PAKISTAN BURMAH SHELL LTD. Versus KHALIL AHMAD

1. This first Rent Appeal is directed against the order dated 15‑9‑1983 passed by the XVIth Senior Civil Judge/Rent Controller, Karachi, whereby he allowed the eviction application filed by the respondent and directed the appellants to hand over the vacant possession of the premises in dispute to the respondents within a month from the date of the order.

2. The facts leading to the filing of the above appeal are that the respondents leased out the plot of land bearing No. SB‑2, K.DA. Scheme No. 1, Drigh Road, Karachi, to the appellants under a deed of lease executed and registered on 3‑7‑1969 for a period of ten years from 10‑3‑1969. The respondents filed eviction application No. 1048 of 1980 against the appellants on the ground of personal requirement. The appellants resisted the eviction application. The respondents filed affidavit‑in‑evidence of respondent No.2, besides affidavit‑in- evidence of Muhammad Haroon the son of the respondent No.l. The appellants filed affidavit‑in‑evidence of Area Assistant YA.Burney. They were cross examined by the learned counsel for the respective parties.

3. The learned Controller on the basis of the evidence adduced by the parties and taking into consideration the arguments advanced by the learned counsel for the parties allowed the eviction application vide order dated 15‑9 1983.

4. The appellants being aggrieved against the order dated 15‑9‑1983 of the XVth Senior Civil Judge/Rent Controller have preferred this First Rent Appeal on the grounds mentioned in the memo of appeal.

5. Mr. Rehanul Hassan Farooqui the learned counsel for the appellants has raised the following contentions:‑

(1) The learned Controller has travelled beyond the contents of the eviction proceedings in making the observations impugned in the appeal.

(2) In case, I find that the learned Controller is right, in the constructions he placed upon clause 1(f) whether I should pass eviction order notwithstanding the appellant had exercised the option to renew the release.

(3) The respondents have failed to prove bona fide personal requirement.

6. Mr. Habib A. Rehmani the learned counsel for the respondents has submitted that the lease after the expiry does not subsist and the respondents have proved their case of personal requirement. The learned counsel for the respondents has further, submitted that the finding of the learned Controller on the question of renewal is erroneous.

7. I have heard the learned counsel for the parties and have gone through the record. I have also perused the impugned order.

8. It is an admitted position that by a registered lease deed dated 3‑7‑1969, the respondents leased out the premises to the appellants for a period of ten years on a monthly rent of Rs.1,800. The lease or tenancy was to commence on and from 10‑3‑1969. The following clause relevant for the present purposes:

9. And the lessors covenant with the lessees as follows:‑

(a) . ...............................

10. (b). ..............................

11. (c). ..............................

12. (d). ..............................

13. (e). ..............................

(f) On the expiry of the period of this lease, the lessees shall have one option i to renew the lease for a period of ten years on the same terms and conditions as of this lease except the rental will be decided mutually.

14. Sometime before the expiry of ten years, the appellants exercised their option through a letter dated 12-12-1978 appellants exercised their option through a letter dated 12‑12‑1978 (ExhA‑1) which has been ackhowledged by the respondents by their letter dated 8‑1‑1979 (Exh.4‑A). The respondents by their letter dated 9‑12‑1978 (Exh.A‑3) asked the appellants to vacate the premises in dispute on or before 9‑3‑1979 and treated the agreement as cancelled failing which they would charge Rs.15,000 per month w.e.f. 10‑3‑1979. As the appellants did not vacate the premises in dispute, the respondents filed the above eviction application. The appellants in their written statement denied the allegation of personal requirement. The appellants further submitted that the appellants in fact before the expiry of the lease period, exercised their option through Exh.A‑1. The contract of renewal having come into force, confers immediate right on the appellants to hold the plot in dispute for a further period of ten years on the same terms and conditions as in the registered lease deed. The appellants. further submitted that "the eviction application for ejectment has been made prematurely as the terms of lease according to the lease deed is to expire on 9th March, 1989 and the applicants are debarred from claiming possession of the aforesaid plot where the opponent has made huge investment by raising structure of permanent nature and installed a petrol pump thereon."

15. On the above pleadings the learned Controller framed appropriate issues and on consideration of the oral and documentary evidence placed before him, the Controller found that the appellants have validly exercised their option of renewal in terms of clause 11(f) of the lease deed and, therefore, have a right to continue in possession for a further period of ten years from 10‑3‑1979. It is significant to notice that the eviction order was rendered on 15‑9‑1983. In other words, the renewal period of ten years was not over by that day and even today. Accordingly he allowed the eviction application.

16. I shall take up the first contention for my consideration. Mr. Rehanul Hassan Farooqi's contention was that the appellant has exercised their option of renewal in terms of clause 11(f) of the lease deed and the learned Controller has rightly come to the conclusion that the appellants have exercised the option of renewal. Mr. Rehmani submitted that the provision upon which the Controller has relied as a provision intended to give appellants on option of renewal has been wrongly interpreted, that the true meaning of the provision is that there was to be a fresh lease deed between the parties after the question of proper rent to be paid by the appellants was settled between them; that in the absence of a fresh agreement arrived at between the parties, appellants were to quit the plot in dispute. The decision of the case before me depends to a very great extent on the interpretation of terms of lease. A perusal of it shows that the lease was created for a period of ten years commencing from 10‑3‑1969.

17. After consideration of terms of this lease I find it impossible to accept the contention raised on behalf of respondents that under its terms, the respondents have an option of refusal. In my opinion, there is nothing in the terms of the deed which would warrant me in accepting the contention raised on behalf of respondents. Although the term of the lease deed shows one option to renew the lease for a period of ten years on the same terms and conditions as of the lease deed except the rental will be decided mutually. The case of the respondents in the eviction application was that the respondents vide their letter informed the appellants that they were not inclined to renew the lease. The contention of the learned counsel for the respondents is devoid of force. This was not the case .of the respondents in the eviction application or in the evidence. The provision having been made in the lease, it is proper that effect should be given to it as far as possible and for the purpose of giving effect to it, I have endeavoured to ascertain the intention of the parties. As I have said, if the intention of the parties was that at the determination of the lease by efflux of time, a fresh lease was to be entered into without any option to appellants, nothing would have been easier than to have said nothing at all in the lease, as regards settlement of the lease after the expiry of terms. The appellants undoubtedly understood the material provision as giving the right to ask for a renewal of the lease for they sent to the respondents a letter in writing in this behalf some 87 days before the termination of the lease. The respondents ignored the letter; they did say that the appellants had no right to ask for a renewal of the lease. I think the intention of the parties was clear enough and I need not dilate on this aspect of the case.

18. In my opinion, the appellants were entitled to a renewal for a period of ten years from 10‑3‑1979 and on the same terms and conditions as were to be found in the lease of 3‑7‑1969, subject to the reservation that the appellants were liable to pay the rent mutually decided. If a lessor agrees to a provision in the lease that the lessee will have the option to ask for a renewal at the determination of the case, for a further period, I think the provision must be given effect to. In this view of the matter, I think the decision of the Controller on this point was right.

19. The learned counsel for the respondents has submitted that the renewal clause is uncertain because option was void for uncertainty.

20. The question is whether the language of the clause provides a proper formula, or whether it is uncertain to be valid. In Gregory v. Mighell (1811) 18 Vs 328 = 34 E.R.341, there was an agreement for a lease at `a fair and just annual rent', to be fixed by arbitration. The tenant had taken possession and spent money on the premises and Sir William Grant the Master of Rolls decreed spec performance in his favour. He said:

21. "That is a case in which the failure of the arbitrators to fix the rent can never affect the agreement. It is to be performed: and the Court must find some means of completing its execution; as I have already said, the plaintiff is not to be considered a trespasser. Some rent he must pay: the amount must be fixed in some other mode; and it seems to me, that it should be ascertained by the Master without sending it to another arbitration; which might possibly end in the same way."

22. In Greater London Council v. Linnolly (1970) 1 A.E.R. 870= (1970) 2 Q.B. 100: (1970) 2 W.L.R. 658, which was a case between landlord and tenant concerning a condition on the rent card of a council tenant. This condition provided that the rent and other sums shown on the rent card are liable to be increased or decreased on notice being given; and the Court of Appeal unanimously held that the condition was not for uncertainty. Lord Denning M R said:,

23. "The Courts are always loath to hold a condition bad for uncertainty. They will give a reasonable interpretation whenever possible. It is possible here."

24. Lord Pearson said:

25. "As Lord Denning MR has said, the Courts are always. Loath to hold a clause invalid for uncertainty if a reasonable meaning can be given to it, and it seems to me easy to give a reasonable meaning to this condition."

26. Sir Gordon Willmer agreed with both the judgments.

27. In Brown v. Gould, (1971) 2 A.E.R. 1505, the facts of the case were that the landlord demised the premises to the tenant for a term of 21 years at a rent of L.500 a year. A clause in the lease provided that the landlord would, on the written request of the tenant made within 12 months before the expiration of the term if there had been no breach on non‑observance of the covenants in the lease by the tenant, grant him a lease of such part of the demised premises in his actual occupation for a further period of 21 years at a rent to be fixed having regard to the market value of the premises at the time of exercising this option taking into account to the advantage of the tenant any increased value of such premises attributable to structural improvements made by the tenant during the currency of this present lease .... The clause provided no machinery for fixing the rent. On the question whether the tenant's option for renewal under the clause was valid and enforceable or void of uncertainty. Mr. Megarry, J. has come to the conclusion after giving cogent reasons, which are fully supported by the various authorities including decision in King's Motors (Oxford) Ltd., v. Lax (1969) 3 A.E.R. 665: (1970) 1 W.L.R. 426: 1970 discussed by him in the said Judgment that the option was valid and enforceable.

28. I am in respectful agreement with this decision of Mr. Megarry, J. for the reasons given by him in his judgment and as such I am of the opinion that the learned Controller rightly held that the clause is valid and enforceable.

29. I am of the opinion that the clause is not uncertain as contended by the learned counsel for the respondents. If the parties disagree as to the rent payable C under such a renewal clause, then in my opinion, since the lease does not provide any machinery, the Controller or the Court has jurisdiction to determine it. The rent is to be fixed by whatever method is adopted: in the phrase of Sir William Grant MR in the case of Milnes v. Gery (1803‑13) A E R Rep. 369:

30. "In this instance the parties have agreed upon a particular mode of ascertaining the price. The agreement that the price shall be in one specific manner, certainly does not afford an inference that it is wholly indifferent in what manner it is to be fixed. "The Court declaring, that the one shall take, and the other shall give a price, fixed in any other manner does not execute any agreement of theirs, but makes an agreement for them upon a notion that it may be as advantageous as that which they made for themselves. How can a man be forced to transfer to a stranger that confidence, which upon a subject materially interesting to him, he has reposed in an individual of his own selection? No substantial difference arises from the circumstance that in this case the decision may ultimately fall to an umpire, not directly nominated by the parties, as through the medium of the original nominees they had an influence upon the choice. No one could be chosen without the concurrence of the persons in whose judgment they reciprocally confided.

31. The case of an agreement to sell at a fair valuation is essentially different. In that case no particular means of ascertaining the value are pointed out. There is nothing, therefore, precluding the Court from adopting any means, adapted to that purpose.

32. In this process, regard must be had to the rent prevailing when the option is exercised. In the result I reject the contention that the clause is invalid.

33. With regard to the second and third contentions of the learned counsel for the appellant that the learned Controller cannot pass an eviction order after finding that the appellants have rightly exercised the option of renewal and the personal requirement, it is advantageous to reproduce section 13 of .the Sind Rented Premises Ordinance, 1979 (hereinafter referred to as the Ordinance) which reads as follows:‑

34. "13. Eviction. No tenant shall be evicted from premises in his possession except in accordance with the provisions of the Ordinance:"

35. Under section 13, no tenant shall be evicted from the premises in this possession except in accordance with the provisions of this Ordinance. Any party aggrieved by such .an order can prefer appeal under section 21 and under clause (3) of that section, the decision is made final.

36. The next question is whether the Controller had jurisdiction to order eviction in the particular circumstances of the case. The decision turns upon the construction of section 13 of the Ordinance which I have already set out. Before proceed with the construction of the section, it is as well, that I give the circumstances under which the Ordinance was promulgated and the state of law that existed prior to its enactment governing the relationship between landlord I and tenant. The rights of lessor and lessee are governed by the Transfer of Property Act. Under section 105, a lease of immovable property is transfer of a right to enjoy such property for consideration. The said lease can be terminated in the manner provided by the Act; by efflux of time, by forfeiture or by giving the requisite notice to quit. Section 111 provides the manner in which the lease can be terminated. For the purpose of this case, the relevant clause is clause (a) of section 111, i.e. by efflux of time. If the Sind Rented Premises Ordinance was not promulgated, appellants/ opponents could be evicted by the respondents/ applicants only by the reasons contained in section 111, Transfer of Property Act. Till the lease is terminated by efflux of time, the appellant had no right to evict the tenant.

37. In exercise of the powers conferred by clause (bb) of sub‑rule (2) of rule 81, Defence of India Rules, the Governor made an order, the Sind (Residential Premises) Control Order, 1942. Owing to war conditions, house owners with the hope of getting high rents were evicting tenants which they were entitled to do under the Transfer of Property Act. This not only caused great hardship to the tenants but was impeding the war effort as many of the tenants happened to be persons in essential services. In the circumstances this Order was passed imposing further restrictions on a landlord, who could, after the passing of the Order, evict the tenant only if one or other of the events mentioned in that Order happened. 4n supersession of this Order, Sind Rent Restriction Act, 1947 was passed. This Act was also superseded by Karachi Rent Restriction Act (VIII of 1953). This Act was superseded by Sind urban Rent Restriction Ordinance, 1959. This Ordinance was also superseded by Sind Rented Premises Ordinance; 1979 which, was promulgated on 21‑11‑1979. The Preamble to this Ordinance makes it clear the purpose for which this Ordinance was promulgated. It says:

38. "Whereas it is expedient to make effective provisions for regulation of relations between landlords and tenants and protect their interest in respect of rented premises within urban areas."

39. So the main object of this Ordinance is to make effective provisions for regulation of relations between landlords and tenants and protect their interest in respect of rented premises and not to confer any new rights of eviction on the landlord. The Ordinance pre‑supposes the existence of a landlord's right to immediate possession. But for this Ordinance he could demand immediate possession; but under this Ordinance, his right of immediate possession is limited try the provisions of section 15. Though he got a right to evict the tenant under general law, he cannot get possession unless one or other conditions specified therein are complied with. Mr. Rehmani has contended that provisions of section 15 have superseded the contractual terms between the parties and the landlord's right to evict is now governed only by section 15 of the Ordinance. If Mr. Rehmani's argument is accepted, it would lead to the position that though the terms of the contract were for a period of ten years and there was no clause providing for forfeiture for non‑payment of the rent within fifteen days on the expiry of the term fixed in the lease deed or the agreement of tenancy, the landlord would be entitled to evict the tenant on such a default in payment of rent. If so construed, the section would defeat the purpose of the legislature. Instead of giving the relief which the legislature intended to give to the tenants it would be depriving the tenants of the vested rights which they had before the enactment. Unless the section expressly says so or by necessary implication such an intention must be imputed to the legislature, it is impossible to construe the section in the manner Mr. Rehmani asked me to do. The general principle governing the construction of the Ordinance or Act of this nature is well‑settled. A passage from Maxwell on the Interpretation of Statutes, 9th Edition may usefully be cited as it competently and accurately states the law on the subject. At page 85 the learned author says:‑

40. "One of these presumptions is that the Legislature does not intend to make any substantial alteration in the law beyond what it explicitly declares, either in express terms or by clear implication, or, in other words, beyond the immediate scope and object of the statute. In all general matters outside those limits the law remains undisturbed. It is in the last degree improbable that the Legislature would overthrow fundamental principles, infringe rights, or depart from the general system of law, without expressing its intention with irresistible clearness."

41. Another principle which may be borne in mind in construing section 15 of the Ordinance may also be noticed. This is stated with clearness by the Court of Appeal in Flannagan v. Shaw (1920) 3 K.B. 96: 89 L.J. K.B.

168. It is unnecessary to state the facts of that case. Scrutton L.J. refers to the words of A.L. Smith, J. in Kutner v. Phillips (1891) 2 Q.B. 267: 60 L.J.Q.B. 505.

42. "Now a repeal by implication is only effected when the provisions of a later enactment are so inconsistent with or repugnant to the provisions of an earlier one, that the two cannot stand together, in which case the maxim "Leges posteriores constrarias abrogant" applies. Unless two acts are so plainly repugnant to each other, that effect cannot be given to both at the same time, a repeal will not be implied and special Acts are not repealed by General Acts unless there is some express reference to the previous legislation, or unless there is a necessary inconsistency in the two Acts standing together."

43. I will therefore proceed to consider whether by enacting section 13 of the Ordinance, the Legislature expressly repealed the provisions of Transfer of Property Act so far as they related to the tenants governed by the Ordinance or whether I must hold by necessary implication that such was the intention of the Legislature. There is no express provision in the Ordinance or express words in section 13 repealing the provisions of the Transfer of Property Act in so far as the rights of the landlord and tenant are governed by the Act. Indeed the words of section 13 are couched in a negative form and it is impossible to read in the section any such words of repeal. When the Legislature says that a tenant in possession of a premises shall not be evicted therefrom except m accordance with the provisions of the Ordinance, it cannot possibly mean that the landlord can evict the tenants even if he has no right to evict them under the Transfer of Property Act. I cannot help in thinking that if the Legislature had intended to repeal the provisions of the Transfer of Property Act, it would have said so in plain terms.

44. The construction I am putting on sections 13 and 15 of the Ordinance gets support from a decision of Hon'ble Supreme Court in Mrs. Zehra Begum v. Messrs Pakistan Burmah Shell Ltd. P L D 1984 S C 38. The Hon'ble Supreme Court laid down the following dictum:‑

45. "The bona fide requirement of the premises by the landlord for "his own occupation or use or for the occupation or use of his spouse or any of his children" is, to begin with, a need personal to him. He has only to place certain facts before the Controller to make the objective assessment, and renew in appeal, of his need and good faith possible. When an owner vacates the only house possessed by him, gets it demolished, lets out the plot for commercial .exploitation on best market rent on a long lease giving up his right to recover possession if the rent was paid and the covenants observed he cannot on the ground of same need then existing or one which could then be visualized get the tenant evicted. It would not be a requirement justifying eviction. It would not be in good faith. It would be in repudiation of contract.

46. It is necessary to attend to other objections of the learned counsel for the appellant because the decision of the Controller that in view of a valid subsisting contract between the appellant cannot invoke the ground of personal requirement and that his application is premature stands affirmed.

47. Section 15 enumerates the grounds contained in section 15(2)(ii) to (vii) on which the landlord can get the tenant evicted. As already stated above, the question of eviction would come into picture only on the H expiry of the period mentioned in the registered lease deed. So long as the contractual period of tenancy is subsisting the question of the landlord evicting the tenants from the premises does not arise."

48. Under the general law, subject of course to the contract between the parties, a landlord can evict a tenant on the valid termination of tenancy. The Ordinance, however, says that the landlord cannot evict his tenant although he may be entitled to do so under the general law and under the terms of the lease, unless the provisions of the rented Ordinance in this behalf are also satisfied; which means that he cannot avail himself of the grounds of eviction under section I 15 of the Ordinance unless the general law and this latter will not happen unless the tenancy is duly determined either by notice to quit or by efflux of time or under any of the other clauses of section 111, Transfer of Property Act. The following observations at page 175 of "the Rent Acts" by R.E.Megarry (Tenth Edition) are pertinent and may be quoted:

49. "The Acts do not interfere with lease and tenancy agreements more than is necessary to carry out their purposes they are "Acts for the protection of tenants, and not Acts for the penalising of landlords". Looked at from the landlords' point of view, the Rent Acts proper are restrictive and not enabling conferring no new right of action but restricting existing rights. Consequently, if apart from the Acts a landlord is unable to evict his tenant or raise his rent, the Acts do not enable him to do either of these things."

50. Again at page 245 the learned author says:

51. "While the contractual tenancy still exists, the landlord cannot obtain an order for possession unless the terms of the tenancy provide for forfeiture and circumstances exist which are both a breach of the terms of the tenancy and a ground for possession under the Acts."

52. Again at page 246 the learned author says:

53. "The Acts bring into being no new right to possession which does not exist at common law, but merely superimpose a general restriction which is relaxed in certain specified cases."

54. On the same page the author further says:

55. "A contractual tenant may therefore be able to plead any or all of the following defences:

(i) That the tenancy has not been determined.

(ii) That he should be granted relief under the Common Law Procedure Act, 1852, Ss.210‑212, or the County Courts Act, 1959, section 191 (which deals with forfeiture for non‑payment of rent), or under the Law of Property Act, 1925, section 146 (which deals with forfeiture for breach of other covenants).

(iii) That the Rent Acts do not allow an order for possession to be made."

56. Therefore in the case of contractual tenancy the lease has first to be determined.

57. For the aforesaid reasons I hold that the Controller's order is erroneous.

58. Therefore, under these Circumstances the contractual tenancy or lea, e deed executed between the parties would come to an end by 9‑3‑1989 only. Therefore present eviction application which is filed on 18‑2‑19811 is premature or incompetent. Therefore, the present eviction application merits to be dismissed.

59. I would not like to enter into the question as to whether the landlords/respondents require the premises bona fide for the use and occupation of their children. Any expression of opinion on this point is likely to jeopardise the interests of landlords or the tenants, in case the landlords were to file an eviction application on the expiry of the contractual period of ten years. Whatever has been said by the Controller on this point, should not be taken as determining this point in dispute. In view of the conclusion that the present eviction application filed prior to the expiry of the contractual period of ten years is premature and thus incompetent, the eviction application merits to be dismissed. The landlords, if they choose, are at liberty to file fresh application for eviction of the appellants after expiry of the period of lease, on any one of the grounds under section 15.

60. In the result, the appeal by the tenants is allowed. The parties are ordered to bear their own costs.

61. H.B.T./P‑72/K

62. Appeal allowed.