judgement:
Civil Appeals Nos. 1741 and 1742 of 1981.
From the Judgment and order dated 12.3.1981 of the Punjab and Haryana High Court in R.S.A. No. 1822 of 1978.
Harbans Lal and Balmukand Goel for the Appellants.
Anil Dev Singh, N.D. Garg and Rajiv Garg for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
How far an order directing eviction of a person by the Revenue Court under section 77(3) of the Punjab Tenancy Act, 1887 (hereinafter called 'the Act ') operates as res judicata for a title suit filed by a person claiming to be a mortgagee and not a tenant of the alleged landlord, is the question that arises in this appeal by special leave from the Full Bench decision of the High Court of Punjab and Haryana dated 12th March, 1981 in second appeal.
By the impugned order and judgment the High Court has dismissed the appeal of the appellants and affirmed the judgment and order dated 7th September, 1978 of the Additional District Judge, Gurgaon reversing the judgment and order of Sub Judge 1st Class, Ballabgarh dated 4th of November, 1977 dismissing the suit of the respondent.
It appears that the appellants filed proceedings in the Court of Assistant Collector, 1st Grade, Ballabgarh seeking ejectment of the respondent from his lands on 29th July, 1975 under section 77(3) proviso 2(e) of the Act on the ground that the respondent tenant had H 96 defaulted in the payment of rent.
The suit was decreed on 29th October, 1976.
In execution of the decree the respondent was ejected from the suit land.
No appeal though provided under the said Act was filed by the respondent from the said decree.
The resondent, however filed a suit in the civil court against the appellants alleging that he fact was a mortgagee in possession of the suit land and not a tenant and that the decree of ejectment dated 29th of October, 1976 by the Revenue Court was without jurisdiction and, therefore, a nullity.
The respondent claimed to be restored the possession of the suit land from which he had been wrongly ousted by the Revenue Court.
The suit was dismissed by the learned Subordinate Judge on 4th November, 1977 holding that the claim of the respondent to be a mortgagee in possession of the suit land was wrong and that the order of the Revenue Court was perfectly in order and was within that court 's jurisdictional competence.
It was alleged that it was of binding nature on the respondent and was not capable to challenge the same in subsequent proceedings.
The claim, it was asserted, by the respondent in the subsequent suit, was barred by the principles of res judicata.
The respondent lost.
He filed an appeal against the said order of the learned Subordinate Judge.
The learned Additional District Judge, Gurgaon vide his order dated 7th September, 1978 reversed the findings of the trial court and decreed the suit of the respondent.
Against the said order of the learned Additional District Judge the appellants filed Regular Second Appeals which were placed for disposal before one of the learned Judges of the High Court of Punjab and Haryana at Chandigarh.
After hearing counsel for the parties the learned Judge was of the view that there were conflicting judgments on the points for determination in the case which were of importance and the matter was referred to the Hon 'ble the Chief Justice of the said High Court for the constitution of a larger bench for the determination of the points in controversy.
The question referred to a larger bench was whether, the decision of Rent Controller under the Rent Control Laws or a Revenue Court under section 77 of the Punjab Tenancy Act upon the relationship of landlord and tenant between the parties operates as res judicata and is not open to challenge in a subsequent suit or in other collateral proceedings between the parties.
The learned Chief Justice constituted a Full Bench of three learned Judges for resolving the conflict pointed out in the referring order.
The three learned Judges of the Full Bench have given three separate judgment and ultimately the case came to be decided in accordance with the majority view.
The order of the Full Bench was that in accordance with the majority view it was held that the decision of the Revenue Court under 97 Section 77 of the Punjab Tenancy Act upon the relationship of landlord and tenant between the parties would not operate as res judicata and it would be open to challenge in a subsequent suit or any other collateral proceedings between the parties.
The Full Bench thereafter directed the matter to go back to the learned single Judge for disposal in accordance with the decision of the Full Bench.
Aggrieved by the aforesaid order and decision the appellants have come up in appeal before this Court.
It may be mentioned that of the three learned Judges, Sandhawalia, CJ.
was of the view that it was to operate as res judicata, but the other two learned judges, namely, J.V. Gupta, J. and S.P. Goyal, J. held contrary views.
It is the propriety and the validity of the majority view of the Full Bench which calls for an examination in this appeal.
C In order to appreciate the controversy in appeal it is necessary to refer to the relevant provisions of the said Act.
The preamble of the Act states that it was an Act to amend the law relating to the tenancy of land in Punjab.
These provinces of Punjab had the distinction between the occupancy tenants and tenants at will with the rest of its early revenue Code from the United Provinces.
The possession of a right to fixity of tenure by many cultivators in northern India was early recognised.
Indeed the fact that in Lower Bengal the connection of persons whom were recognised as proprietors with the land was often far more recent than that of the cultivators inevitably suggested that the latter had rights in the soil that required protection.
Fixity of tenure of resident cultivators at rents determined by authority was prominent feature of the Bengal settlement as originally planned.
Regulation XXVIII of 1803 professed to extend the Bengal system to the North Western Provinces, but it left the subject of tenant right in a vague and uncertain condition.
The provisions of Regulation VII of 1922 were more definite.
By its 9th section Settlement officers were required not only to prepare a record of "persons enjoying the possession and property of the soil, or vested with any heritable or transferable interest" in it, that is to say, of proprietors, but also of "the rates per bigha . demandable from the resident cultivators not claiming any transferable property in the soil whether possessing the right of hereditary occupancy or not".
It is not necessary to trace the history of these settlement laws which can be found in Douie 's Settlement Manual, 4th Edition.
Twelve years ' uninterrupted possession of a holding at the same rate of rent was considered as a sufficient proof of occupancy right in the United Provinces.
The twelve years ' rule was very generally adopted in early Punjab settlements, though the best H 98 revenue officers held that it should not be regarded as the sole criterion, and that the quality, as well as the length of occupation should be considered.
The Act in question was passed to amend the law of tenancy in Punjab which was later the object of the Act to protect the tenants from the exactions of the landlords The tenants as usual in other parts of the world were in many cases peculiarly liable to oppression or duress from their landlords and in order to protect them quite effectively from the possibility of any such oppression or duress the Act was passed.
The overall scheme of the Act is to provide speedy remedies with regard to disputes between the landlords and tenants and also under what circumstances that relationship comes to an end.
It is appropriate to bear in mind the whole basic question involved in this appeal is whether the courts created by this Act have limited power and jurisdiction or plenary powers and jurisdiction.
In this appeal we are concerned with the amplitude of the jurisdiction of the courts under section 77 of the Act which deals with Courts and suits cognizable by them.
Relevant portion of section 77 of the Act provides as follows: "77.
Revenue Courts and suits cognizable by them. (1) When a Revenue officer is exercising jurisdiction with respect to any such suit as is described in sub section (3), or with respect to an appeal or other proceeding arising out of any such suit, he shall be called a Revenue Court.
(2) . . . . . . . . (3) The following suits shall be instituted in, and heard and determined by, Revenue Courts, and no other Court shall take cognizance of any dispute or matter with respect to which any such suit might be instituted: Provided that (1) . . . . . . . . (2) . . . . . . . .
FIRST GROUP . .
SECOND GROUP . . 99 (e) suit by a landlord to eject a tenant;" A The controversy with which we are concerned in this appeal is a type of suits indicated in second group under clause (e), namely, suits by a landlord to eject a tenant The question of res judicata was analysed in the background of land acquisition proceedings by this Court in Raj Lakshmi Dasi and others vs Banamali Sen and others, There this Court observed that the right to receive compensation for property acquired in land acquisition proceedings as between rival claimants depended on the title to the property acquired and the dispute as to title was raised by the parties and had to be decided by the Land Acquisition Judge after contest, so this decision as to title operates as res judicata in a subsequent suit between the same parties on the question of title The binding force of a judgment delivered under the Land Acquisition Act depended on general principles of law and not on section 11 of the Civil Procedure Code, and the decision of a Land Acquisition Judge would operate as res judicata even though he was not competent to try the subsequent suit.
It has to be emphasised, however that the right to compensation depended upon the title, but here in the instant case the right to ejectment existed only if the relationship of landlord and tenant existed.
The Revenue Court did not have jurisdiction whether the claimant was the landlord to be entitled to eject the tenant.
Our attention was drawn by Sree Harbans Lal, learned counsel appearing for the appellants to section 98 of the Act, as to the power of the Revenue Court to refer to the Civil Court a decision by the Revenue Court if it thought proper and also to section 99, where there is power to refer to High Court question as to jurisdiction.
These provisions in our opinion, do not in any way affect the question whether the decision of the Revenue Court under the Revenue Act can operate as res judicata in certain cases like the present.
The limits of the jurisdiction would be apparent by the fact that in all suits by a landlord to reject a tenant, do not encompass suits to decide whether a person is a tenant or not or whether the plaintiff is a landlord or not.
The question was answered by this Court in Om Prakash Gupta vs Rattan Singh and another, l 19641 1 S.C.R. 259 where Sinha, C.J. dealing with the Delhi Rent Control Act observed at pages 264 and 265 as follows: "The most important question that arises for determination 100 in this case is whether or not the Rent Control authorities had jurisdiction in the matter in controversy in this case ordinarily it is for the Civil Courts to determine whether and, if so, what jural relationship exists between the litigating parties But the Act has been enacted to provide for the control of rents and evictions of tenants, avowedly for their benefit and protection.
The Act postulates the relationship of landlord and tenant which must be a pre existing relationship.
The Act is directed to control some of the terms and incidents of that relationship.
Hence, there is no express provision in the Act empowering the Controller, or the Tribunal, to determine whether or not there is a relationship of landlord and tenant.
In most cases such a question would not arise for determination by the authorities under the Act.
A landlord must be very ill advised to start proceedings under the Act, if there is no such relationship of landlord and tenant.
If a person in possession of the premises is not a tenant, the owner of the premises would be entitled to institute a suit for ejectment in the Civil Courts, untrammelled by the provisions of the Act.
It is only when he happens to be the tenant of premises in an urban area that the provisions of the Act are attracted." (Emphasis supplied. ) In Shri Raja Durga Singh of Solan vs Tholu, [19631 2 S.C.R. 693, this Court had occasion to consider the question of res judicata in the background of the jurisdiction of the Court.
That was a case under section 77 of the Punjab Tenancy Act.
In that case the appellant had filed a suit before the Civil Court for the ejectment of the respondent therein on the ground that they were licensees.
The respondents claimed that they were occupancy tenants and contended that under section 77 of the Punjab Tenancy Act, 1887, the suit was triable by a revenue court only and not by the civil court.
The trial court and the first appellate court decreed the suit holding that the respondents were not tenants.
On second appeal the Judicial Commissioner held that the respondents were occupancy tenants and that the civil court had no jurisdiction to entertain the suit.
It was held by this Court that the civil court had jurisdiction to entertain the suit and section 77 of the Punjab Tenancy Act was applicable "only to suits between landlord and tenants where there was no dispute that the person cultivating the land was a tenant".
But where the status of the defendant as a tenant was not admitted by the landlord, section 77 did not bar a suit in a civil court.
This Court held that it would, therefore, be reasonable to infer 101 that the legislature barred only those suits which form the cognizance of a civil court where there was no dispute between the parties that a person cultivating land or who was in possession of land was a tenant.
This is precisely what has been held in the two decisions of the Lahore High Court where there was reference at pages 698 699 of the report.
In the first of these two cases.
Tek Chand J. had observed: "It is obvious that the bar under clause (4) is applicable to those cases only in which the relationship of landlord and tenant is admitted and the object of the suit is to determine the nature of the tenancy i.e. whether the status of the tenant falls under section 5, 6, 7 or 8 of the Act.
In that case the suit was instituted by someone claiming to succeed to the tenancy of certain land on the death of the occupancy tenant.
The learned Judge observed: 'In a suit like the one before us the point for decision is not the nature of the tenancy, but whether the defendant is related to the deceased tenant and if so whether their common ancestor had occupied the land.
If these facts are established, the claimant, ipso facto succeeds to the occupancy tenancy.
But if they are found against him, he is not a tenant at all. ' As these facts were not established the High Court held that the landlord was entitled to sue the defendant who had entered on the land asserting a claim to be a collateral of the deceased tenant but who failed to substantiate his claim.
This view was affirmed by a Full Bench consisting of five Judges in the other Lahore case.
In Daya Ram vs Jagir Singh, A.I.R 1956 H.P. 61 the same Judicial Commissioner who decided the appeal before us has expressed the view that where in a suit for ejectment the existence of the relationship of landlord and tenant is not admitted by the parties the Civil Court had jurisdiction to try the suit and that such a suit did not fall under section 77(3) of the Act.
In Magiti Sasamal vs Pandab Bissoi, [1962] 3 S.C.R. 673 this Court was considering the provisions of section 17(1) of the Orissa Tenants Protection Act, 1948 (3 of 1948).
The provisions of that section run thus: 'Any dispute between the tenant and the landlord as re 102 gards, (a) tenant 's possession of the land on the 1st day of September, 1947 and his right to the benefits under this Act, or (b) misuse of the land by tenant, or (c) failure of the tenant to cultivate the land properly, or (d) failure of the tenant to deliver to the landlord the rent accrued due within two months from the date on which it becomes pay able, or (e) the quantity of the produce payable to the landlord as rent, shall be decided by the Collector on the application of either of the parties. ' lt was contended in that case on behalf of the respondents who claimed to be tenants that suit for permanent injunction instituted by the appellant landlord was barred by the provisions of section 7(1).
Dealing with this contention this Court observed as follows. 'In other words, section 7(1) postulates the relationship of tenant and landlord between the parties and proceeds to provide for the exclusive jurisdiction of the Collector to try the five categories of disputes that may arise between the landlord and the tenant.
The disputes which are the subject matter of section 7(1) must be in regard to the five categories.
That is the plain and obvious construction of the words 'any dispute as regards '.
On this construction it would be unreasonable to hold that a dispute about the status of the tenant also falls within the purview of the said section.
The scheme of section 7(1) is unambiguous and clear.
It refers to the tenant and landlord as such and it contemplates disputes of the specified character arising between them.
Therefore, in our opinion, even on a liberal construction of section 7(1) it would be difficult to uphold the argument that a dispute as regards the existence of relationship of landlord and tenant falls to be determined by the Collector under section 7(1). ' " As regards the said observations, in so far as the essential facts are concerned, precisely the same is the position in the instant appeal.
Here the respondent is claiming to be a mortgagee in possession and not a tenant in possession.
In Magiti Sasamal vs Pandab Bissoi, , the appellant had filed in the Civil Court a suit for permanent injunction restraining the respondents from entering the lands in suit on the allegation that the lands belonged to him and were in his cultivatory possession for many years and the respondents had 103 no right or title and had never cultivated them.
The respondents contended that they were tenants of portions of the said lands and were in cultivating possession of the same as tenants.
The question which arose for decision was whether having regard to the provisions of section 7(1) of the Orissa Tenants Protection Act, 1948, the Civil Court had jurisdiction to entertain the suit which involved a dispute as to the relationship of landlord and tenant between the parties.
It was held that even on a liberal construction of section 7(1) of the Act, it cannot be held that disputes as regards the existence of the relationship of landlord and tenant fall to be determined by the Collector under that section.
Disputes which are entrusted to the Collector under section 7(1) are the simple disputes specified therein in the five categories and do not include a serious dispute as to the relationship between the parties as landlord and tenant.
It is well settled that ouster of jurisdiction of civil courts should not be inferred easily.
It must be clearly provided for and established.
This question was again viewed in the background of the in Lal Chand (dead) by Lrs.
and others vs Radha Kishan, [1977] 2 S.C.R. 522, where this Court reiterated that section 11 was not exhaustive and the principle which motivates that section could be extended to cases which do not fall strictly within the letter of the law.
This Court further reiterated that the principle of res judicata was conceived in the larger public interest which required that all litigation must, sooner than later, come to an end.
This Court in the State of Tamil Nadu vs Ramalinga Samigal Madam, A.I.R. 1986 S.C.794 has analysed the position in paragraph 8 as follows: "The principles bearing on the question as to when exclusion of the Civil Court 's jurisdiction can be inferred have been indicated in several judicial pronouncements but we need refer to only two decisions.
In Secretary of State vs Mask and company, A.I.R. 1940 P.C. lOS at p. 110 the Privy Council at page 236 of the Report has observed thus: 'It is settled law that the exclusion of the jurisdiction of the Civil Courts is not to be readily inferred but that such exclusion must either be explicitly expressed or clearly implied.
It is also well settled that even if jurisdiction is so excluded, the Civil Courts have jurisdiction to examine into cases where the provi 104 sions of the Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure.
In Dhulabhai vs State of Madhya Pradesh, [ ; Hidayatullah, C.J., speaking for the Court, on the analysis of the various decisions cited before the Court ex pressing diverse views, called out as many as 7 propositions; out of them the first two which are material for our purposes are these: '(1) Where the statute gives a finality to the orders of the special tribunal the civil Court 's jurisdiction must be held to be excluded if there is adequate remedy to do what the civil Courts would normally do in a suit.
Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure.
(2) Where there is an express bar of the jurisdiction of the Court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the Civil Court.
Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive.
In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted, and whether remedies normally associated with actions in civil Courts are prescribed by the said statute or not '.
Applying the aforesaid principles, it appears to us that if the dispute was as to the nature of the relationship of landlord and tenant 105 between the parties, the Revenue Court under the Punjab Tenancy A Act had no jurisdiction when there was admitted position, the relationship of landlord and tenant was accepted, the remedies and rights of the parties should be worked out under the scheme of the Act.
A salutary and simple test to apply in determining whether the previous decision operated as res judicata or on principles analogous thereto is to find out whether the first court, here the Revenue Court could go into the question whether the respondent was a tenant in possession or mortgagee in possession.
It is clear in view of langugage mentiond before that it could not.
If that be so there was no res judicata.
The subsequent civil suit was not barred by res judicata.
In that view of the matter, we are of the opinion that the High Court of Punjab and Haryana was right in holding that there was no res judicata so far as the second suit based on the assertion of the title of the respondent was concerned.
The appeals must, therefore, fail and are accordingly dismissed with costs.
D N.P.V. Appeals dismissed.

summary:
A suit was filed by the appellants in the Court of the Assistant Collector seeking ejectment of the respondent tenant from his lands, under section 77(3) proviso 2(e) of the Punjab Tenancy Act, 1887 on the ground that he had defaulted in the payment of rent, and it was decreed.
In execution of the decree, the respondent was ejected from the suit land.
No appeal was filed from the said decree but the respondent filed a suit in the Civil Court against the appellants alleging that he was in fact a mortgagee in possession of the suit land and not a tenant and that the decree of ejectment passed by the Revenue Court was without jurisdiction and, therefore, a nullity, and claimed restoration of the possession of the suit land from which he had been wrongly ousted by the Revenue Court.
The suit was dismissed by the Subordinate Judge holding that the claim of the respondent to be a mortgagee in possession of the suit land was wrong and that the order of the Revenue Court was perfectly in order and within that court 's jurisdictional competence and that it was of a binding nature on the respondent and was not open to challenge in subsequent proceedings.
The appellant asserted that the claim by the respondent in the subsequent suit was barred by the principles of res judicata.
The suit was dismissed.
In appeal, the Additional District Judge reversed the findings of the trial court and decreed the suit of the respondent.
The appellants filed regular second appeals before the High Court.
94 A Single Judge of the High Court was of the view that, in view of the conflicting judgments on the points for determination in the case, the matter required to be referred to a larger bench.
The Full Bench, by a majority view, held that the decision of the Revenue Court under section 77 of the Punjab Tenancy Act upon the relationship of landlord and tenant between the parties would not operate as res judicata and it would be open to challenge in a subsequent suit or in other collateral proceedings between the parties, and remitted the matter back to the Single Judge for disposal in accordance with the above decision.
The question for consideration in the appeals by Special Leave before this Court was: as to how far an order of eviction of a person by the Revenue Court under section 77(3) of the Punjab Tenancy Act, 1887 operated as res judicata for a title suit filed by a person claiming to be a mortgagee and not a tenant of the alleged landlord.
Dismissing the appeals by special leave, this Court, ^ HELD: 1.
The High Court was right in holding that there was no res judicata so far as the second suit based on the assertion of the title of the respondent was concerned.
[105C D] 2.1 The overall scheme of the Act is to provide speedy remedies with regard to disputes between the landlords and tenants and also under what circumstances that relationship came to an end.
Sections 98 and 99 do not in any way affect the question whether the decision of the Revenue Court under the Revenue Act can operate as res judicata in certain cases.
The limits of the jurisdiction would be apparent by the fact that all suits by a landlord to eject a tenant do not encompass suits to decide whether a person was a tenant or not or whether the plaintiff was a landlord or not.
[98C; 99 F G] 2.2 ouster of jurisdiction of Civil Courts should not be inferred easily.
It must be clearly provided for and established.
If the dispute was as to the nature of the relationship of landlord and tenant between the parties, the Revenue Court under the Punjab Tenancy Act had no jurisdiction; when there was admitted position, the relationship of landlord and tenant was accepted, the remedies and rights of the parties should be worked out under the scheme of the Act.
[103C D] 2.3 A salutory and simple test to apply in determining whether the previous decision operated as res judicata or on principles analogous thereto was to find out whether the first court could go into the question 95 whether the respondent was a tenant in possession or mortgagee in A possession.
In view of the language of section 77 it is clear that it could not and, therefore, there was no res judicata.
The subsequent civil suit was.
therefore, not barred by res judicata.
[105B C] Raj Lakshmi Dasi and others vs Banamali Sen and others, ; Om Prakash Gupta vs Rattan Singh and another, ; Shri Raja Durga Singh of Solan vs Tholu; , ; Magiti Sasamal vs Pandab Bissoi, ; Lal Chand (dead) by Lrs.
and others vs Radha Kishan, [1977] 2 SCR 522 and State of Tamil Nadu vs Ramalinga Samigal Madam; , , referred to.


judgement:
Special Leave Petition (Civil) No. 9524 of 1987.
From the Judgment and order dated 25.5.1987 of the Delhi High Court in F.A.O. No. 58 of 1987.
R.B. Datar and Ranjit Kumar for the petitioner.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
The respondent No. 1 herein was awarded the contract in question for the construction of staff quarters for the Municipal Corporation of Delhi, the petitioner herein and the work had to be completed within the stipulated period mentioned in the contract.
Since, however, the work was not being done in the manner as the Delhi Municipal Corporation thought it ought to have been done, the petitioner wrote 29 letters during June, 1978 to July, 1980 regarding the timely completion of the work.
It is alleged that the work was not completed by the 15th of January, 1980 as per the schedule in the contract.
Show cause notice was given to the respondent contractor.
The contractor failed to give satisfactory reply and according to the petitioner, the contract was rescind.
Thereafter several other letters were written which are not material to refer.
183 There was an arbitration clause in the agreement.
On 2nd November, 1982 an application was filed under section 20 of the (hereinafter called 'the Act ') in the Delhi High Court.
A learned Single Judge of the said High Court directed reference of the dispute and directed the Commissioner of the Municipal Corporation or anyone nominated by him to enter into reference.
The Commissioner on 17th of March, 1983 appointed one Shri S.M. Hasnain, Arbitrator and Superintending Engineer No. II, of the Municipal Corporation of Delhi as the arbitrator.
He is respondent No. 2 in this petition.
The said arbitrator entered upon the reference and thereafter on 21st of August, 1984 submitted his award allowing some claims of the contractor and some counter claims of the Municipal Corporation.
The Municipal Corporation filed its objections to the said award.
The learned Single Judge of the High Court by his judgment and order dated 22nd of October, 1986 directed that the award be made a rule of the Court.
A Letters Patent Appeal was filed thereafter but the same was summarily dismissed by a Division Bench of the Delhi High Court on 25th May, 1987.
The petitioner seeks leave in this petition under Article 136 of the Constitution to challenge the said order.
As the learned Division Bench did not give reasons, we must refer to the order of the learned Single Judge.
The arbitrator gave reasons in support of the award.
The question is whether reasonableness of the reasons in a speaking award is justiciable under Article 136 of the Constitution.
We are of the opinion that such reasonableness of the reasons given by an arbitrator in making his award cannot be challenged in a proceeding like the present.
It is desirable, however, that we state our reasons for so holding.
In order to appreciate this the award of the arbitrator must be looked into.
The arbitrator in his award has dealt with various claims, one of the main claims was the claim of 23,850 out of which 8,300 was in the form of fixed deposit receipt carrying interest and the balance amount of 15,520 was deducted as security of 10% from the bills of the claimant.
According to the claimant this amount had wrongly been forfeited by the Corporation at the time of rescission of the contract and that the same should be refunded to him.
It was held by the arbitrator that there was provision in the agreement for extension of time for completion of the contract, as well as for levy of compensation for delay.
Therefore, it could not be taken that time was the essence of the contract.
The arbitrator had opined that according to the respondents ' own admission there was delay of nearly four 184 Months in the commencement of the work due to giving of the layout etc.
There was also delay in the execution of sanitary work by another contractor previously employed by the petitioner and this work was still incomplete at the time of the making of the award and as such complete site had not been made available to the present contractor in time.
Further there was provision in the agreement for extension of time or levy of compensation for delay and, therefore, according to the arbitrator time could not be considered in such a contract to be the essence of the contract.
Furthermore, subsequent to the expiry of the stipulated period of completion, the Corporation did not make time the essence of the contract by directing the claimant to complete the work within a specified period but instead rescinded the contract.
In those circumstances it was held by arbitrator that the decision of rescission of the contract has bad, wrongful and hence the claim of Rs.23,820 was considered to be just.
We do not find any lack of reason in the reasons given by the arbitrator.
Whether in a particular contract time was the essence of the contract or not is a mixed question of law and fact.
But the reasons given by the arbitrator appear to be reasonable and have rational nexus with the conclusion arrived at by him.
It was stated that it was admitted on behalf of the Corporation that there was initial delay of four months.
This was controverted by the Corporation.
They say that there was no admission.
This, in our opinion was a significant factor that there was some delay and in spite of the delay the corporation gave letters to the contractor to complete the work and in the contract itself there was provision for extension of time.
In our opinion, where reasons germane and relevant for the arbitrator to hold in the manner he did have been indicated, it cannot be said that it was unreasonable.
Another factor the arbitrator had noted was that the site was not available due to the conduct of another contractor previously employed by the petitioner.
This factor is also a relevant factor.
The fourth item of the award was a claim for damages for Rs.60,000().
This amount was not granted on the ground that the claimant was not able to prove this amount.
The fifth item in the award was a claim for interest at 18 % per annum on certain items from the date of rescission of the contract to the date of payment of decretal amount.
The arbitrator allowed the interest as the amount had been withheld due to unjustified and wrongful rescission of the contract.
Reasons given by the arbitrator appear per se not unreasonable.
The arbitrator has not awarded any costs.
There were also counter claims by the Corporation against the contractor.
The first counter claim was forfeiture of Rs.23,820 on account on the rescission of the contract.
Inasmuch as the rescission was held to be unjustified in the facts of this case, the forfeiture was also held to be wrongful.
There was a claim of 185 Rs.32,640 as payment of compensation at 10% of Rs.3,28,400, but as the time was not the essence of the contract and the rescission of the contract was unjustified, this claim could not be sustained and it was so rejected by the arbitrator.
The next claim was for Rs.85,620 for the execution of the remaining work at the risk and cost of the respondent.
The arbitrator found that the contractor had as far as possible discharged his contractual obligation and the rescission of the contract was unjustified and wrongful.
Therefore, the Corporation 's claim for getting the work executed at the risks and costs of the contractor was unjustified and the claim was so logically rejected and no amount was awarded on that score.
The next claim was for Rs.2739 on account of mild steel Lying with the contractor.
On examination it was found that some quantities of steel had been consumed in the work and as such recovery could only be made for the balance quantity of 1172 kgs.
at the recovery rate of Rs.1.50 per kg.
and the claim was, therefore, allowed in favour of the Corporation for Rs.1,758.
The Corporation further claimed a sum of Rs.6,083.20 on account of non return of certain steel.
After taking into account the steel consumed in the work and after allowing for permissible variation and wastage, it was held that recovery claim for Rs.3,862 only was justified.
The award was made accordingly.
There was another claim of Rs.6,473 on account of penal rate recovery of mild steel.
It was held for good reasons indicated in the award that the claim for Rs.5,620 was justified.
The Corporation claimed Rs.13,578 for penal rate recovery of cement for the quantity in excess of the theoretical consumption.
After going into the material the arbitrator found that the cement issued to the claimant was consumed in the work and the claim of the Corporation for the penal rate recovery was not justified.
The next was the claim for Rs.1400 by the Corporation on account of non return of 700 empty cement bags to the Municipal store.
This was enquired into and found to be justified and a sum of Rs.1400 was awarded in favour of the Corporation.
There was a further claim of Rs.65 for adjustment of cost of steel on account of three transfer entries.
From the documents produced the claim was awarded in favour of the Corporation.
The next claim was for interest at the rate of 12% per annum w.e.f. 1.9.81 on the amount of alleged counter claim preferred against the claimant.
As it was held that the rescission of the contract was unjustified and wrongful, the Corporation was at liberty to recover its justified claims from the dues of the claimant at its disposal and pay the balance amount to the claimant within a reasonable time.
There was a further claim for Rs.10,000 as arbitration costs and the claim was rejected.
It appears to be very reasonable and fair award.
186 In this case, there was no violation of any principles of natural justice.
It is not a case where the arbitrator has refused cogent and material factors to be taken into consideration.
The award cannot be said to be vitiated by non reception of material or non consideration of the relevant aspects of the matter.
Appraisement of evidence by the arbitrator is ordinarily never a matter which the Court questions and considers.
The parties have selected their own forum and the deciding forum must be conceded the power of appraisement of the evidence.
In the instant case, there was no evidence of violation of any principle of natural justice.
The Arbitrator in our opinion is the sole judge of the quality as well as quantity of evidence and it will not be for this Court to take upon itself the task of being a judge of the evidence before the arbitrator.
It may be possible that on the same evidence the Court might have arrived at a different conclusion than the one arrived at by the arbitrator but that by it self is no ground in our view for setting aside the award of an arbitrator.
It is familiar learning but requires emphasis that section 1 of the Evidence Act, 1872 in its rigour is not intended to apply to proceedings before an arbitrator.
P.B. Mukharji, J. as the learned Chief Justice then was, expressed the above view in Haji Ebrahim Kassam Cochinwall vs Nothern Indian oil Industries Ltd., A.I.R. 1951 Calcutta 230 and we are of the opinion that this represents the correct statement of law on this aspect.
Lord Goddard, C.J. in Mediterranean & Eastern Export Co. Ltd. vs Fortress Fabrics Ltd., observed at pages 188/189 of the report as follows: "A man in the trade who is selected for his experience would be likely to know and indeed to be expected to know the fluctuations of the market and would have plenty of means of informing himself or refreshing his memory on any point on which he might find it necessary so to do.
In this case according to the affidavit of sellers they did take the point before the Arbitrator that the Southern African market has slumped.
Whether the buyers contested that statement does not appear but an experienced Arbitrator would know or have the means of knowing whether that was so or not and to what extent and I see no reason why in principle he should be required to have evidence on this point any more than on any other question relating to a particular trade.
It must be taken I think that in fixing the amount that he has, he has acted on his own knowledge and experience.
The day has long gone by when the Courts 187 looked with jealousy on the jurisdiction of the Arbitrators.
The modern tendency is in my opinion more especially in commercial arbitrations, to endeavour to uphold Awards of the skilled persons that the parties themselves have selected to decide the questions at issue between them.
If an Arbitrator has acted within the terms of his submission and has not violated any rules of what is so often.
called natural justice the Courts should be slow indeed to set aside his award.
" This in our opinion is an appropriate attitude.
In this case the reasons given by the arbitrator are cogent and based on materials on record.
In Stroud 's Judicial Dictionary, Fourth Edition, page 2258 states that it would be unreasonable to expect an exact definition of the word "reasonable".
Reason varies in its conclusions according to the idiosyncrasy of the individual, and the times and circumstances in which he thinks.
The reasoning which built up the old scholastic logic sounds now like the jingling of a child 's toy.
But mankind must be satisfied with the reasonableness within reach; and in cases not covered by authority, the verdict of a jury or the decision of a judge sitting as a jury usually determines what is "reasonable" in each particular case.
The word "reasonable" has in law the prima facie meaning of reasonable in regard to those circumstances of which the actor, called on to act reasonably, knows or ought to know.
See the observations, in Re a Solicitor [ 1945] K.B .
368 at 371 of the report .
After all an arbitrator as a Judge in the words of Benjamin N. Cardozo, has to exercise a discretion informed by tradition, methodized by analogy, disciplined by system, and subordinated to "the primordial necessity of order in the social life".
F Indeed reading the award of the arbitrator, one would say that he acted reasonably and rationally.
In the premises the award of the arbitrator was assailed on trivial grounds and the challenge was rightly rejected by the High Court.
The respondent is entitled to the costs of the challenge upto the High Court.
So far as the costs of this petition to this Court is concerned, parties are directed to bear their respective costs.
The petition for leave to appeal is, therefore, dismissed and the leave refused.
P.S.S. Petition dismissed.

dataset_name: IN-Abs

summary:
HELD: 1.1 The reasonableness of the reasons given by an arbitrator in making his award cannot be challenged in proceedings under Article 136.
[183E] 1.2 Appraisement of evidence by the arbitrator is ordinarily never a matter which the court questions and considers.
Section 1 of the Evidence Act, 1872 in its rigour is not intended to apply to proceedings before an arbitrator.
In the instant case, the parties have selected their own forum and the deciding forum must be conceded the power of appraisement of the evidence.
The arbitrator is the sole judge of the quality as well as quantity of evidence and it will not be for the Supreme Court to take upon itself the task of being a judge of the evidence before the arbitrator.
It may be possible that on the same evidence the Court might have arrived at a different conclusion than the one arrived at by the arbitrator but that by itself could be no ground for setting aside the award of an arbitrator.
1186B D] Haji Ebrahim Kassam Cochinwall vs Northern Indian oil Industries Ltd., A.I.R. 1951 Calcutta 230, referred to. 2.
There was no violation of any principles of natural justice in the instant case.
It was not a case where the arbitrator had refused cogent and material factors to be taken into consideration.
The award could not therefore, be said to be vitiated by non reception of material or non consideration of the relevant aspects of the matter.
[186A B] Mediterranean & Eastern Export Co. Ltd. vs Fortress Fabrics Ltd., 11948] 2 All.
E.R. 186, referred to.
Whether in a particular contract time was the essence of the contract or not, is a mixed question of law and fact.
In the instant case, the reasons given by the arbitrator in holding that it could not be taken 182 that time was the essence of the contract, were cogent and based on materials on record and have a rational nexus with the conclusion arrived at by him.
[184C;186A] 4.
The word 'reasonable ' have in law the prima facie meaning of reasonable in regard to those circumstances of which the actor, called on to act reasonably, knows or ought to know.
An arbitrator acting as a Judge has to exercise a discretion informed by tradition, methodized by analogy, disciplined by system, and subordinated to the primordial necessity of order in the social life.
Therefore, where reasons germane and relevant for the arbitrator to hold in the manner he did have been indicated, it cannot be said that it was unreasonable.
[187E F; 184E Re a Solicitor, at 371 of the Report) and Stroud 's Judicial Dictionary, Fourth Edition, page 2258, referred to.
In the instant case the arbitrator acted reasonably and rationally.
The challenge to the award was, therefore, rightly rejected by the High Court.
[187G]


judgement:
ivil Appeal No. 47(N) of 1978.
From the Judgment and Decree dated 4.7.1977 of the Gujarat High Court in F.A. No. 152 of 1974.
K.N. Bhatt, P.H. Parekh and P.K. Manohar for the Appellant.
T.U. Mehta, and S.C. Patel for the Respondents.
The Judgment of the Court was delivered by NATARAJAN, J.
This appeal by certificate under Article 133 of the Constitution is directed against a judgment of the High Court of 80 Gujarat in an appeal arising from the execution proceedings.
The appellant is a tenant inducted to the ground floor of a building in Bhavnagar by a mortgagee in possession and the question for consideration is whether the mortgagors are entitled to dispossess him by reason of the redemption of the mortgage debt.
For a full and effective understanding of the issues involved in the case a maze of details have to be gone through and we will, there fore, advert ourselves to that task.
In July 1947 Dhami Navnitbhai Amaratlal, the first respondent, acting for himself and his minor son mortgaged a house property with possession to a business firm known as Bhagwan Das Chagan Lal to secure repayment of a loan of Rs.21,000.
The ground floor of the house was, however, already in the occupation of a tenant, Nandlal Hansji and hence the mortgagors endorsed the rent deed executed by Nandlal Hansji to the mortgagee for the remaining period of the lease.
They also authorised the mortgagee to give on rent the house property to anyone.
Under clause lO of the mortgage deed it was provided that the mortgage could be redeemed whenever the mortgagors paid the mortgage amount and on redemption the mortgagee should return the title deeds and deliver possession of the mortgage property to the mortgagors.
Notwithstanding the mortgage purporting to be a possessory mortgage, the mortgage deed provided for payment of interest and for the mortgagee to demand repayment of the mortgage amount at any time it deemed fit and if the demand was not met, to file a suit and bring the mortgage property for sale and also to proceed against the person and other items of properties of the mortgagors for recovery of the balance amount, if any.
By a further mortgage deed dated 21.3.1950 the mortgagors obtained another loan of Rs.16,000 from the mortgagee on the same security.
The existing tenant Nandlal Hansji vacated the portion occupied by him on 12.11.1956.
Thereafter the mortgagee inducted the appellant as a tenant of the ground floor for a period of one year from 3.12.56 to 2.12.57 on a monthly rent of Rs.125.
The lease deed, how ever, came to be executed only after one year, i.e., on 9.12.1957.
On 13.7.1958 the mortgagee issued a notice to the appellant terminating the tenancy and calling upon him to surrender possession on the ground he had failed to pay the rent.
The appellant did not surrender possession and instead filed Civil Misc.
Application No. 40 of 1958 for fixation of standard rent.
It is relevant to mention here that the Saurashtra Rent Control Act, 195 1 governed the leases of buildings in Saurashtra region including Bhavnagar.
The mortgagee filed Civil Suit No. 46 of 1958 against the appellant for recovering the arrears of rent 81 and possession of the leased premises.
On 13.4.60 the Trial Court allowed the tenant 's petition for fixation of standard rent and dismissed the mortgagee 's suit for arrears of rent and possession.
The Trial Court fixed the standard rent at Rs.52.10 as against the contractual rent of Rs.125.
The mortgagee filed successive appeals before the District Judge and the High Court against the judgments of the Trial Court in the Standard Rent Petition and the suit for ejectment but failed in both the appeals before both the Appellate Courts.
During the pendency of the ejectment proceedings, the mortgagee filed Special Civil Suit No. 8/62 against the mortgagors for recovery of the mortgage amounts under the two mortgages and a consent decree was passed stipulating that the mortgagors should pay Rs.18,000 in six months, i.e., by 20.5.63 with running interest at 6% p.a.
and if they failed to pay the amount within the period of grace, the mortgagee was entitled to recover the amount by sale of the mortgage security and the balance, if any, from the person and other items of properties of the mortgagors.
As the mortgagors failed to pay the decree amount in terms of the consent decree, the mortgagee took out execution proceedings in Special Darkhast No. 7/72.
Therein the parties once again compromised and the compromise was recorded on 7.10.72 and in the memo of compromise it was stated that the ground floor portion of the house had been given on rent to the appellant, that the mortgagee has filed a case against him, that in such circumstances the vacant possession of the ground floor cannot be delivered and that the mortgagors were entitled to obtain vacant possession of the ground floor portion of the house from the appellant.
As regards the decree amount the compromise memo stated that the full amount of Rs.18,000 had been paid and no further amount was payable to the mortgagee.
After the compromise memo was recorded the mortgagors took out execution application No. 3/73 for the issue of a warrant of possession for obtaining possession of the ground floor.
The Executing Court issued a warrant of possession even though the appellant was not impleaded as a party in the suit or the execution application.
The appellant preferred Appeal No. 190 of 1973 to the High Court and the High Court revoked the warrant of possession and remitted the matter to the Executing Court for going into the question whether the consent decree and final decree to which the mortgagors and mortgagee were alone parties would be binding on the appellant (tenant) and furthermore whether the mortgagors would be entitled to delivery of physical 82 possession of the leased premises or only symbolic delivery.
The Executing Court considered the matter afresh and held that the mortgagors were entitled to get only symbolic delivery and not delivery of physical possession of the leased property.
The mortgagors preferred First Appeal No. 152 of 1974 before the High Court.
A Division Bench of the High Court allowed the appeal and directed the Executing Court to issue a warrant of possession for ejecting the appellant and placing the mortgagors in possession of the leased premises.
The High Court however granted a certificate of leave to the appellant to prefer an appeal to this Court and that is how the matter is before us.
The main contention of the appellant before the High Court was that though the lease was given by the mortgagee, the lease was binding on the mortgagors even after they had redeemed the mortgage because they had authorised the mortgagee to create tenancies over the mortgage property and secondly because his tenancy rights became protected under the Saurashtra Act XXII of 1951 which came to be later replaced by the Bombay Rents, Hotel and Lodging House Rates P Control Act No. LVII of 1947 (for short the Bombay Rent Act) and as such he cannot be evicted by the mortgagors merely by reason of their repayment of the mortgage debt.
The second contention was that the consent decree and the final decree on the basis of which the execution application was taken to dispossess him were not binding on him since he was not a party to the proceedings.
The High Court repelled both the contentions.
In so far as the first contention is concerned, the High Court held that as the mortgage was an anomalous mortgage the rights of the mortgagee have to be determined with reference to the terms of the mortgage deed, that though the mortgage deed permitted the mortgagee to create tenancies, the said permission did not extend to granting leases beyond the term of the mortgage and it was subject to the stipulation in the mortgage deed that the mortgagee should deliver possession whenever the mortgage was redeemed and hence when the mortgagee 's right to possession came to an end he ceased to be a lesser and the appellant also ceased to be a lessee and therefore the appellant was bound to surrender possession and he has no right to invoke the provisions of the Rent Act to continue his tenancy.
As regards the second contention, the High Court held that the appellant was not a necessary party to the suit or the execution application as his possession was akin to that of a sub lessee and the execution application was therefore legally maintainable against him.
Arguing for the appellant, Mr. Bhatt, learned counsel advanced the following contentions to assail the judgment of the High Court: 83 1.
The appellant constituted a tenant as per the definition of tenant in the Saurashtra Act and the Bombay Rent Act and therefore the fact that the lease was granted by a mortgagee with possession and not by the mortgagors themselves would not affect his tenancy rights under the Acts in any manner; 2.
The High Court, in spite of holding that the mortgage dated 19.7.1947 was an anomalous mortgage has erred in referring to Section 76(a) of the and going into the question whether the granting of a lease of urban immovable property so as to tie up the property beyond the term of the mortgage was a prudent act or not of the mortgagee.
The High Court has failed to consider that the induction of the appellant as a tenant was fully in accordance with the authority given to the mortgagee under the mortgage deed and consequently the lease granted to the appellant was a lawful one.
The appellant 's right to invoke the provisions of the Saurashtra Act XXII of 195 1 and the Bombay Rent Act to protect his tenancy rights is a conferment by the statutes and not due to any grant by the mortgagee.
Hence there was no need or necessity for the High Court to invoke the Full Bench decision of the Gujarat High Court in Purshottam vs Madhavaji Meghaji; , (AIR 1976 Gujarat 161: and take the view that the tenancy created by the mortgagee would not extend beyond the term of the mortgage as the lease property was urban immovable property and not agricultural land; 4.
The High Court ought to have followed the consistent view taken by this Court in numerous decisions that the rights of a tenant inducted by a mortgagee with possession would enure even beyond the period of mortgage if by reason of legislative enactments subsequently made the tenant 's rights had been given statutory protection (vide the decisions in Mahabir Gope vs Harbans Narain, ; ; Asa Ram vs Ram Kali, 11958] SCR 986 and Dahya Lal vs Rasul Mohammed Abdul Rahim, [ ; and Prabhu vs Ram Dev, [19661 3 SCR 676).
The observations in Film Corporation Ltd. vs Gyan Nath, the general principle of the bona fide and prudent acts of the mortgagee in possession being binding on the mortgagor even after the title of the mortgagee comes to an end would ordinarily apply to management of agricultural lands and would seldom extend to urban property was by way of an obiter.
Indeed the very same decision has recognised that even if the lease granted by the 84 mortgagee is of urban immovable property, it will be binding on the mortgagor if he had concurred with the granting of the lease.
Even in Sachalmal Parasram vs Ratan Bai, AIR 1972 SC 673 where the view taken in Film Corporation 's case has been followed, the observations would only constitute obiter because the decision there too had been rendered in acceptance of the finding of the District Judge that the tenancy created by the mortgagee was not a prudent act.
The Full Bench decision in Purshottam 's case relied upon by the High Court and the Full Bench decisions rendered in SV Venkatarama Reddiar vs Abdul Gani Rowther & Ors., AIR 1980 Madras 276 and Devkinandan vs Roshan Lal, AIR do not affect the appellant 's case in any manner since all these decisions have been rendered in observance of the obiter dicta of this Court in Film Corporation 's case and Sachalmal Parasram 's case.
If for any reason this Court is of the view that the judgments in Film Corporation 's case and Sachalmal Parasram 's case have enunciated a law differentiating between agricultural land on the one hand and urban immovable property on the other and holding that any lease granted by a mortgagee with possession of urban immovable property would not constitute a bona fide and prudent act and as such the tenancy will not be binding on the mortgagor after the redemption of the mortgage, this Bench should refer the appeal to a larger Bench for resolving the conflict between the law laid down in the earlier cases and the view taken in the two cases mentioned above.
Replying to the arguments of the appellant 's counsel, Mr. T.U. Mehta, learned counsel for the respondents submitted that the High Court has rightly found that the mortgagee had no authority to create a tenancy beyond the term of the mortgage because the mortgagors had given only a limited authority to the mortgagee to create tenancies over the property and had specifically stipulated that the mortgagee should re deliver possession of the property whenever the mortgage was redeemed.
Hence the permission given to the mortgagee to grant lease of the mortgage property was subject to the requirement that he should surrender possession of the property as soon as the mortgage was redeemed.
The learned counsel, therefore, stated that the appellant had no right to claim tenancy rights as against the mortgagors and that he cannot claim protection under the Saurashtra Act XXII of 195 1 or the Bombay Rent Act because the mortgagee ceased to be a lessor when the mortgage was redeemed and the tenant (appellant) also ceased to be a tenant eo instanti the mortgagee ceased to be a lessor.
85 Alternatively, the learned counsel submitted that even if the observations contained in Film Corporation 's case and Sachalmal Parasram 's case are to be viewed as obiter dicta.
the Full Bench decisions rendered by the Gujarat High Court in Purshottam vs Madhavji Meghaji and by the Madras High Court in SV Venkatarama Reddiar vs Abdul Gani Rowther & Ors.
have given succinct and adequate reasons for a differentiation being made between a lease of agricultural land and a lease of urban immovable Property leased by a mortgagee with possession and hence those decisions merit acceptance by this Court and therefore it must be held that the grant of lease of an urban immovable property by the mortgagee was not a prudent act and would not, therefore, bind the mortgagors.
Before taking up for consideration the various contentions of the appellant 's counsel it is necessary that the basic factors governing the rights of the parties are identified and kept in the forefront.
The High Court has held the first mortgage dated 19.7.1947 was an anomalous mortgage and not an usufructuary mortgage.
This finding of the High Court is un assailable and indeed neither of the parties controverts the finding.
The legal consequence of the finding is that the rights of the parties to the mortgage would not be governed by Section 76 of the but by Section 98 of the said Act.
Section 98 provides that in the case of anomalous mortgages the rights of the parties have to be determined in accordance with the terms of the mortgage deed.
Looking into the mortgage deed the first sentence in the text of the deed and clauses 2, 3, 4, S, 7, & 10 have relevance and they reads as under: "To wit we have borrowed the below mentioned amount of Rs.21,000 in words rupees twenty one thousands, from you, with an interest at a rate of six annas per hundred per month, under the business method of Diwali and under the remaining method by compound interest under this agreement in respect of interest.
According to the decision we have to pay to you an amount of interest accruing due every month.
And you are entitled to demand interest on the interest on any Diwali period if any interest remain claimable.
In respect of the said house other repairing charges or taxes of the Government or the Municipality all these expenses shall be paid by us.
We shall have to bring 86 insurance on your name and the policy shall be handed over to you.
And if in any circumstances we do not incur such expenses or we make delay therein you are entitled to make such expenses and to pay the amounts at our cost.
And if you pay the amount in the said manner, you are entitled to recover all these amounts as a portion of amount claimable under mortgage as an amount claimable under this mortgage with compound interest at a rate of six annas per month on all the aforesaid paid by you.
But you are not bound to do any such expense.
If you do not make such expenses and if any damage is occurred thereby or by any other reason, no responsibility in respect of the same shall lie on you.
We have given assurance that insurance has been taken(?).
Some portion of the said house has been given on rent to Patel Nandlal Hodaji under joint conditions.
Under the said conditions we have executed a rent deed in favour of you from the said Nandlal Hodaji for the remaining period.
You are entitled to give on rent the said house to anybody under the aforesaid clauses number 3 4.
You have to give the clear amount of rent in consideration of the same.
If under any reason any amount of rent is not given or the rent is given less or any of the portion of the house is left vacant, the responsibility thereof does not lie on you.
(Rest omitted).
You are entitled to obtain this property or to keep this property in your possession till any kind of amount claimable remains to be paid under this mortgage.
We are entitled to pay the amount at any time.
And the mortgage shall be redeemed when we pay up the amounts and the same shall be given to us and other documents and possession shall be returned to us.
And if we require the documents of redemption of mortgage and in respect of handing over possession etc.
the same shall be executed and the same shall be got registered.
" From a reading of these clauses it may be seen that although the mortgagors had delivered possession to the mortgagee they had bound 87 themselves to pay interest for the mortgage amount, that they had undertaken the liability to keep the house in good repair and meet all public charges and pay the insurance premium and that they had endorsed the lease deed executed by the tenant Nandlal Hansji (referred to as Patel Nandlal Hodaji in clause 4) in favour of the mortgagee so that he could collect the rent from the tenant and credit the same towards interest.
In clause 5 the mortgagee is given permission to give the house on lease to anyone subject to the terms contained in clauses 3 4.
The authorisation, however, gives an option to the mortgagee to lease out the house to anyone or not to grant any lease.
This is made clear by the fact that the mortgagors have further stated in clause 5 that if the house is given for a lesser rent or the tenant does not pay the stipulated rent or even if the mortgagee keeps the house vacant, the mortgagee will not be held liable for any loss meaning thereby that the mortgagee will not be held accountable for loss of rental income.
This is obviously because of the undertaking by the mortgagors in clause 2 that they hold themselves liable to pay interest to the mortgagee "at the rate of six annas per month under the business period of Diwali and under the remaining method by compound interest under the agreement." Under clause 7 the mortgagors have empowered the mortgagee to keep the property in his possession till the mortgage debt is fully repaid.
Under clause 10 the mortgagors have stated that they are entitled to redeem the mortgage at any time and that as soon as redemption takes place the mortgagee should return the documents of title and re deliver possession of the house.
Clauses 7 and 10, therefore, stipulate that the mortgagee is entitled to retain possession of the mortgage property only till such time the mortgage debt is outstanding and that as soon as the mortgage is redeemed the mortgagee is bound to re deliver possession of the property to the mortgagors.
It is with reference to these terms the question whether the mortgagee had authority to give tenancy rights to the appellant so as to enable him to claim tenancy rights beyond the term of the mortgage has got to be determined .
Leaving the facts aside for a moment we will turn our attention to the decision of this Court upon which the appellant 's counsel has placed considerable reliance.
For the purpose of the present case the pronouncement of law in Mahabir Gope vs Harbans Narain, Asa Ram vs Ram Kali, Dahya Lal vs Rasul Mohammed Abdul Rahim, and Prabhu vs Ram Dev, (supra) does not call for mention with reference to each decision.
Suffice it to say that the general principle which has been recognised in all these cases has been aptly summarised in Mulla 's .
Seventh Edition, page 514 in the following manner: 88 "No question of imprudence can arise where, as in Prabhu vs Ram Dev, the rights of the tenant were enlarged by tenancy legislation enacted after the tenant was put in pos session by the mortgagee.
It is submitted that this statement of the law is consistent with all the Supreme Court decisions quoted above.
" The other proposition of law which has found acceptance with this Court is that a tenancy created by a mortgagee in possession may be binding even after the termination of the title of the mortgagee in possession if the mortgagors had concurred to the grant of the lease (vide Film Corporation 's case.) It now behoves us to consider whether the appellant 's case falls under one of the two categories set out above i.e., (1) whether his tenancy rights came to be enlarged by tenancy legislation after he was put in possession by the mortgagee, or (2) whether the tenancy created in his favour by the mortgagee had the concurrence of the mortgagors 1) so as to entitle the appellant to claim tenancy rights even after the redemption of the mortgage.
In so far as the first question is concerned, the appellant was not inducted into possession soon after the mortgage deed was executed and the mortgagee was put in possession of the property but long thereafter.
In fact there was already a tenant on the mortgage property when the mortgagee was put in possession in July 1947.
During the period of tenancy of that tenant (Nandlal Hansji) the Saurashtra Act XXII of 1951 came to be enacted and it gave protection to the tenants from paying exhorbitant rent and from unreasonable eviction.
Despite the enlargement of his tenancy rights by the Act, Nandlal Hansji vacated the lease premises in 1956 and it was thereafter the mortgagee inducted the appellant in possession.
This is, therefore, a case where the Saurashtra Act was already in force when the appellant was inducted into possession.
By no stretch of imagination can the appellant contend that his tenancy rights became enlarged after the mortgagee granted him the lease by subsequent legislation enacted for affording protection to tenants.
The fact that the mortgagee had granted lease only for a period of one year will not alter the situation in any manner because not only had the mortgagee executed the lease deed after the expiry of the lease period of one year but also because the restriction of the lease period to one year was of no consequence in view of the provisions contained in the Saurashtra Act XXII of 195 1.
The learned counsel for the appellant placed reliance on the fact that the Bombay Rent Act had come to be enacted after the appellant was inducted into the property and hence it is a 89 subsequent tenancy legislation which has enlarged the tenancy rights of the appellant.
This argument overlooks the fact that Saurashtra Act XXII of 195 1 was already in force when the mortgagee granted the lease to the appellant and the said Act continued to be in force till 31.12.1963 and it was only from 1.1.1964 the Bombay Rent Act came to replace Saurashtra Act XXII of 1951.
In the second appeals pertaining to the standard rent application and the suit for ejectment filed by the mortgagee the High Court has observed as follows: "Now, it is not in dispute that the civil suit as well as the standard rent application were instituted at the time when the Saurashtra Act was in operation in Bhavnagar area.
It is not disputed that the present appeals are governed by the said Act.
However, I may say that the Saurashtra Act was repealed by Section 5 1 of Gujarat Act 57 of 1964 and the Bombay Rent, Hotel and Lodging House Rates Control Act, 1947 (Bombay Act LVII of 1947), it will hereafter be referred to as "the Bombay Act" was extended to the area comprised in the former State of Saurashtra which includes Bhavnagar where the suit premises are situate.
The repeal is with effect from December 31, 1963.
The present two second appeals have been instituted some time in February 1968 (sic for 1963) before the repeal of the Saurashtra Act.
Thus the present second appeal will have to be decided on the footing that the Saurashtra Act is applicable to the suit premises.
It is, therefore, futile for the counsel to contend that the tenancy in favour of the appellant was created when no tenancy legislation was in force and the appellant 's rights became enlarged by reason of tenancy legislation enacted subsequently viz. the Bombay Rent Act.
Hence, the reliance of the appellant 's counsel on the four earlier decisions of this Court, including the two decisions rendered by Benches of five Judges cannot be of any avail to the appellant.
We are then left with the question whether the lease granted to the appellant by the mortgagee had the approval or concurrence of the mortgagors so as to entitle the appellant to claim tenancy rights even as against the mortgagors after they had redeemed the mortgage.
The bedrock for the appellant 's contention that the mortgagors had given express authority to the mortgagee to create tenancy over the mortgage property is the first sentence contained in clause 5 of the mortgage deed which says that "you are entitled to give on rent the said 90 house to anybody under the aforesaid clauses No. 3 4".
Viewed from any angle the authorisation given to the mortgagee to give on lease the mortgage property cannot be said to be an unconditional and absolute one.
In the first place it has to be remembered that the mortgage deed came into existence in July 1947 which was long prior to the Saurashtra Act XXII of 1951 being enacted.
Neither the mortgagors nor the mortgagee could have anticipated a tenancy legislation like Saurashtra Act XXII of 195 1 being enacted by the Government so as to enlarge the rights of the tenants.
In such circumstances the appellant cannot legitimately contend that the mortgagors had given an unrestricted power to the mortgagee to create a tenancy for any length of time and are therefore bound to accept the lease transaction even after the redemption of the mortgage deed.
Secondly even without reference to the absence of any tenancy legislation when the mortgage deed came to be executed, there are a host of materials in the mortgage deed itself to show that the permission given to the mortgagee to induct tenants was of a very limited and qualified nature.
We have already pointed out that in spite of the mortgagee being given possession, the mortgagors had agreed to pay interest to the mortgagee at mercantile rate and also as per contractual rate.
This was not, therefore, a case where the mortgagee was put in possession of the mortgage property in order to appropriate the usufructs in lieu of interest.
The position stands further clarified by the recitals in clause S which absolve the mortgagee of any liability for loss of income from the mortgage property due to fall in rent or non payment of rent or even due to non leasing the property and keeping the house vacant.
On account of these guarantees the mortgagee was under no compulsion to lease out the property, just because of the permission given to him to grant leases, either to secure rental income in lieu of interest or on grounds of prudent management.
The mortgagee should have realised that by inducting the appellant, he was running the risk of being unable to deliver possession of the house to the mortgagors when the mortgage was redeemed and thereby he would be contravening clauses 7 and 10 of the mortgage deed.
In such circumstances there is no scope at all for the appellant to contend that the mortgagee had leased out the property in the belief that he was well within the authority given to him by the mortgagors to lease out the property and therefore the mortgagors are bound by the lease transaction.
In the light of these findings it follows that there is neither need nor necessity for us to go into the question whether the pronouncements made in Film Corporations 's case constitute a deviation from the ratio laid down in the earlier cases of Mahabir Gope, Asa Ram, 91 Dahya Lal and Prabhu (supra) and as such the appeal should be referred to a larger Bench for decision.
For the same reason we are of the view that there is no need to go into the question whether the judgments rendered in Purshottam vs Madhavji Meghaji, SV Venkatarama Reddiar vs Abdul Gani Rowther & Ors.
and Devkinandan vs Roshan Lal, (supra) require consideration by this Court.
The High Court, we may observe, has not held against the appellant because the lease granted by the mortgagee pertained to an urban immovable property but because the mortgagors had not given authority to the mortgagee to create a lease which would enure beyond the term of the mortgage, and secondly the authority given to the mortgagee to lease out the property was circumscribed by the stipulation that the mortgagee should re deliver the possession of the property whenever the mortgage was redeemed.
In the course of the arguments Mr. Bhatt also sought to contend that by reason of the authority given to the mortgagee to create tenancies over the mortgage property, the mortgagors had constituted the mortgagee their agent and hence the mortgagors as principals were bound by the acts of their agent.
We cannot countenance this argument because the relationship between the parties to the mortgage was always one of debtor and creditor and there was no question of the mortgagors constituting the mortgagee as their agent.
Since it has been found that the mortgagors had not empowered the mortgagee to create a lease which would be binding on them after the redemption of the mortgage and since the appellant 's rights, as a tenant, did not become enlarged by means of any tenancy legislation which came to be enacted after the lease was granted, the appellant can claim tenancy rights only as against his landlord viz. the mortgagee and not against the mortgagors.
As soon as the mortgagee 's rights became extinguished by the redemption of the mortgage, neither he nor anyone inducted by him has a right to be in possession of the mortgage property.
Consequently, the mortgagors were entitled to seek ejectment of the mortgagee and the tenant inducted by him.
The appellant had no independent rights and hence it was not necessary that he should have been made a party to the suit filed by the mortgagee or the execution application taken out by the mortgagors after the redemption of the mortgage.
His position was akin to that of a sub tenant whose rights were co terminus with those of the tenant himself.
As such the execution application taken against the mortgagee will be binding on the appellant having no independent rights of his own, the appellant cannot contend that the decrees and the 92 execution application are not binding on him as he was not made a party to the proceedings.
For all the reasons aforesaid we are of the view that the appeal deserves to fail.
Accordingly the appeal stands dismissed with costs to the contesting respondents.
P.S.S. Appeal dismissed.

summary:
The respondents mortgaged a house property in Bhavnagar with ID possession to a business firm in July, 1947.
The ground floor of the house was already in the occupation of a tenant and hence the mortgagors endorsed the rent deed to the mortgagee for the remaining period of the lease.
Clause 5 of the mortgage deed gave option to the mortgagee to give the house property on rent to anyone and made the mortgagors accountable for loss of rental income.
Clause 7 empowered the mortgagee to keep the property in his possession till the mortgage debt was repaid.
Clause 10 entitled the mortgagors to redeem the mortgage at any time and stated that as soon as redemption took place, the mortgagee should return the documents of title and re deliver possession of the house to the mortgagors.
Notwithstanding the mortgage purporting to be possessory the deed provided for payment of interest, and for the mortgagee to demand repayment of the mortgage amount at any time it deemed fit.
When the existing tenant vacated the portion occupied by him, in November, 191;6, the mortgagee inducted the appellant as a tenant.
The Saurashtra Rent Control Act, 1951 had in the meantime come into force.
This was replaced by the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 with effect from 1.1.1964.
The ejectment proceedings initiated by the mortgagee against the tenant appellant were pending when the mortgage was discharged in October, 1972 in terms of the memo of compromise, which stated that the ground floor of the house had been given on rent to the appellant, that the mortgagee had filed a case against him, that in such circumstances the 77 vacant possession of the ground floor could not be delivered, and that the mortgagors were entitled to obtain vacant possession of the said portion from the appellant.
In the execution proceedings taken out by the mortgagors thereafter the executing court held that they were entitled to get only symbolic delivery and not physical possession of the leased property.
The High Court held that as the mortgage was an anomalous mortgage, the rights of the mortgagee have to be determined with reference to the terms of the mortgage deed, that though the mortgage deed permitted the mortgagee to create tenancies, the said permission did not extend to granting lease beyond the term of the mortgage and it was subject to the stipulation in the mortgage deed that the mortgagee should deliver possession whenever the mortgage was redeemed, and hence when the mortgagee 's right to possession came to an end, he ceased to be a lessor and the appellant was bound to surrender possession and he had no right to invoke the provisions of the Rent Acts to continue his tenancy, and that the appellant was not a necessary party to the suit or the execution application, as his possession was akin to that of a sub lessee and the execution application was therefore legally maintainable against him.
In this appeal by certificate it was contended for the appellant tenant that his tenancy rights were protected under the Saurashtra Rent Act and the Bombay Rent Act, that the mortgagors had given an unrestricted power to the mortgagee to create a tenancy for any length of time, and were therefore, bound to accept the lease transaction even after the redemption of the mortgage deed, that his tenancy rights became enlarged by the subsequent legislation enacted for affording protection to tenants, and that by reason of the authority given to the mortgagee to create tenancy the mortgagors had constituted the mortgagee as their agent and hence they as principals were bound by the acts of their agent.
Dismissing the appeal, ^ HELD: 1.1 A tenancy created by a mortgagee in possession may be binding even after the termination of the title of the mortgagee in possession if the mortgagors had concurred to the grant of the lease.
[88B] 1.2 In the instant case, the mortgagors had not empowered the mortgagee to create a tenancy which would be binding on them after the 78 redemption of the mortgage.
The authorisation given to the mortgagee was not an unconditional and absolute one.
It was circumscribed by the stipulation that the mortgagee should re deliver the possession of the property whenever the mortgage was redeemed.
The lease granted by the mortgagee could not thus enure beyond the term of the mortgage.
[9lE, 90A, 91BC] 1.3 This was not a case where the mortgagee was put in possession of the mortgaged property in older to appropriate the usufructs in lieu of interest.
The mortgagors had agreed to pay interest to the mortgagee at mercantile rate and also as per contractual rate.
Furthermore, the mortgage deed absolved the mortgagee of any liability for loss of income from the mortgaged property due to fall in rent or non payment of rent or due to non leasing of the property and keeping the house vacant.
On account of these guarantees the mortgagee was under no compulsion to lease out the property just because of the permission given to him to grant lease, either to secure rental income in lieu of interest or on grounds of prudent management.
The mortgagee should have realised that by inducting the appellant, he was running the risk of being unable to deliver possession of the house to the mortgagors when the mortgage was redeemed and thereby he would be contravening clauses 7 and 10 of the mortgage deed.
[90D E] 1.4 The mortgage in the instant case was an anomalous mortgage and not an usufructuary one.
The rights of the parties to the mortgage therefore would be governed by section 98 of the , which provides for determination of the rights of the parties in accordance with the terms of the mortgage deed.
Consequently, the appellant could claim tenancy rights only as against his landlord viz. the mortgagee and not against the mortgagors.
As soon as the mortgagee 's rights became extinguished by redemption of the mortgage, neither he nor anyone inducted by him had a right to be in possession of the mortgaged property.
[85CE, 91F] Film Corporation Ltd. vs Gyan Nath, ; Purshottam vs Madhavaji Meghaji, ; AIR 1976 Gujarat 161; ; SV Venkatarama Reddiar vs Abdul Gani Rowther & Ors.
AIR 1980 Madras 276; and Devkinandan vs Roshan Lal, AIR , referred to.
No question of imprudence can arise where the rights of the tenant were enlarged by tenancy legislation enacted after the tenant was put in possession by the mortgagee.
In the instant case, the appellant 's rights, as a tenant, did not become enlarged by means of any tenancy 79 legislation which came to be enacted after the lease was granted.
The Saurashtra Rent Control Act, 1951 was already in force when the appellant was inducted into possession from December 4, 1956.
It cannot be claimed that the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 which had replaced the Saurashtra Act from January 1, 1964, was a subsequent tenancy legislation that had enlarged the tenancy rights of the appellant, since the second appeal pertaining to the standard rent application and the suit for ejectment filed by the mortgagee were instituted in 1963 before the repeal of the Saurashtra Act.
[88A, 91E, 88F,H, 89AB,DE] Mahabir Gope vs Harbans Narain, ; ; Asa Ram vs Ram Kali, ; Dahya Lal vs Rasul Mohammed Abdul Rahim, [1963] 3 SCR l; Prabhu vs Ram Dev, ; and Mula 's , 7th Edn.
p. 514, referred to.
The relationship between the parties to the mortgage was always one of debtor and creditor.
There was, thus, no question of the mortgagors constituting the mortgagee as their agent.
[9lD] D 4.
The appellant had no independent rights and hence it was not necessary that he should have been made a party to the suit filed by the mortgagors after the redemption of the mortgage.
His position was akin to that of a sub tenant whose rights were co terminus with those of the tenant himself.
The mortgagors were, therefore, entitled to seek ejectment of the mortgagee and the tenant inducted by him.
The execution application taken against the mortgagee would be binding on the appellant.
[9lG H]