Supreme Court: Tenancy from mortgagee doesn't survive; Rent Restriction Act doesn't apply

The Supreme Court ruled that the tenancy created by the mortgagee in possession did not survive the termination of the mortgagee interest and was not binding on the purchaser. The tenants were not protected by the Rent Restriction Act as the tenancy ceased with the mortgagee's interest termination upon full mortgage payment by the purchaser. The Court determined mesne profits to be limited to the actual rent paid for the premises. The Court dismissed both appeals, upholding the lower court's decision on all issues and ordering costs to be set off with the resulting difference payable.

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Issues:
1. Whether the tenancy created by the mortgagee in possession survived the termination of the mortgagee interest to be binding on the purchaser.
2. Whether the tenants were protected by the East Punjab Urban Rent Restriction Act (3 of 1949).
3. Determination of mesne profits.
4. Whether the plaintiff was entitled to possession before the full term of the lease with right to renewals.

Analysis:
The Supreme Court heard appeals regarding a property dispute involving a cinema building in Jullundur City, originally owned by Azim Baksh, declared evacuee property after his migration to Pakistan. The property was leased and sub-leased multiple times, eventually purchased by Raja Gyan Nath. The main issues revolved around the survival of the tenancy post-mortgagee interest termination, tenant protection under the Rent Restriction Act, determination of mesne profits, and the plaintiff's entitlement to possession before the lease term's completion.

The Court established that a mortgagee's interest ends upon redemption, terminating any derivative titles unless explicitly agreed upon by the mortgagor. While exceptions exist under s. 76(a) for prudent management binding post-termination, they are typically limited to agricultural lands. In this case, a long lease at a low rent for urban property was deemed imprudent, precluding the tenant's rights extension beyond the original lessor's interest.

Regarding tenant protection under the Rent Restriction Act, the Court found the tenancy ceased with the mortgagee's interest termination upon full mortgage payment by the purchaser, eliminating the landlord-tenant relationship. The Act's definitions applied only if the tenancy survived post-mortgage, which was not the case here due to the mortgage's extinction upon sale.

In determining mesne profits, the Court upheld the High Court's decision to limit profits to the actual rent paid for the premises, considering the rent of &8377; 250/- per month as appropriate despite potential inclusion of passage rent.

Ultimately, the Court dismissed both appeals, affirming the lower court's decision on all issues and ordering costs to be set off with the resulting difference payable.

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