ZEHRA BEGUM Versus PAKISTAN BURMA SHELL LTD.
The appellant filed Rent ‑ Case No.2245/1985, renumbered as 1901/1985 against the respondent on 1‑7‑1985 in respect of property, bearing Survey No.569, Garden East, Jahangir Road, Karachi, measuring 949 sq. yards.
The property was rented out to the respondent for a period of 10 years commencing from 1‑5‑1975 under a registered Lease Deed. The aforesaid Lease Deed contemplated that the respondent will be liable to pay each year's rent at the rate of Rs.2,750 per month. The said yearly rent was payable in advance before the beginning of the year. The lessee had the option to renew the lease for another period of 10 years on giving 12 months' notice before the expiry of the period of the lease, on the same terms and conditions except that the rate of rent was to be increased by 10%.
As provided under the agreement of lease, the respondent exercised the option by its letter dated 15‑11‑1983 for renewal of the lease for a further period of 10 years.
The record shows that originally the aforesaid plot was leased out to the predecessor of the respondent under registered Lease Deed dated 10‑7‑1965 with effect from 1st May, 1965 for a period of 10 years. During .the subsistence of the lease, the tenancy rights were acquired by the present respondent. Before expiry of the 10 years, the respondent exercised the option and fresh registered Lease Deed was executed for 10 years commencing from 1st of May, 1975.
3. The aforesaid rent case was filed by the appellant on the ground that the respondent had infringed the condition on which the premises was let out as the respondent had failed to pay in advance the entire yearly rent of Rs.36,300 for the year ending on 30th April, 1985 and instead pail Rs.33,000 only, that is to say without increasing the rent by 10% as contemplated under the lease agreement. An alternate ground was also taken for eviction but since the said ground was not urged, it is not necessary to refer to the. same.
The respondent in its written statement pleaded that huge amount was paid as advance for acquiring tenancy rights in respect of the said plot and for commencing the petrol pump business on the said plot and also huge amounts have been spent on raising permanent construction and subsequently on improvement, extension and renovation of the said constructions under the express powers given to it‑ under the lease, to enjoy the property until 30th April, 1.995. It was further averred that the respondent has always performed all its obligations punctually and fully. The appellant had refused to accept the rent and, therefore, with effect from 1st May, 1981, the rent was being deposited in Court after obtaining the requisite permission, at the rate of Rs.33,000 per year, before the due date. It is further pleaded that the rent for the period commencing from 1‑4‑1985 was deposited at the old rate of Rs.33,000 per annum, due to bona fide oversight or inadvertence on the part of the respondent's concerned employee who while preparing the note for the Disbursement Department of the respondent omitted to add 10% to the yearly rent. It was pleaded that even if there is a breach, the same is not wilful or substantial and the same is condonable by the Court. It was pleaded that steps were taken to deposit the deficit amount of Rs.3,300 with the Nazir of the Rent Controller. The record shows that the aforesaid deficit amount was deposited on or about 16‑7‑1985.
4. After recording the evidence, the learned Rent Controller dismissed the application holding that after expiry of the lease agreement, the respondent was liable to pay rent within statutory period of 60 days as prescribed under the' Sindh Rented Premises Ordinance (XVII of 1979).
5. The appellant challenged the above order in First Rent Appeal No.671 of 1985.
During the course of the arguments in the aforesaid appeal, both the learned counsel agreed that the aforesaid order passed by the Rent Controller be set aside and "case remanded to the Rent Controller for deciding the case afresh after due consideration of the point if in the circumstances of the present case the respondent had committed infringement of the condition of the agreement of tenancy by not depositing the amount of 10%. increase in the rent with the principal amount of rent rendering it liable to be ejected from the premises in question
The impugned order "was accordingly set aside and the case was remanded to be decided afresh as indicated in the judgment.
6. After remand the learned VI Senior Civil Judge and Rent Controller, Karachi (East), reached the conclusion that there was bona fide mistake in not depositing the annual rent with the addition of 10% and at the same time concluded that the respondent had not infringed the terms of the lease agreement and held that the respondent was not liable to be evicted. Accordingly by his order dated 17th February, 1991, he dismissed the rent case. The aforesaid order of the Rent Controller has been assailed in this appeal.
7. I have heard the learned counsel Mr. SA. Samad Khan for the appellant and Mr. Noor Muhammad for the respondent.
The learned advocate for the appellant contended that:
(i) Under clause (v) of the lease, it is provided that the time shall always be the essence of the lease in all respects and accordingly the respondent was bound to pay the annual rent for the year commencing from 1st May, 1985 in advance after increasing the rent by 10%,
.
(ii) The terms and conditions of the lease including the agreed quantum of rent and the payment thereof shall continue to be operative in spite of the expiry of the lease period and since the respondent failed to deposit entire rent, before commencement of the year in advance, he had infringed the condition of the lease and had committed default in payment of the rent and was, therefore, liable to be evicted. It was contended that since the rent was payable in advance and the deficit amount was deposited on 16‑7‑1985, after expiry of 15 days of the time provided for in the agreement, the said deposit does not save the respondent from consequences of section 15(2), clause (ii) and para. (c) of clause (iii) (c).
In reply to the above, the learned counsel for the respondent has contended that:
(i) After expiry of the tenure of lease, the terms thereof ceased to be operative and the relationship between the parties as landlady and tenant is to be governed in terms of the provisions of the Sindh Rented Premises Ordinance (XVII of 1979).
(ii) The Sindh Rented Premises Ordinance contemplates monthly tenancies and; therefore, the respondent was liable to pay rent on that basis. As the rent for the month of July, 1985 stood deposited before 30‑4‑1985, the respondent cannot be treated as defaulter
(iii) It was alternatively contended that the aforesaid lease deed was repugnant to the provisions of the said Ordinance and, therefore, . cannot be given effect to.
(iv) The respondent had invested huge amount in the construction and subsequent improvement and as such if the eviction is ordered, the appellant will suffer irreparable losses and will be put to great inconvenience. Under such circumstances he urged that even if there is a default which is of a few days and the respondent having remained regular in payment of rent for years together, the exercise of discretion by the Rent Controller should not be interfered.
(v) He additionally submitted that the respondent had exercised the option for next 10 years by its letter dated 15‑11‑1983, but the appellant deliberately avoided to execute the lease deed. Had it been done, the rent would .have been paid in terms of the lease. The appellant, therefore, is contributory towards non‑payment of the entire rent within stipulated time. According to him under the circumstances of this case the respondent cannot be solely blamed for default.
(vi) Lastly, the Rent Controller has exercised the discretion in favour of the respondent which cannot be termed as illegal, capricious or arbitrary and, therefore, no justification exists to interfere with the same.
8. The learned advocate for the appellant in support of his contention that in spite of the expiry of the lease agreement, the terms and conditions contained therein, continued to be operative, has relied upon the case of Mrs. Zarina Khawaja v. Agha Mahboob Shah PLD 1988 SC 190. In the above case the question came up before the Court whether the security amount deposited with the landlord could be adjusted against the rent, after expiry of the lease period. On the anlaysis of the provisions of the Sindh Rented Premises Ordinance (XVII of 1979) (hereinafter to be referred to as the Ordinance) and the previous case‑law, their Lordships observed as under:‑‑‑
"We have carefully considered the implication of various judgments of the Supreme Court which deal with the question of continuance of the terms of agreement of tenancy, after its termination. Leaving aside the theoretical possibilities all of them can be interpreted consistently on the following lines:‑‑‑
ONE: notwithstanding the enactment of the rent laws the relationship of landlord and tenant would continue to be determined and regulated in accordance with:‑‑‑
(a) the general law; and;
(b) the terms of tenancy between the parties,‑‑‑but, subject to a very important condition that in case of repugnancy of either of these two elements to any of the provisions of the rent law the latter shall prevail, meaning thereby that the provisions of the general law and/or the covenants, in the agreement to the contrary, shall have no effect;
TWO: during the continuance and subsistence of the agreement of tenancy, the question of relationship of landlord and tenant, the regulation of that relationship particularly vis‑a‑vis the determination be governed by the covenants contained in the agreement; provided that those covenants do not come in conflict with the provisions of the rent law and it! case of conflict the provisions of that law will prevail notwithstanding any term of agreement to the contrary;
THREE: after the expiry of the agreement of tenancy the general law of holding over by the tenant has not been repealed or modified by the rent laws except to the extent that it comes in conflict with the provisions of the Rent Restriction law."
At page 200 of the report, it is further observed as under:‑‑‑
" .The terms of the so‑called expired agreement which are not repugnant to the rent law shall continue to operate. For example, the rate of rent, the mode of payment thereof including its advance payment or deposit, provision for agreed increase in rent provided it is not after the determination of fair rent ."
He also referred to the case of Syed Asghar Ali Imam v. Muhammad Ali PLD 1988 SC 228. In this case also the Supreme Court held that the agreement as to the security would continue, to be operative notwithstanding its expiry. ,
He then referred to Muhammad Yunus Malik v. Mst. Zahida Irshad 1980 SCMR 184. In this case the agreement of lease executed for a period of two years provided that the monthly rent shall be payable in advance in two six monthly instalments due on the 20th of January and 20th of July each year. After expiry of the two years of the lease, the landlady brought an ejectment application against the petitioner inter alia on the ground that the tenant had failed to pay the rent due to her from January, 1975. When the matter came up before the High Court, the tenant was, ordered to be evicted on observing that after the expiry of the period of two years of the lease, the tenant continued to hold over as a tenant under the landlady on the old terms and conditions and that thereafter he was not relegated to the position of a monthly tenant and it was further held by the High Court that the petitioner was bound to have paid the six monthly rent in advance on 20th of January, 1979 and for his failure to do so, he had committed default. The matter then came up before the Supreme Court and the order of eviction on the basis of the aforesaid premises was maintained.
In the case of Muhammad Baqar Qureshi v. Mst. Razia Begum 1981 SCMR 118 the phrase "rent due" was interpreted as the rent which has become due according to the terms of the tenancy and if it is not paid within 15 days after the expiry of the time fixed in the agreement, then the tenant will be liable to ejectment. The contrary view expressed in the case of Altaf Hussain v. Tafb Hussain PLD 1977 Lah. 110, wherein it was held that the rent would fall due only after the whole month had expired and no default would be said to have been committed if the tenant merely acted against the condition regarding the advance payment of rent, was disapproved and overruled.
From the aforesaid authorities the following rules are deducible:‑‑‑
(i) In case the tenancy rights are created under written agreement between landlord and tenant, the tenancy is to be governed in terms off the agreement with regard to‑‑‑
(a) quantum of rent,
(b) mode of payment of rent, including payment of rent in advance,
(c) the provisions for agreed increase in rent, and
(d) utilisation or disposal of security deposit.
(ii) Rent, whether monthly, six monthly or yearly, payable under the written agreement between the parties, if not paid within the agreed time, tenant is bound to pay the same within the statutory grace period of 15 days and his failure in payment of rent as above, will entail consequences of default under section 15 of the Ordinance.
(iii) The provisions of the general law or covenants in the agreement, ‑ contrary to the said Ordinance, shall have no effect.
9. In view of the aforesaid legal position, the submission of the learned counsel for the respondent that after expiry of the lease deed the relationship between the parties is ‑to be governed in terms of the said Ordinance, with regard to payment .of rent, is of no substance. The other submission of the learned counsel is that section 10(1) of the said Ordinance contemplates only monthly tenancies and, therefore, the terms of the lease deed providing for annual tenancy and payment of annual rent is repugnant to the said Ordinance, requires consideration. It may be pointed out that the repealed Ordinance did not contain the provisions like section 10(1) of the said Ordinance. The said section reads as under:‑‑‑
"10. Payment of rent .‑‑‑(1) The rent shall, in the absence of any date fixed in this behalf by mutual agreement between the landlord and tenant, be paid not later than 10th of the month next following the month for which it is due."
Plain reading of the aforesaid subsection shows that the tenancy is to be monthly and the time limit prescribed for payment of rent in the said section is to be operative only when there is no mutual agreement between the parties and in case there is a mutual agreement between the parties whether it be monthly, six monthly or yearly, the rent is to be paid accordingly in accordance with the terms of the agreement and not as provided under the said section. Such conclusion is confirmed by the grace period of 15 days provided for payment of rent when it falls due in case the tenancy is governed by agreement and grace period of 60 days in cases not covered by written agreement, under section 15(ii) of the Ordinance. In short, section 10 will not be applicable to such tenancies, as are ‑created under the mutual agreement between the parties. The later class of tenancy, as the aforesaid section itself provides, shall be regulated in terms of the mutual agreement executed between the parties.. The said section does not specifically prohibit creation o six monthly or annual tenancy or of any other tenure or payment of rent ii advance or periodical increase in rent by mutual agreement.
Section 10 of the Sindh Rented Premises Ordinance, 1979 has not brought any material change in respect of the aforesaid context in comparison to the repealed Ordinance and in such view of the matter, the rules laid down in the aforesaid authorities are applicable with full force to the cases under the said Ordinance.
Therefore, the submission of the learned counsel that the lease deed in question is inconsistent with or repugnant to section 10 of the said Ordinance is overruled, being of no substance.
10. In view of the above authoritative observations of the Hon'ble Supreme Court, there is no escape from the conclusion that the terms of the agreement which expired on 30‑4‑1985 continued to be operative including the rate of rent, the mode of payment thereof, its advance payment and the provisions for the agreed increase in the rent.
11. The yearly tenancy for the third term of 10 years commenced with effect from 1‑5‑1985. The rent for the third term was agreed to be paid by increasing the existing rent by 10% i.e. Rs.36,300 per annum. Since under the terms of the agreement one year's rent was payable "before the beginning of the year", it was due and payable before 1‑5‑1985. In other words the last date for the payment was 30‑4‑1985. Allowing 15 days of the grace period provided under section 15(ii) of the Ordinance, the rent was payable by 15‑5‑1985. The respondent deposited Rs.33,000 on 11‑4‑1985 and the deficit of Rs.3,300 on 16‑7‑1985. Thus the respondent infringed the conditions on which the premises was let out and committed default in payment of rent inasmuch as the whole rent was not paid in advance.
The learned Rent Controller held the aforesaid deficit deposit as bona fide mistake on the part of the respondent and exercised the discretion in his favour.
Now the question arises whether the exercise of discretion in favour of the respondent by the learned Rent Controller is warranted under the law, in the facts and circumstances of this case.
12. The learned advocate for the appellant relying on:
(i) Military Estates Officer, Multan Cantonment and others v. Muhammad Saleem Baig 1982 SCMR 920;
(ii) Province of Punjab v. Muhammad Jalil‑ur‑Rahman 1986 SCMR 1705;
(iii) Shahriyar Ali Patudi v. Decora Furnishers PLD 1985 Kar. 47 and
(iv) Khadim Ali Shah v. M/s. Pakistan Burmah Shell Ltd. 1986 CLC 1487, contended that unless it is found that the delay in payment of rent was unavoidable or that it was beyond the control of the tenant, discretion cannot be exercised in favour of the tenant. It was urged that the respondent had failed to deposit the entire yearly rent in terms of the agreement or within the grace period of fifteen days, due to clear negligence and want of due care and caution. The Rent Controller, therefore, had no jurisdiction to ignore it and exercise the discretion in favour of the respondent.
In the first case the facts are that the tenant had tendered rent by cheque at a wrong address of the landlord in Multan, instead of sending it to Rahim Yar Khan. Under the above circumstances it was contended that the default was not deliberate as it happened due to the despatch of earlier cheque at the wrong address. All the Courts below had found that the said mistake could have been easily avoided and that it was a case of clear negligence and want of due care and caution, therefore, there was no justification to ignore' it. The Supreme Court observed that the learned counsel for the petitioner/tenant could not point out violation of any principle of law applicable to cases or situations of that type and consequently dismissed the petition. So far as the second case is concerned, it was observed that unless the reason for non‑deposit shows objective non‑avoidability, the Rent Controller had no power to ignore the delay in making the deposit under section 13(6) of the repealed Ordinance. In the third case it was found by the learned Judge that the explanation given by the tenant with regard to the non‑payment of rent within due date was not factually correct and, therefore, the tenant was not found entitled to exercise of discretion in his favour. However, the issue of default was decided in favour of the tenant on the ground of waiver.
In the last cited case the respondent had remitted rent for the period from 14‑2‑1978 to 13‑7‑1978, by its letter dated 8‑6‑1978. The delay in payment of rent was sought to be condoned on the grounds (i) that it was due to bona fide mistake on the part of the concerned clerk of the respondent; (ii) that the appellant/landlord had deferred the question of renewal of lease by his letter, dated 13‑2‑1978, which created confusion and (iii) because of the said letter the relevant file of the respondent, moved up to other officers of the respondent due to which the remittance of rent to the landlord was lost sight of. With regard to the first contention, it was found that it was not the case of bona fide mistake but of negligence and want of due care and caution and that inadvertence by itself is no ground to condone the delay. So far as second submission is concerned, the learned Judge observed as under:‑
"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. It is a clear case of forgetfulness and negligence:"
The third ground was repelled as the tenant failed to place before the Court the relevant file to prove the same.
It may further be stated that the learned Judge had noted that while exercising the discretion, the learned Rent Controller had taken into consideration extraneous matters like construction of permanent structure by the respondent and reduction of the area by the landlord due to acquisition, which were not relevant to the controversy.
It was under the above circumstances that the learned Judge interfered with the exercise of discretion by the Rent Controller by allowing the appeal. '
13. The learned counsel for the .respondent relied on (i) Abdul Aziz Baig v. Mushtaq Ahmed Shaikh 1980 SCMR 834, (ii) Zohra Begum v. Pakistan Burmah Shell Ltd. 1984 CLC 2769, (iii) Shahriyar Ali Patudi and 3 others (supra) and (iv) Muhammad Ishaq v. Mst. Kubra Begum PLD 1988 Kar. 533, in support of his last three submissions.
14. It is established law that the exercise of discretion depends upon the facts and circumstances of each case, which may differ from each other. But it is to be exercised on recognised judicial principles, and not. arbitrarily, capriciously or perversely or on hypothetical basis. In case exercise of discretion is found in violation of any judicial principles, it can be interfered with, particularly in first appeal.
The ratio decidendi of the case‑law cited by the learned counsel is that where delay in payment of rent was avoidable or due to clear negligence or want of due care and caution on the part of the tenant or where the conduct of the tenant is contumacious or default is deliberate or wilful, he is not entitled to exercise of discretion in his favour. But in cases where the tenant is prevented to pay rent within the grace period due to reasons beyond his control or misconduct on the part of the landlord or the landlord has contributed towards commission of the default in payment of rent or the default was due to bona fide mistake or inadvertence and not wilful, mala ride or deliberate or occurred because of such circumstances which may justify delay in payment, the discretion is to be exercised in favour of the tenant.
The present case is to be viewed in the above background of law.
15. The facts of the present case are that the appellant had refused to receive rent from the respondent and, therefore, it was constrained to deposit rent with the Rent Controller from the year 1981 and continued to deposit the rent in terms of lease deed, from year to year and in the process rent for the year commencing from 1‑5‑1985 was also deposited. The practice that was being followed was that the concerned clerk used to prepare a note for Disbursement Department of the respondent for depositing rent in advance in Court. The sum of Rs.33,000 was being mentioned in the note continuously, as annual rent, as a result whereof the same figure of rent was mentioned in the official note towards rent for the year commencing from 1‑5‑1985.
The respondent had exercised option for continuance of the lease for the third term of ten years on 15‑11‑1983 and the appellant was bound under the terms of the lease to execute the lease deed, but it was not done. Had the lease deed been executed, the concerned hand of the respondent would not have followed the old pattern for deposit of rent, but would have prepared the note for deposit of the amount of annual rent, as it would have figured in the deed, which would have been placed in the relevant file. Under these circumstances, there does exist a justification, to lead to the conclusion that the above conduct of the appellant contributed towards the said default in payment of annual rent, and the respondent was led to deposit the rent. at the rate, at which it was being deposited in Court since 1981.
It is to be seen in the juxtaposition of, the fact that the appellant was bound to execute the lease deed once the option was exercised by the respondent. The omission on her part was an intentional act of breach and infringement of the lease deed, which led to commission of infringement of the', lease terms on the part of the respondent also and under the circumstances the default is to be held unintentional due to bona fide mistake and not wilful.
16. It may be observed that the present case is unusual in that there is singular instance of deficit deposit of. rent inasmuch as the respondent had deposited a sum of Rs.33,000 towards the rent and omitted to deposit only an insignificant. amount of Rs.3,300.
The learned advocates for the parties have failed to bring to my notice any case of the present nature. It is the case of yearly tenancy and of singular default resulting from non‑payment of part of the rent. The past conduct of the respondent clearly establishes that it had always been regular in payment of advance yearly rent and never provided any, cause of complaint to the appellant.
In the case of Saeeda Khatoon v. Muhammad Ahmed Latifi PLD 1990 SC 389, the learned Rent Controller had found the tenant to be in default in payment of rent of one month and accordingly exercised discretion in favour of the tenant in following words, reproduced by the Supreme Court in its judgment:‑
"Moreover, the tenancy is very old and prior to that there was no complaint regarding the default committed by opponent or any other overt action, at the hands of the opponent, therefore, he cannot be termed as deliberate defaulter, in the payment of rent. Moreover, he cannot be asked for the alleged default and the old standing tenancy cannot be ignored."
The High Court had refused to interfere with the discretion exercised by the learned Rent Controller. When the matter came up before the Supreme Court, it was observed as under:‑‑‑
"This appeal could have been dismissed on the short ground that the default was only for one month and the Controller had exercised his discretion in favour of the respondent and the High Court had not adverted to it or held that it was not duly exercised by the Controller."
Further observed:
"However, in view of the fact that the Controller exercised his discretion in favour of the respondent and the High Court had not held that the exercise of discretion was in any manner arbitrary, capricious or uncalled for, we would accordingly uphold the order ..
The above rule is fully applicable to the circumstances of this case as the respondent committed only single default during last 20 years of the tenancy in payment of rent in terms of the lease deed. As observed above, the default is in respect of a very insignificant sum in comparison with the quantum of rent payable.
In view of the above, it cannot be said that the Rent Controller had exercised the discretion perversely, arbitrarily or capriciously and I do not find any justification to interfere with the exercise of the discretion by the Rent Controller in favour of the respondent.
This appeal is, therefore, dismissed ‑with no order as to costs.
A.A./Z‑189/K Appeal dismissed.