MUHAMMAD UMAR KHAN and others vs HABIB BANK LTD. and others

ORDER

' SABIHUDDIN AHMED, J.--- Leave to appeal is sought by the petitioner against the judgment of the learned single Judge of the High Court of Sindh whereby a petition under Article 199 of the Constitution questioning the concurrent findings of the Rent Controller and the Appellate Authority, dismissing the petitioner's ejectment application on ground of default in payment of rent was dismissed.

2. Briefly the undisputed facts of the case appear to be that the predecessor-in-interest of the petitioner had rented out the premises in question to the respondent-Bank at the monthly rent of Rs,11,000 for the period of five years commencing from 1-11-1990. It seems that after the expiry of the lease the petitioner refused to receive rent at the rate stipulated in the lease and the respondent started depositing the same in M.R.C. No,1553 of 1995, which the petitioner kept withdrawing.

Simultaneously negotiation between the parties started taking place and by a letter, dated 24-6- 1997 the respondent communicated to the petitioner that they were prepared to pay enhanced rent at the rate of Rs,25,000 per month for a further period of five years with effect from 1-11-1995 and requested the petitioner to execute an agreement immediately. The petitioner however, failed to do so and according to the respondent requested for three years rent in advance amounting to Rs,9,00,000, which the respondent was unwilling to pay. As such the respondent kept depositing rent at the rate of Rs,11,000 in the M.R.C. The petitioners withdraw the amount up to December, 1997.

In January, 1998 however, an application seeking ejectment of the respondent on ground of default in payment of rent was filed alleging that the respondent failed to pay the difference of rent between 1-11-1995 and 30-6-1997 as well as future rent at the rate of Rs,25,000 with effect from 1-7- 1997 as agreed.

3 .The respondent in reply did not dispute the contents of their letter, dated 24-6-1997 or their offer to pay the rent at the rate of Rs,25,000 effective from 1-11-1995. However, it was averred that the offer was conditional upon execution of a fresh lease, but the petitioner was unwilling to do so on account of his unwarranted demand of three years rent in advance and as such the respondent's offer was not accepted. No concluded contract to pay rent at the enhanced rate having come into being. Respondent could not be held to have defaulted, as long as rent at the old rate was being paid.

4. Affidavits in evidence were filed by the petitioner No,1 and an authorized officer of the respondent reiterated the contents of the respective pleadings of the parties and the witnesses were duly cross-examined. While the petitioner averred in his affidavit-in-evidence that he had affixed his signature beneath the respondent's letter dated 24-6-1997 in token of acceptance of the offer, in cross-examination he admitted that in response to the aforesaid letter the rent agreement was not prepared and executed due to some reason (underling is ours). He further admitted that the petitioner had requested the Bank to pay advance rent for three years amounting to Rs,9,00,000 though he denied the suggestion that the rent agreement was not executed owing to refusal of the respondent to pay the advance.

5. The respondent's witness on the other hand admitted that since the petitioner did not execute a fresh agreement therefore, the respondent did not pay rent at the enhanced rate.

6. The learned Rent Controller vide his order, dated 27-5-1999 rejected the allegation of default holding that since the petitioner failed to execute a fresh agreement, no enhancement of rent was due. He went on to hold that the agreement was not completed unless it was acted upon and further observed that withdrawal of rent deposited in Court at the rate of Rs,11,000 by the petitioner amounted to waiver on their part. Consequently the application for ejectment was dismissed.

7. The petitioner preferred an appeal against the order before the IInd Additional District Judge, Karachi South, who dismissed the same, holding that non-execution of an agreement requested for by the respondent amounted to non-acceptance of the offer to pay rent at enhanced rate and the respondent being a financial institution no amount could be withdrawn in the absence of a lease agreement, as such he found that there was no intentional or deliberate default and dismissed the appeal.

8. The petitioner moved the Honourable High Court, assailing the findings of the Rent Controller and sustained by the Appellate Authority and the learned single Judge observed that the letter of the respondent, dated 24-6-1997 indicated that the offer of enhancement of rent was subject to the condition of execution of a fresh agreement because the respondent being a financial institution could pay only enhanced rent upon such execution. She further held that the concurrent findings of the two Courts below being premised on appreciation of evidence were not liable to be disturbed in the constitutional jurisdiction of the Court. She also took note of the respondent's contention that in the absence of an agreement executed in accordance with section 5 of the S.R.P.O. Rent at the enhanced rate could not be claimed by the petitioner.

9. Mr. Sadiq Hidayatullah, learned counsel for the petitibner press before us mainly that the requirement of section 5 of the S.R.P.O. Were not mandatory and mere offer and acceptance constituted a valid contract, which was enforceable under the law irrespective of being executed in accordance with section 5 of the Ordinance.

10. Mr. Kamal Azfar, learned counsel for the respondent on the other hand urged that a tenancy agreement under S.R.P.O. Could only be made in accordance with section 5 thereof and even otherwise the respondent's letter, dated 24- 6-1997 was merely an offer and in the absence of categorical acceptance by the petitioner, could not be enforced.

11. We have carefully heard learned counsel for the parties and gone through the record. In principle Mr. Sadiq Hidayatullah, Advocate appears to be correct that since the consequence of non-compliance with section 5 of the S.R.P.O. Have not been specified, its provisions ought to be treated as merely directory. Indeed after the repeal of section 6 in the originally promulgated Ordinance stipulating the liability of the tenant to be ejected upon expiry of the agreement, section 5 seems to have lost substantial effect. When the existence of an agreement creating landlord relationship is established even through oral evidence, its terms have to been forced under the.

Ordinance. The factum of respondent being a financial institution may not be a relevant consideration. The judgment of this Court in the case of Zareena Khawaja v. Mehboob Shah PLD 1988 SC 190 also indicates the same. We are also unable to upheld the view taken by the Rent Controller that a contract comes into being only upon its being acted upon. It is well-settled that a concrete offer by one party and its categorical acceptance by the other constitutes a valid contract enforceable at law. The view that withdrawal of rent at the old rate disputed by the respondent in the M.R.C. Constituted a waiver on the part of the petitioner, taken by the Rent Controller, is also unsustainable. In the face of a categorical offer on the part of the respondent to pay enhanced rent with effect from a prior date, which the petitioner could accept or reject, the mere withdrawal of the amount deposited at the preexisting rate could not be treated as a clear relinquishment of a legal right. The only question required to be determined was whether in the facts and circumstances notation of the contract could be found to have taken place.

12. Mr. Kamal Azfar, however, seems to be right in contending that the respondents' letter dated 24- 6-1997 was merely an offer, while we are not impressed by the contention that such offer was conditional upon execution of a fresh lease, which was not the requirement of law. Learned counsel, however, appears to be right in emphasizing that there ought to be a categorical acceptance of the offer to constitute a binding contract. Admittedly the letter in question was not responded to by the petitioner. Mere affixation of signatures at its bottom could only indicate the petitioner's receipt of the offer, but not acceptance of its terms. On the contrary the petitioner himself has admitted that he demanded three years rent in advance and this demand could only be treated as a counteroffer. At the same time his contention that a fresh agreement was not executed "for some reason" clearly indicates his conscious reluctance to accept the offer.

13. Mr. Sadiq Hidayatullah, Advocate attempted to urge that the offer of continuance of tenancy upon increase in rent was made by the petitioner and the respondents' letter dated 24-6-1997 was merely its acceptance by the respondent. We find no force in this contention as there is nothing on record to indicate any firm offer being made by the petitioner. "The mere fact of an unspecified demand that might have been made by the petitioner, as rightly pointed out by Mr. Kamal Azfar, could only be treated as an invitation to offer under the contract law". We are, therefore, clearly of the view that no valid contract to pay rent at the rate of Rs,25,000 had come into being.

14. In the circumstances we do not find any merit in this petition and would accordingly dismiss the same. Leave to appeal is refused accordingly.