Holding

A registered deed of mortgage cannot be varied or extinguished by an unregistered document; the appellant remained a mortgagee and the suit for redemption was maintainable.

Summary

The appellant obtained possession of a house under a registered deed of mortgage dated 28‑02‑1983 for a term of seven years. After the term expired, the mortgagor (respondent) served notice for redemption and filed a suit. The appellant contended that a later unregistered agreement had converted his possession into a tenancy, thereby extinguishing the mortgage. The trial court accepted this claim, but the Court of Appeal reversed, holding that the mortgage remained valid. The High Court dismissed the appellant’s second appeal, finding no substantial question of law. The Supreme Court affirmed the High Court, ruling that a registered mortgage deed can be altered only by another registered document; the appellant failed to prove tenancy and therefore remained a mortgagee, making the suit for redemption maintainable.

Issues considered

Can a subsequent unregistered agreement alter or extinguish the rights created by a registered deed of mortgage?
Whether the appellant was in possession as a tenant/lessee, affecting his liability to redeem the mortgage.
Does the interest of a lessee merge with that of a mortgagee in the absence of proof of surrender?
Whether any substantial question of law arose for appellate review.

Legislation cited

Indian Contract Act, 1872s. 92
Registration Act, 1908s. 17(1)(b)

Subjects

mortgageregistered deedalteration of deedunregistered agreementredemption of mortgageleasepossessiontransfer of propertyregistration actmerger of interests

Judgment

[2008] 4 S.C.R. 1003

CHANDRAKANT SHANKARRAO MACHALE A
;:...
... v.
PARUBAI BHAIRU MOHITE
(Civil Appeal No. 1957 of 2008)
MARCH 13, 2008
B
[S.B. SINHA AND V.S. SIRPURKAR, JJ.]

-!' Transfer of Property - Mortgage by a registered deed -
... Mortgagee getting possession of the property - Redemption
of mortgage sought - Mortgagee stating to be in possession c
of the property as a lessee by virtue of a subsequent
unregistered agreement whereby right as a mortgagee was
extinguished - Held: Transferee could not prove his
possession as a lessee - Mortgage deed being a registered
deed could not have been altered by a subsequent
D
unregistered document.
.Jf
Deeds and Documents - Registered deed - Alteration
' of - Held: Alteration of a registered document can be done
only·by another registered document.
The predecessor of the respondent had executed a E
registered mortgage deed in favour of the appellant. The
mortgage was for seven years. The possession of the
mortgaged property was delivered to the appellant. After
expiry of seven years, since his predecessor had expired,
respondent issued notice to the appellant seeking F
redemption of the mortgage. As the same was not acted
upon, he filed a suit for redemption of mortgage. Appellant
contested the suit on the ground that by a subsequent
unregistered agreement between the parties, right of the
appellant as a mortgagee had been extinguished and by G
virtue of that document appellant acquired interest in the
suit property as a tenant. Trial Court dismissed the suit,
relying on the subsequent agreement. First appollate
court decreed the suit. Second appeal was dismissed by
1003 H
1004 SUPREME COURT REPORTS [2008] 4 S.C.R.

A High Court. Hence the present appeal.
Dismissing the appeal, the Court
HELD: 1. The Deed of Mortgage was a registered
document. The terms of a registered document could be
B varied or altered only by another registered document. A
finding of fact has been arrived at that the appellant could
not prove his possession as a tenant. The appellant was
put in possession as a mortgagee. It was, therefore,
impermissible in law to change his status from a
C mortgagee to that of a lessee by reason of an
unregistered deed of lease (even if it is assumed that
the same had been executed). [Para 11] [1008-G, H;
1009-A, B]
S. Saktivel(dead) by LRs. v. M. Venugopal Pillai and
D Ors. AIR 2000 SC 2633- relied on.
Gopa/an Krishnakutty v. Kunjamma Pillai Sarojini Amma
and Ors. (1996) 3 SCC 424- distinguished.
2. The case as to whether the interest of a lessee
E merged with the interest of a mortgagee would depend
upon facts and circumstances of each case. There cannot
be any hard and fast rule for arriving at only one decision
as the decision thereupon~ill depend upon the terms of
the document. [Para 15] [1010-FJ
F CIVILAPPELLATE JURISDICTION : Civil Appeal No. 1957
of 2008.
From the final Judgment dated 28.11.2006 of the High
Court of Judicature at Bombay in S.A. No. 722/2000
G S.N. Bhat, N.P.S. Panwar and D.P. Chaturvedi for the
Appellant.
. H.l. Tiku, Yashmeet Kaur and Ashok K. Mahajan for the
Respondent.
H The Judgment of the Court was delivered by
• CHANDRAKANT SHANKARRAO MACHALE v. PARUBAI
BHAIRU MOHITE [S.S. SINHA, J.].
1005

..
,x S.8. SINHA, J. 1. Leave granted.
2. Appellant was the owner of a house property situated in
A

Taluka Gandhinglaj, District Kolhapur. On 28.2.1983, Bhairu
Rama Mohite and Krishna Rama Mohite (the predecessor of
the first respondent herein) executed a registered deed of
mortgage in favour of the appellant. The possession of the said B
property was delivered in favour of the mortgagee. The period
:;· prescribed in the said Deed of Mortgage was seven years. The
4'
amount of mortgage was Rs.20,000/-. It was agreed that upon
expiry of the said period, the property would revert back to the
mortgagor. c
3. Allegedly, an unregistered agreement was entered into
by and between the parties herein, stating :
"This agreement in writing executed by us in respect of
land C.S. No.1943 admeasuring 252 Sq. meters situated D
Mouje Gadhinglj which includes house and open space
,;
\ belongs to us absolutely. Earlier the house admeasuring
East West 39 feet i.e. 11 meters 89 centimeters ar)d '
South-North 49 feet i.e. 14 meters 94 centimeters, totally
adm.177.63 59 meters house as also the open space in E
front of the house East. West 21.89 meters and South-
North 6.10 meters totally adm.72.52 sq. meters from out
of which house and the open space on the Western side
admeasuring 36.26 meters was given to you by way of
mortgage by conditional sale for Rs.20,000/- under F
registered document No.229 dated 1.3.1983 and the
same is recorded in your name."
Some other terms and conditions were also laid down
therein.
G
4. Respondents, being the predecessors in interest of the
mortgagor filed a suit for redemption of the mortgage. Krishna
died during the pendency of the suit. As the period specified in
the said Deed of Mortgage was to expire on 28.2.1990, the
plaintiff served with a notice dated 17 .2 .1990 for redeeming
H
A
1006 SUPREME_ COURT REPORTS [2008] 4 S.C.R.

the suit property. As the same was not acted upon, a suit for
•
redemption of mortgage was filed. ~'
A

5. Contention of the appellant, inter alia, was that he has 11' ---

been put in possession of the said property as a tenant.· it was '·
j.

urged that by reason of the said mortgage, his right to occupy
B the premises as a tenant was not extinguished.
In view of the aforementioned rival contentions of the
parties, the learned Trial Judge framed the following issues : .-{

c
"1. Do the plaintiff prove that Bhairu Rama Mohite and •
the defendant No.10 Mortgaged the suit property to
the defendant by conditional sale on 1.3.1983?
2. Does the defendant prove that he is in possession
of the suit property as a monthly tenant?
D 3. Are the plaintiffs entitled_ to redeem the mortgage by
obtaining reconveyance" of the suit property from the
defendant? ~

4. Are they entitled to possession of the suit property? '
E 5. What order and decree?"
6. On issue No.1, learned Trial Court opined :
"Now we have to see what was intended by the parties to
these three documents. It may be noted that parties to
F these documents are the same. The defendant claims
tenancy rights by virtue of agreement dated 24.2.1983
(Exh.52). On the other hand according to the plaintiff the
property comprising this agreement is not the subject
matter of the mortgage the controversy has to be solved
G
by going through the contents of the document. From the
recitals it appears that the Municipal House No.1440 was
agreed to be let for the period of 7 years on lease by
accepting Rs.20,000/-. It also appears from the recitals
that the plaintiff received Rs.1 ;000/- on the day of
agreement. I do ooJ come across recitals of the defendant
H
CHANDRAKANT SHANKARRAO MACHALE v. PARUBAI 1007
BHAIRU MOHITE [S.B. SINHA, J.]

having been put in possession of the property. On the A
;x. contrary, the recitals do show that the agreement was
j_
executor (sic) in nature and the intended transaction was
to be completed within15 days. Therefore, I do not
subscribe to the submission of the defendant that the lease
was created by Exh.52 on 24.2.1983. It is true that if we 8
peruse the description of the property given in the
mortgage deed Exh.62, it does not correspond with the
->-
description given in Exh.52. However, the plaintiff has failed
to prove that on the day of execution of the mortgage
<t
deed there were two Municipal House numbers viz., 1440
and 1440-A. However, since I have already observed
c
"'document Exh.52 to be an agreement of the lease to be
created within 15 days, I do not wish to rely strongly on that
document since the fate of the suit is rest on subsequent
document Exh.53 and Exh.62."
D
The suit, however, was dismissed. opining that the plaintiff
4'
has leased the suit property in favour of the defendant.
• 7. An appeal preferred thereagainst by the plaintiff was
allowed by the Court of Appeal, holding :
E
"After going through terms and conditions of deed of lease
styled as Kararpatra (Exh.53) it reveals that it is not fresh
contract of lease but, under that document, the right created
by plaintiffs, in favour of the defendant in the immovable
property for Rs.20,000/- as a mortgagee, has been
· extinguished. By the terms and conditions of this F
agreement, parties, intended to change the right created
in favour of defendant, under registered deed of mortgage,
which was admittedly executed for the mortgage amount
of Rs.20,000/-. Therefore, U/s. 17(1 )(b) of the Indian
Registration Act, this second agreement dated 1.3.1983 G
(Exh.53) requires registration. Admittedly, this document
is not registered document. Therefore, under this second
agreement (Exh.53) the relations created in between the
plaintiffs and defendant as mortgagor and mortgagee,
cannot be extinguished. I hold that, the Kararpatra (Exh.53) H
1008 SUPREME COURT REPORTS [2008) 4 S.C.R. .

A cannot extinguish the right created in favour of the ,,
.4
defendant as mortgagee in the suit property. So also when
under deed of mortgaged deed (Exh.62) in lieu of amount
of Rs.20,000/- interest has been created in favour of the
defendant, after execution of this deed of mortgage,
B plaintiffs had no right to lease out the same property to the
defendant by canceling this registered deed of mortgage
under unregistered agreement of lease (Exh.53) I hold
that, the learned trial court totally ignored the legal position ~

that, by unregistered agreement (Exh.53) the contract of jt

mortgage (Exh.62) cannot be ·extinguished or cancelled.
c Therefore, the agreement (Exh.53) is of no help to the
defendant to prove that under that document he acquired
interest in the suit property as a tenant of the plaintiff."
8. As regards the contention that the appellant became a
D tenant under the plaintiffs, the Court of First Appeal held that the
relationship between the parties were that of a mortgagor and
mortgagee and the defendant-appellant had failed to prove that ·i- 11--

he was in possession of the suit property as a tenant. The appeal '
was, thus, allowed and the suit was decreed.
E 9. A second appeal preferred by the appellant herein has
been dismissed by the High Court opining that no substantial
question of law arose for its consideration.
10. Mr. S.N. Bhat, learned counsel appearing on behalf of
the appellant, would, in support of the appeal, contend that the
F transactions of mortgage and the lease were separate and
~
independent transactions.
The Court of First Appeal as also the High Court, thus,
committed a serious error in passing the impugned judgment.
G
The learned counsel furthermore urged that although a decree
for redemption could be granted but in execution of the said
decree, only symbolical possession could be directed to be
issued.
)....

11. The Deed of Mortgage dated 28.2.1983 was a
H registered document. The terms of a registered document could
CHANDRAKANT SHANKARRAO MACHALE v. PARUBAI 1009
BHAIRU MOHITE [S.B. SINHA, J.]

be varied or altered only by another registered document. A A
i finding of fact has been arrived at that the appellant could not
prove his possession as a tenant. We have noticed hereinbefore
that the appellant was put in possession as a mortgagee. It was,
therefore, in our opinion, impermissible in law to change his
status from a mortgagee to that of a lessee by reason of an B
unregistered deed of lease (even if we assume that the same
had been executed).
->
.4 The learned Court of Appeal may not be entirely correct in
taking recourse to Section 92 of the Indian Contract Act or
holding that the deed of lease required registration even for the c
purpose of month to month tenancy, but, as indicated
hereinbefore, we have considered the question from a different
angle.
12. Furthermore, the only question of law which was
D
pressed before the High Court was :

"'• ''The lower appellate court ought to have held that the
respondents and appellant executed an agreement dated
28.2.1983 i.e. Exh.62 and immediately on the next day,
i.e., on 1.3.1983 executed the agreement for tenancy which E
is a subsequent agreement. Hence it ought to have been
held that the parties have by their conduct agreed to treat
the transaction as a lease and hence suit filed by
respondents for redemption of mortgage is not
maintainable in law and ought to have been dismissed F
with costs."
No substantial question of law, thus, had been raised.
13. The deed of mortgage was a registered one. It fulfilled
the conditions of a valid mortgage. Its terms could not have been
G
varied or altered by reason of an unregistered document so as
to change the status of the parties from mcrtgagee ro 3 18ssee.
[See S. Saktivel (dead) by L.Rs. v. M. Venugopal Pilla: & Ors.
-\ [AIR 2000 SC 2633 para 67)

14 .:;;_•r attention has been drawn to a decisio: of this Court H
1010 SUPREME COURT REPORTS [2008] 4 S.C.R.
e
I

A in Gopalan Krishnakutty v.Kunjamma Pillai Sarojini Amma &
Ors. [(1996) 3 SCC 424] wherein upon taking into consideration f
some of its earlier decisions, this Court held :
. "The High Court, in the present case, proceeded on the
erroneous assumption in law that surrender of the lease ·r-
B J-
by the lessee (defendant) must be implied from the fact of
execution of the usufrucuai:y mortgage in-his favour by the
lessor (plaintiff). As indicated, this is an erroneous ..\.
assumption in law. lhis question has to be decided on the .
contents of the deed since there is no other evidence of
c surrender of the lease by th.e defendant on execution of
the mortgage. We find nothing in the mortgage deed
(Annexure A-1) dated 18.7:1974 read with the release
deed of the same date to prove either an express or an
implied surrender of the lease by the defendant in favour
D of the plaintiff on execution of the mortgage deed. Since
there is no automatic merger of the interest of a lessee I
~
with that of a mortgagee when the same person is the jti.
lessee as well as the mortgagee, in ·absence of proof of '
surrender of the lease by the defendant, on redemption of
E the mortgage, the plaintiff is not entitled automatically to
recover possession of the leased premises. The
defendant's right to continue in possession as a lessee,
therefore, continues to subsist."
15. We are concerned here with a converse case. The
F case as to whether the interest of a lessee merged with the
interest of a mortgagee would depend upon facts and '.,,,. \

circumstances of each case, as indicated in Gopalan Krishna
Murti. There cannot be any hard and fast rule for arriving at only ,
one decision as the decision thereupon will .depend upon the
G terms of the document.
16. For the aforementioned reasons, there is no merit in
the appeal. The same is dismissed accordingly. In the·facts of
the case, there shall, however, be no order as to costs.

H K.K.T. Appeal dismissed.