KHADIM ALI SHAH BOKHARI V, PAKISTAN BURMAH-SHELL LTD. Versus KHADIM ALI SHAH BOKHARI V, PAKISTAN BURMAH-SHELL LTD.

1. The appellant is the owner of plot of land bearing No. GRE 461, Survey No. VII‑A.E. 249 Sheet GRE 12 situated at Lasbela Chowk Lawrance Road now known as Nishtar Road, Karachi which he had purchased from its previous owner Qari Zahir Qasimi. Under a registered lease deed, dated 11‑4‑1976 Qari Zahir Qasimi had leased out this land to the respondent for installation of filling/service station. This lease deed was executed for a terms of 10 years commencing from 14‑2‑1963 with two consecutive options exercisable by the respondent to renew the lease each for a period of 10 years on the same terms and conditions subject to change in the monthly rent. Under the lease deed after the adjustment of advance rent which the respondent had paid to Qasimi it was to pay the rent at the rate of Rs.2,200 p.m. in the first week of each following months. It also provided that after the expiry of lease, if the option to renew the lease was exercised by the respondent the rent for the renewed period was payable at the rate of Rs.1,900 p.m. By an addendum, dated 24‑10‑1963 between Qasmi and the respondent the lease was amended and the quantum of rent was increased from Rs.2,200 to Rs.2,500 w.e.f. the date of lease and for the renewed period it was fixed at Rs.2,200 p.m. payable in the first week of the following month. Again by an addendum, dated 27‑11‑1964 the lease‑deed was amended whereby the period of lease was extended from 14‑2‑1973 to 13‑2‑1978 and the rent was fixed at Rs.1,800 p.m. on the same terms and conditions as contained in the main lease. On 1‑2‑1978 the respondent exercised its option to renew the lease for a period of ten years in terms of clause 11(f) of the lease‑deed. By a letter dated 8‑6‑1978 the respondent remitted a cheque for Rs.9,000 to the appellant towards the rent from 14‑2‑1978 to 13‑7‑1978. The appellant acknowledged the receipt of the cheque without prejudice to his legal right and remedy against the respondent. The appellant served a notice, dated 1‑7‑1978 alleging that rent was to be paid in the first week of every calendar month and as the cheque, dated 8‑6‑1978 for Rs.9,000 being the arrears of rent from 14‑2‑1978 to 13‑7‑1978 was paid on 8‑6‑1978 default has been committed and he called upon the respondent to vacate the premises. This notice was replied in July 1978 in which it was stated that the appellant having accepted the cheque for Rs.90,000 it was too late in the day to alleged any default in payment of rent or violation of the lease‑deed. The appellant then filed an ejectment case on 13‑8‑1978 on the ground of default in payment of rent and personal bona fide requirement.

2. The respondent filed its written statement taking preliminary objections to the jurisdiction of the Controller. On facts the alleged default was denied and it was pleaded that 'due to an inadvertent and bona fide accident on the part of the clerk of the legal department of the opponent (respondent) the remittance of the monthly rent was omitted and the omission was discovered on 7‑6‑1978 and thereupon a cheque for Rs.9,U00 being rent for five months was immediately remitted to the applicant (appellant) and the applicant accepted the same.' It was further pleaded that in the circumstances the default was not wilful or deliberate and is a fit case for exercise of discretion in favour of the respondent. It was also pleaded that having accepted the cheque for Rs.9,000 the respondent was estopped from complaining about the default and further that the default, if any, stands waived. The learned Controller after assessment of evidence held that on acceptance of the cheque of Rs.9,000 the default, if any, stood waived and the circumstances in which the rent was not paid establishes that it was not wilful and deliberate default but due to bona fide mistake of the respondent's clerk for which the respondent cannot be punished and evicted. The learned Controller also noted and seems to have been influenced by the facts that after reduction of the area of the land due to acquisition of a part of it, the rent was not reduced and the respondent has incurred huge amount on construction of the office, fitting and fixture.

3. The learned counsel for the appellant contended that as the default has been admitted, the facts and circumstances of the case do not permit in law the exercise of discretion in favour of the respondent. From the plea raised by the respondent delay in payment of rent is established. In the first place the period of default has to be ascertained. According to Mr. Memon as under the lease‑deed time for payment of rent has been fixed the rent ought to have been paid within fifteen days from the date it became payable. On the other hand Mr. Noor Muhammad the learned counsel for the respondent has contended that as the clause under the main lease‑deed fixing the time for payment of rent was changed by virtue of the amendments, the respondent was entitled to pay rent within sixty days from the date the rent became payable. By this argument the learned counsel for the respondent was to extend the period for payment of rent by about 45 days.

4. Admittedly the rent for the period from 14‑2‑1978 to 13‑7‑1978 was paid by cheque, dated 8‑6‑1978. If rent was payable in the first week of the following month then after adding a grace period of 15 days the rent from 14‑2‑1978 to 13‑3‑1978 ought to have been paid upto 22‑4‑1978. But if the contention of the learned counsel for the respondent is accepted this very rent could have been paid within 60 days from 14‑3‑1978 i.e. upto 12‑5‑1978. Likewise the rent for the subsequent month could have been paid upto 12‑6‑1978. Therefore, on the basis of the contention of the learned counsel for the respondent default has occurred in payment of rent in respect of one month (14‑2‑1978 to 13‑3‑1978) because instead of paying on 12‑5‑1978 rent was paid on 8‑6‑1978. According to the respondent's calculation there is a delay of about 26 days. According to the learned counsel for the respondent in the facts and circumstances of the case the delay in payment of rent for the month of February/March cannot be termed as a wilful default. This aspect of the case will be considered later. At the moment it would be proper to determine on which date the rent was payable. The lease‑deed and its addenda have been referred in the earlier part of the judgment. Under clause 1(a) of the lease‑deed the respondent was re4uired to pay monthly rent after adjusting the advance 'in the first week of each following month'. Clause II (f) required the payment of rent after the expiry of the lease during the renewed period on the same terms and conditions except the quantum of rent which was fixed at Rs.1,900 p.m. By the first addendum the period of lease was extended and the rate of rent was changed. Clause 4 provided that the respondent will pay the rent from 14‑2‑1972 and 13‑2‑1973 on monthly basis at the rate of Rs. ,500 per month payable in the first week of each following month. Clause 5 provided that during the renewed period from 14‑2‑1973 to 13‑2‑1973 the respondent will pay rent at the rate of 2,200 per month 'payable in the first week of each following month subject to the lessee (respondent) exercising their renewed option ....

5. ' By the second addendum clause II(f) of the lease‑deed was substituted by a new clause which reads as follows:‑‑

6. 'That clause 11(f) of the main lease shall be amended and shall now read as under:‑‑

7. 'On the expiry of the period of this lease on 13‑2‑1978 the lessees shall have two consecutive options to renew the lease each for a period of five and ten years on the same terms and conditions save that the rental during the renewed period or periods shall be at the rate of Rs.1,800 (Rupees one thousand eight hundred only) per month and paid on monthly basis and no advance rent shall be paid.'

8. It seems that earlier the respondent used to pay advance rent but by this addendum and particularly the amended clause 11(f) the respondent was not required to pay advance rent and that is why the emphasis has been made on payment on monthly basis. Even by this amended clause 11(f) except the rate of rent which was reduced to Rs.1,800 other terms and conditions were to remain the same. Both the addenda by a separate clause provided that all other terms and conditions of the main lease shall remain the same. Therefore, clause I(a) of the lease‑deed which casts an obligation on the respondent to pay the rent in the first week of the following month remained operative and was not changed. The fact that the rent was payable in the first week of the following month is not only the logical and legal interpretation of the registered documents but this is admitted by the respondent itself. Although in the affidavit of evidence it has been denied that any date for payment of rent was fixed, while explaining that the respondent has acted bona fide an office note, dated 7‑6‑1978 was filed which is reproduced as follows:‑‑

9. Ref: LEG/55‑A 7th June, 1978. A

10. Note to: DISB. Acctt.

11. RENT PUMPSITE KY‑81 PLOT NO. 461

12. GRE‑LAWRENCE ROAD, KARACHI.

13. Advance rent paid vide our letter LEG/P/7, dated 5‑11‑1964 expired on 13‑2‑1978. Please, therefore, pay to Mr. Syed Khadim Ali Shah Bukhari 97, 98‑99, Stock Exchange Building, Kallian Road, Off I.I. Chundrigar Road, Karachi regular monthly rental @ Rs.1,800 (Rupees one thousand and eight hundred only) p.m. w.e.f. 14‑2‑1978 to date and, thereafter, continue paying the same at the above rate in the first week of every following month till December, 1978 under advice to us."

14. From this note it is clear that the respondent's treasurer had given direction for payment of rent at the rate of Rs.1,800 p.m. in the first week of every following month. It clearly establishes that the respondent had no misunderstanding or misapprehension that the rent was 'not to be paid in the first week of every following month.

15. Having established this fact, the question arises whether the respondent has committed wilful default and discretion can be exercised in its favour. When the appellant served a legal notice‑ the respondent replied through its Advocate and remained contended to allege that as the appellant has accepted the cheque the default stood waived. At that stage the plea of inadvertence of the staff members was not raised. This plea of bona fide mistake was introduced in the written statement by stating that due to inadvertence and bona fide mistake of the clerk the rent could not be paid. In order to explain this alleged bona fide mistake the respondent has examined a witness. This witness has explaineti the cause of delay as follows:‑‑

16. "That in the normal course after this letter, Annexure 0/3, arrangement should have been made by me for the remittance of the montly rent to the applicant in respect of the petrol pump site but on or about 15‑2‑1978 the opponent received the applicant's letter, dated 13th February, 1978 by which the applicant wanted to defer his reply to the exercise of option by the opponent and because of this letter of the applicant, the file of the opponent pertaining to this petrol pump moved up to other officers of the opponent and the matter of the remittance of the rent to the applicant was lost sight of by me because of these developments. I annex hereto a true copy of the said letter, dated 13th February, 1979 of the applicant marked as 0/4."

17. According to the respondent the confusion was created due to the appellant's letter of 13‑2‑1978 which was in reply to the respondent's letter of 1‑2‑1978 exercising his option to renew the lease which reads as follows:‑‑

18. 'We are in receipt of your above‑noted letter on the subject noted above. Our lawyer is examining the letter and the position at the moment. We will convey to you our decision after we have received opinion from our lawyer. We hope that till then you are not taking any step to complicate the position.'

19. From the office notes which have been placed on record by the respondent it seems that the question of renewal of lease was initiated by it in early December, 1977. On 31‑1‑1978 the respondent's Law Officer reminded I.T.M. to obtain his approval for renewal. The next day came the approval in the following terms:

20. 'We agree to get the above lease renewed for next option of 10 years on existing terms and conditions.'

21. Following up the matter the letter was issued to the appellant on 1‑2‑1978. The appellant replied on 13‑2‑1978. Besides these notes and letters nothing has been produced to show in what manner action, if any, was taken by the respondent. Except the statement of the respondent's witness no office note or documents have been produced to establish the fact stated in the affidavit of evidence reproduced above. From 13‑2‑1978 till 8‑6‑1978 there seems to be complete silence with no action worth the name. The appellant by his letter, dated 13‑2‑1978 had evidently expressed reservation which should have been a sufficient indication to the respondent to remain vigilant, deligent and on the alert. In this background the silence of the respondent without bringing any fact on record to show its bona fide and confusion cannot lead to the conclusion that the payment of rent was delayed due to circumstances beyond its control. On the date when option for renewal of lease‑ was exercised the respondent was aware of the terms and conditions of the lease. It was known to it that no advance was lying unadjusted in the hands of the appellant. In the past advance rent had been paid to the landlord but in terms of lease deed as amended, no advance rent was payable at the time of exercising option for renewal of the lease. Accordingly, the respondent did not pay any advance rent as in the past. The respondent had, therefore, full knowledge of the terms and conditions of the lease otherwise following the past practice it would have paid advance rent at the time of renewal. Be that as it may, the alleged confusion was not such as to delay the payment of rent. It is a clear case of forgetfulness and negligence. Inadvertence by itself is no ground for condoning the delay. The facts and circumstances should be established to prove that default occurred due to reasons beyond the control of the tenant and he was prevented by such circumstances as would have prevented a reasonable man in discharging his obligation. In Shaheryar Ali Patudi v. Messrs Decora Furnishers P L D 1985 Kar. 47, I have observed as follows:‑‑

22. 'In my humble view merely the fact that during a long period of tenancy the tenant has defaulted in payment of rent by few days only will not warrant exercise of discretion in his favour. Besides this fact the tenant should also establish that the default was due to reasons beyond his control or such circumstances which may justify delayed payment. If the default is avoidable or due to the negligence of the tenant in performance of his statutory duty then it cannot be executed. But if it is unavoidable discretion may be exercised in favour of the tenant.'

23. By granting grace period of 15 days or 60 days as the case may be, the legislature has given allowance to bona fide human error.1 forgetfulness, mistake or inadvertence. No sooner it crosses the specified' period it no longer remains bona fide error but turns into negligence, Even the continued bona fide error beyond the specified period can be C condoned provided the tenant establishes that it was due to reasons beyond his control and brings his case within the principle laid down in Shaheryar Ali Pataudi's case P L D 1985 Kar.

47. The test is that if the default was avoidable it cannot be condoned but if it was not avoidable and had occurred due to reasons beyond the control of the tenant, then discretion should be exercised in his favour.

24. Mr. Noor Muhammad the learned counsel has contended that the Controller should have exercised his discretion in favour of the tenant as the default is not wilful. In this regard he has referred P L D 1976 Lah. 1052, 1980 C L C 848, 1983 C L C 1523, 1984 C L C 1009, PLD 1984 Kar. 373 and 1985 C L C 1433. In Meharban Ali's case P L D 1976 Lah. 152 from the facts the Court came to the conclusion that it was not possible to give conclusive finding safely as to whether rent was paid or not, therefore, discretion was exercised in favour of the tenant and ejectment order was not passed. In Allah Rakha's case 1980 C L C 848 the facts were completely different. In that case rent for the previous month was due on 23‑7‑1972 and tenant filed application for deposit of rent on 1‑7‑1972 for permission to deposit the rent which was granted on 23‑7‑1972. 24‑7‑1972 being a Sunday a holiday the tenant deposited rent on 25‑7‑1972. Therefore, there was a delay of two days only. In these circumstances it was held that the default if any was technical and not wilful and the discretion was exercised in favour of the tenant. In Ghulam Hussain's case 1983 C L C 1520 it was held that "the tenant's regular payment of rent in the past may to some extent influence the exercise of discretion by the Controller in waiving the future default provided such default is not wilful, deliberate, and intentional and has duly been explained by the tenant". This observation does not apply in the present case as the respondent has not duly explained the default nor proved it to be due to circumstances beyond its control. In Mst. Latifa's case 1984 C L C 1009 it was held that the discretion should not be exercised arbitrarily or capricious and if the facts and circumstances do not justify a clear default the discretion should be exercised in favour of the tenant. In the case of Muhammad Ashraf and 6 others 1985 C L C 1433 it was held that if the tenant defaulted in payment of rent which was neither wilful nor deliberate the discretion should be exercised in favour of the tenant and that in second appeal normally the High Court will not interfere with the exercise of discretion by the Controller unless it is found perverse, arbitrary or capricious. There can be no cavil with the legal principles enunciated in these authorities. In cases where there is_ no conclusive evidence to establish a clear cut default, or the tenant as taken positive steps for payment of rent and due to reasons beyond his control it is delayed, the discretion may be exercised in favour of the tenant. The exercise of discretion depends upon the facts and circumstances of each case which may differ from each other. But it has to be exercised on recognised judicial principles and should not be arbitrary, perverse, capricious and hypothetical. Any discretion suffering from such defect can be interfered with particularly in first appeal.

25. As discussed above from the facts it is clear that the respondent has not succeeded in establishing that the payment of rent was delayed due to circumstances beyond its control. Therefore, the learned Controller was not justified in exercising discretion in favour of the respondent. It seems that while exercising his discretion the learned Controller has taken into consideration extraneous matter like construction of permanent structure by the respondent and reduction of the area of the land due to acquisition, which were not relevant for the controversy. The appeal is, therefore, allowed. As the respondent has installed fixtures, fittings and established service stations which are in the nature of permanent structure I will grant it one year time to vacate and hand over vacant possession to the appellant.

26. The Appeal is allowed.

27. A. A. Appeal allowed.