the lease shall in no
case exceed three years. and the lease shall
contain a covenant for payment of the rent
and a condition of re-entry on the rent not
being paid within a time therein specified.
(3) The provisions of sub-section (1) apply only
if and as far as a contrary intention is not expressed
in the mortgagedeed; and the provision of sub-section
(2) may be varied or extended by the mortgage-deed and,
as so varied and extended shall, as far as may be,
operate in like manner and with all like incidents,
effects and consequences, as if such variations or
extensions were contained in that sub-section.
Rules 95 and 96 of O.XXI of the Code of Civil Procedure
under which the auction-purchaser in the instant case had
made the application for possession are in the following
effect:-
"95. Where the immovable property sold is in the
occupancy of the judgment-debtor or of some person on
his behalf or of some person claiming under a title
created by the judgment-debtor subsequently to the
attachment of such property and a certificate in
respect thereof has been granted under rule 94, the
Court shall, on the application of the purchaser, order
delivery to be made by putting such purchaser or any
person whom he may appoint to receive delivery on his
behalf in possession of the property, and, if need be,
by removing any person who refuses to vacate the same.
96. Where the property sold is in the occupancy of
a tenant or other person entitled to occupy the same
and a certificate in respect thereof has been granted
under rule 94, the Court shall, on the application of
the purchaser, order delivery to be made by affixing a
copy of the certificate of sale in
186
some conspicuous place on the property and proclaiming
to the occupant by beat of drum or other customary
mode, at some convenient place, that the interest of
the judgment-debtor has been transferred to the
purchaser.
An analysis of S. 52 of the Transfer of Property Act
indicates that for application of the said section the
following conditions have be satisfied:-
1. A suit or a proceeding in which any right to
immovable property must be directly and
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specifically in question, must be pending;
2. The suit or the proceeding shall not be a
collusive one;
3. Such property during the pendency of such a suit
or proceeding cannot be transferred or otherwise
dealt with by any party to the suit or proceeding
so as to affect the right of any other party
thereto under any decree or order which may be
passed therein except under the authority of
Court. In other words, any transfer of such
property or any dealing with such property during
the pendency of the suit is prohibited except
under the authority of Court, if such transfer or
otherwise dealing with the property by any party
to the suit or proceeding affects the right of any
other party to the suit or proceeding under any
order or decree which may be passed in the said
suit or proceeding.
It has to be noted that this section imposes a
prohibition on transfer or otherwise dealing with any
property during the pendency of a suit provided the
conditions laid down in the section are satisfied.
S. 58 makes it clear that in case of a mortgage there
is a transfer of an interest in the specific immovable
property mortgaged for the purpose of securing the payment
of money advanced or to be advanced by way of a loan, an
existing or future debt, or the performance of an engagement
which may gives rise to pecuniary liability. It further
confers, in case of a simple mortgage where, without
delivering the possession of the mortgaged property, the
mortgagor binds himself personally to pay the mortgage-
money, a right on the mortgagee to cause the mortgaged
property to be sold and the proceeds of sale to be applied,
so far as may be necessary in payment of the mortgage-debt,
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S. 65A which as we noticed earlier, was introduced by
the Amending Act, 1929 in recognition of the mortgagor’s
powers exercised bona fide to grant lease of the mortgage-
property in the usual course of management, makes provision
with regard to the exercise of such powers by the mortgagor,
while the mortgage subsists and the mortgagor is in lawful
possession of the mortgaged-property. This section further
makes it clear that any lease granted by the mortgagor in
accordance with the provisions of this section would be
binding on the mortgagee.
Rules 95 and 96 of O.XXI of the Code of Civil Procedure
makes provisions for enabling a purchaser of immovable
property in a Court sale after obtaining the necessary
certificate from the Court in terms of the provisions
contained in rule 94 of the Code to apply for delivery of
possession of the immovable property purchased by him at the
Court sale. Rule 95 provides for actual physical possession
and rule 96 provides for symbolic possession. A plain
reading of rule 95 which we have earlier set out, clearly
establishes, that the purchaser will be entitled to physical
possession of property purchased and the Court will direct
delivery of actual possession of the property sold to him by
removing any person who refuses to vacate the same, if need
be, if the following conditions are satisfied:-
1. The property sold must be in the occupation of the
judgment debtor;
2. The property sold must be in the occupancy of some
person on behalf of the judgement-debtor:
3. The property sold must be in the occupation of
some person claiming under a title created by the
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judgment-debtor subsequently to the attachment of
the property.
Rule 96 on the other hand makes it clear that where the
property sold is in the occupancy of a tenant or other
person entitled to occupy the same, symbolic possession of
the property in the manner provided in the said rule is to
be made over to the purchaser after the purchaser has
obtained the necessary certificate under rule 94 of the
Code.
We shall now proceed to consider the decision of this
Court in the case of M/s. Supreme General Films Exchange
Ltd. v. His Highness Maharaja Sir Brijnath Singh Deo of
Maihar and Ors. (supra) and also the decision of this Court
in Jayaram Mudaliar v. Ayya Swami and Ors (supra). In the
case of M/s. Supreme General Films Exchange
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Ltd., the plaintiff-respondent who were the mortgagee
of a cinema theatre of which the appellant Supreme General
Films Exchange Ltd. claimed to be a lessee in occupation,
had filed a suit against the mortgagor and a decree by
compromise had been passed in the said suit on 7th May,
1960. By the said compromise decree it was agreed that the
amounts due to the mortgagee decree-holder would be realised
by the sale of the theatre. The Central Bank of India,
another creditor of the mortgagor, assigned its rights under
the decree to the plaintiff decree holder. The theatre was
attached in the course of execution of the decree. The
original lease of 1940 on the basis of which the appellant,
the Supreme General Films Exchange Ltd. had entered into
possession, expired in 1946 but thereafter the Company had
continued in possession as a tenant holding over until the
impugned lease-deed of 1946 in favour of the company was
executed. The company filed a suit in 1954 for specific
performance of the agreement to lease and the lease deed of
1956 was executed in compliance with the terms of the
compromise decree passed in the said suit filed by the
appellant company. In the said suit for specific performance
by the appellant company, the plaintiff mortgagee was not
impleaded as a party. The plaintiff mortgagee thereafter
filed a suit claiming that the lease of 1956 was void as the
same came within the mischief of Ss. 52 and 65A of the
Transfer of Property Act and also S. 64 of the Code of Civil
Procedure. The appellant company contested the said suit
contending inter alia that the suit of this nature filed by
the plaintiff mortgagee did not lie as it fell outside the
purview of S. 42 of the Specific Relief Act. The trial Court
decreed the said suit of the plaintiff mortgagee and granted
the declaration asked for. The appellant-company preferred
an appeal against the decree of the trial Court to the High
Court which dismissed the said appeal. Thereafter the
appellant company filed a further appeal to this Court by
special leave granted by this Court. This Court for reasons
recorded in the judgment held that the plaintiff was
entitled to the declaration asked for on proper construction
of S. 42 of the Specific Relief Act. One of the contentions
which was raised on behalf of the appellant in this Court
was that S. 52 of the Transfer of Property Act was not
attracted to the lease in question. Dealing with contention
this Court observed at pp. 243-244 as follows:-
"The contention that the case fell outside the
purview of section 52 of the Transfer of Property Act
as the lease was executed in purported satisfaction of
an antecedent claim rests upon the terms of an
agreement of 1948, embodied in a letter, on the
strength of which the defendant-appellant had
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189
filed his suit for specific performance. We find that
the terms of the compromise decree in that suit and
lease-deed of 1956 purported to confer upon the
defendant-appellant new rights. Indeed, there are good
grounds for suspecting that the compromise in the suit
for specific performance was adopted as a device to get
round legal difficulties in the execution of the lease
of 1956 in favour of the defendant-company. We are
unable to accept the argument, sought to be supported
by the citation of Bishan Singh and Ors. v. Khazan
Singh and Anr. (AIR 1951 Assam 101) that the lease was
merely an enforcement of an antecedent or pre-existing
right. We think that it purported to create entirely
new rights pendent lite. It was, therefore struck by
the doctrine of lis pendens, as explained by this Court
in Jayaram Mudaliar v. Ayyaswami and ors. [1973 SCR.
139] embodied in Section 52 of the Transfer of Property
Act.
An alternative argument of the appellant was that
a case falling within S. 65A (2) (a) of the Transfer of
Property Act, confining the duration of a lease by a
mortgagor to three years, being a special provision,
displaces the provisions of section 52 of the Transfer
of Property Act. This argument overlooks the special
object of the doctrine of lis pendens which applies to
a case in which litigation relating to property in
which rights are sought to be created pendente lite by
acts of parties, is peening. Moreover, for the purposes
of this argument, the defendant-appellant assumes that
the provisions of Section 65A(2) (e) Transfer of
Property Act are applicable. If that was so, it would
make no substantial difference to the rights of the
defendant-appellant, which would vanish before the suit
was filed if Section 65A applies. We, however, think
that, as the special doctrine of lis pendens, is
applicable here, the purported lease of 1956 was
invalid from the outset. In this view of the matter, it
is not necessary to consider the applicability of
Section 65A (2) (e), which the defendant-appellant
denies, to the facts of this case."
This Court further held agreeing with the concurrent
findings of the Trial Court and the High Court that the
lease of 1956 was also struck by the provisions of S. 64 of
the Civil Procedure Code, as the property continued to
remain under attachment at the time of the grant of the
lease in 1956.
190
It may be noted that in the case the validity of the
lease had been questioned by the mortgagee decree-holder in
a suit for appropriate declaration. The claim was not for
possession by a third party auction-purchaser in a
proceeding under rr. 95 and 96 of O.XXI of the Code of Civil
Procedure and the merits of an application under the said
provisions of the Code and the scope and effect thereof did
not come up for consideration,
In the case of Mangru Mahto and Ors. v. Shri Thakur
Taraknath Tarakeshwar Math and Ors. (supra), the mortgagor
had granted lease of the mortgaged-property to certain
persons. In execution of the mortgage-decree, the mortgagee
himself purchased the property at the auction. The lessees
of the mortgaged-property had allowed the property to be
sold and had not applied for being added as a party. The
mortgagee had also obtained the money decree against one of
the lessees and in execution of the decree had attached the
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mortgaged land. The lessees filed claim petitions objecting
to the attachment under O.XXI, rule 58 of the Code of Civil
Procedure. The claim petitions filed by the lessees were
allowed and the executing court held that the leases were
genuine. The mortgagee auction-purchaser did not file any
suit under Order XXI, rule 63 but latter filed a suit
against the mortgagor and the lessees for recovery of
possession of the lands, alleging that the leases were
collusive transactions and were otherwise not binding on
him. The Trial Court dismissed the suit holding that the
leases were genuine; but the High Court decreed the suit
holding that the leases were sham transactions and were made
in contravention of S. 65A of the Transfer of Property Act.
The lessees thereafter preferred and appeal to this Court
under certificate granted by the High Court. One of the
contentions raised before this Court was that as the
mortgagee did not file a suit under o. XXI, rule 63 of the
Code of Civil Procedure after the claim petitions of the
lessees under O.XXI rule 58 of the Code of Civil Procedure
had been allowed and the mortgagee was not entitled to
maintain the suit for recovery of possession of the
mortgaged land and for mense profits on the allegation that
the leases were collusive transactions and were otherwise
not binding on him. This contention was negatived by this
Court for reasons recorded in the judgment. This Court
further held that the validity of the leases granted by the
mortgagor was not affected by S. 65A of the Transfer of
Property Act as the leases were granted before the enactment
of S. 65-A. As these aspects do not have any material
bearing on the question involved in the present appeal, it
does not become necessary for us to pursue these two aspects
any further. This Court, however, held that the leases in
question were not granted by the mortgagor in the ordinary
191
course of management as the agent or bailiff of the
mortgagee and were not binding on the mortgagee and in that
view of the matter this Court dismissed the appeal. This
Court observed at p. 132 as follows:-
"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 lessee 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 mortgage decree and they have now lost 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 of recovery of
possession of the lands."
It may be noted that the Court immediately after the
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aforesaid observations has further observed as follows:-
"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 mortgagor."
It is to be noticed that this decision arose out of the suit
instituted by the mortgagee auction-purchaser for recovery
of possession of
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mortgaged-property sold in execution of the mortgage decree
and purchased by the mortgagee himself and the decision in
the case rested mainly on the basis that the lease was not
granted by the mortgagor in the usual course of business.
This case was also not concerned with an application by an
outside-auction purchaser for physical possession of the
property purchased by him in an application made under
O.XXI, rr. 95 and 96 of the Code of Civil Procedure, and the
Court did not have to consider this scope and effect of a
proceeding under O.XXI, rr. 95 and 96 of the Code of Civil
procedure.
In our opinion, it cannot, therefore, be said that
these two decisions of this Court conclude the question
involved in the present appeal before us.
It may be true that S. 52 and S. 65-A of the Transfer
of Property Act operate in different spheres. S.65-A, as we
have earlier noticed deals with the powers of the mortgagor
to grant a lease of the mortgaged property., while the
mortgagor remains in lawful possession of the same. S. 52
deals with cases of transfer of or otherwise dealing with
any immovable property after any suit or proceeding in which
any right to the said immovable property is directly and
specifically in question, has been filed. It is also to be
noted that S. 65-A which came to be inserted by the Amending
Act 1929, is neither made ’subject to’ nor ’not withstanding
the provisions’ contained in S. 52 of the Act. S. 52 will,
however, be only applicable, if the requirements of the said
section are satisfied. We have earlier noticed what the
requirements of the said section are. In the instant case,
it does not become necessary for us to consider whether the
grant of any lease by a mortgagor in conformity with the
provisions of S. 65-A of the Transfer of Property Act during
the pendency of a suit by the mortgagee to enforce the
mortgage will attract the provisions of S. 52 of the Act or
will be outside the mischief of the provisions of the said
section on the ground that the creation of such a lease may
not affect the rights of the mortgagee under any decree or
order which may be passed in the suit. We have earlier
quoted the observations of this Court in the case of Mangru
Mahto (supra) and it will be noticed that the Supreme Court
in the said case did not decide this question and left this
question open. In the instant case an outside auction-
purchaser is seeking recovery of the physical possession of
the property purchased by him at the auction from the
appellants who are in possession of different portions of
the said premises as tenants of the said por-
193
tions. The auction-purchaser in the instant case was not the
mortgagee and he was no party to the suit in which the
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compromise decree was passed. S. 52 in clear terms speaks of
the rights of the parties to the suit or proceeding. In this
connection it may be noted that this Court in the case of
Jayaram Mudaliar (supra) held at p. 153 as follows:-
"It is evident that the doctrine, as stated in
section 52, applies not merely to actual transfers of
rights which are subject-matter of litigation but to
other dealings with it by any party to the suit or
proceeding, so as to affect the right of any other
party thereto. Hence it could be urged that where it is
not a party to the litigation but an outside agency
such as the tax collecting authorities of the
Government, which proceeds against the subject-matter
of litigation, without anything done by a litigating
party, the resulting transaction will not be hit by
section 52. Again, where all the parties which could be
affected by a pending litigation are themselves parties
to a transfer or dealings with property in such a way
that they cannot resile from or disown the transaction
impugned before the Court dealing with the litigation
the Court may bind them to their own acts. All these
are matters which the Court could have properly
considered. The purpose of Section 52 of the Transfer
of Property Act is not to defeat any just and equitable
claim but only to subject them to the authority of the
Court which is dealing with the property to which
claims are put forward."
The auction-purchaser derives his right to obtain possession
only after the sale in his favour has become absolute and
sale certificate has been obtained by him. The mode and
manner of obtaining such possession are regulated by rr. 95
and 96 of the Code of Civil Procedure. It is of interest to
note that in the instant case, the auction purchaser had
applied for obtaining possession under r. 95 which provides
for actual possession and also under r. 96 which provides
for symbolic possession. We have earlier set out the
provisions of these two rules. In the facts and
circumstances of this case, the auction purchaser, in view
of the provisions contained in rule 95 which regulates the
rights of the auction purchaser to obtain physical
possession of the property purchased, is not entitled to
recover the physical possession of the portions in the
occupation of the appellants as tenants. The appellants are
not the judgment-debtors. They are not in occupation of the
property on behalf of the judgment-debtor. They are also not
claiming to be in occupation under
194
a title created by the judgment-debtor subsequently to any
attachment of the property. There has been no question of
any attachment in the instant case. The appellants are in
the occupation of the respective portions as tenants and
they claim to occupy the same as such. The question of
validity or otherwise of the tenancy may have to be
considered and determined in an appropriate proceeding. In
the present proceeding, the auction-purchaser who is an
outsider and was not a party to the suit resulting in the
compromise decree in execution of which the property was put
up for sale, is not entitled to recover physical possession
from the appellants in view of the provisions contained in
O. XXI, rule 95, and the auction-purchaser must be held to
be entitled to symbolic possession in terms of the
provisions contained in O.XXI, rule 96 in respect of the
portions in occupation of the appellants.
We, accordingly, allow this appeal. We set aside the
judgment and order passed by the High Court directing
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physical possession of the portions in the occupation of the
appellants to be made over to the auction-purchaser Gian
Chand Jain, We direct that symbolic possession of the
portions in occupation of the appellants is to be made over
to the auction-purchaser Gian Chand Jain. In the facts and
circumstances of this case, we make no order as to costs.
N.V.K. Appeal allowed.
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