Syed ASGHAR ALI IMAM vs MUHAMMAD ALI
This matter originated as a petition for leave to appeal filed by a landlord against an order of the Sind High Court, which had set aside an ejectment order previously granted by the Rent Controller and affirmed by the first Appellate Court. The core dispute concerns whether a tenancy agreement, which stipulated a six-month term, ceased to govern the relationship after the initial period expired, thereby rendering the tenancy statutory, and whether a security deposit held by the landlord could be adjusted against unpaid rent to negate a claim of default. The High Court had ruled in favor of the tenant, determining that the agreement had terminated, the tenancy had become statutory, and the security deposit was adjustable, thus precluding a finding of default. The Supreme Court, noting that similar legal questions were pending in other litigation, granted leave to appeal to resolve whether the contractual terms regarding the tenancy duration remained binding after the initial period and whether the security deposit was legally adjustable against future rent arrears.
- Does a tenancy agreement cease to govern the relationship after the expiry of the initial term stipulated in the contract?
- Can a security deposit held by a landlord be adjusted towards future rent to prevent a finding of default?
ORDER
M. S. H. QURAISHI, J.-This is the landlord's Petition for Leave to Appeal from the order of a learned Single Judge of the Sind High Court; whereby, in Second Appeal, an order of ejectment of the tenant passed by the' Rent Controller and affirmed in first Appeal was set aside and the ejectment Application of the landlord dismissed.
2. According to the written agreement between the parties, the tenancy had commenced from 10th June, 1974 though possession of the premises is said to have been delivered later, on 10th July, 1974, and six months advance rent at the rate of Rs. 1,100 per month had been paid along with a security deposit of Rs. 6,600. It was one of the conditions of the agreement that the tenant would pay another Rs. 6,600, as rent in advance 15 days before the commencement of another term of six months terminable at the option of the landlord.
3. The tenant did not pay rent after the expiry of the first six months. The landlord, therefore, after serving notice on the tenant on 13th March 1975, filed the ejectment Application on 18th April, 1975.
On the ground of default. The Rent Controller and the first Appellate Court found the tenant guilty of default but the High Court held that after the expiry of the first six months, and in any case after the notice dated, 13th March, 1975, the agreement had come to an end and thereafter the tenancy had become statutory, that the tenancy had actually commenced from 10th July, 1974, when possession of the premises had been delivered, that the amount of security deposit was adjustable towards future rents and that, therefore the tenant was not in default.
4. Two questions arise in the case, which require consideration. First, whether the agreement after the efflux of the first period of six! Months had expired and did no longer govern the tenancy and secondly', whether the security amount could be adjusted towards future rents. Only similar questions, leave had been granted in Syed Wahajul Hasanain Rizvil v. Dr. Zahir Hussain (C.P.S.L.A. No. K-111 of 1981). Accordingly we grant leave to Appeal. Security Rs. 2,000.