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PLD 2010 Karachi 170

Messrs FORBES FORBES & CAMPBELL CO., through Company Secretary vs

CitationPLD 2010 Karachi 170
CourtSindh High Court
Judge(s)Faisal Arab
ResultOrder accordingly

1. ' FAISAL ARAB, J.---On 22-8-2002, the petitioner and Ebrahim Brothers (Private) Limited entered into a Tenancy Agreement whereby several portions on the first floor of "Ebrahim Building" were rented out to the petitioner. In 2004 Ebrahim Brothers (Private) Ltd. Sold Ebrahim Building to respondents Nos.1 and 2. This Ebrahim Building is built on a plot of land that was obtained on lease from Karachi Port Trust.

2. ' After serving notice of change in ownership under section 18 of Sindh Rented Premises Ordinance, the respondents Nos.1 and 2 filed eviction cases in 2006 bearing Nos.181 of 2006 and 186 of 2006 claiming that in spite of intimation of change of ownership, the petitioner has failed to pay property taxes, water charges etc. Amounting to Rs,6,84,669 and Rs,4,13,691 and thereby committed default in the payment of rent, making itself liable for eviction. These two amounts were stated to be due at the time of filing of the two rent cases.

3. ' The petitioner filed written statement in both the cases wherein preliminary legal objections were taken. These were (a) the eviction applications are not maintainable as respondents Nos.1 and 2 are not legal owner of the premises on account of expiry of the lease; (b) the responsibility to pay taxes and charges to Karachi Port Trust is of the owners and not the tenant; (c) the tenancy agreement is a nullity in the eyes of law as it is not registered; and, (d) the land on which Ebrahim Building is built is owned by Karachi Port Trust and by virtue of Notification No,VIII (3) SOJ/75 dated 15-3-1981 issued by the Government of Sindh under section 3(2) of Sindh Rented Premises Ordinance, 1979, the jurisdiction of the Rent Controller is barred. Along with the eviction applications, respondents Nos.1 and 2 filed applications under section 16(1) of the Sindh Rented Premises Ordinance 1979, seeking deposit of arrears of taxes and charges amounting to Rs,6,84,669 in the first case and Rs,4,13,691 in the second case and also sought direction for deposit in Court all future taxes and charges. The petitioner filed its objections to both the applications. In paragraph 4 of the objections it is stated that arrears of Rs,684,669 and Rs,413,691 represented arrears of property tax and ground rent demanded by Karachi Port Trust from the owner which has nothing to do with the petitioner as taxes imposed on properties are exclusive obligation of the landlord.

4. ' After considering the respective pleas of the parties, the Rent Controller passed rent orders in both the cases on 13-10-2008 under section 16(1) of the Sindh Rented Premises Ordinance and directed the petitioner to deposit in Court Rs,684,669 in the first case and Rs,413,691 in the second case within 30 days. As for future taxes and charges, the Rent Controller directed that the respondents Nos.1 and 2 shall first submit challan for taxes and charges in Court and thereafter the petitioner shall deposit the same within 15 days thereof. Respondents Nos.1 and 2 were however not entitled to withdraw the amounts so deposited. Aggrieved by the rent orders passed in both the cases, the petitioner has filed the present petitions, being Nos.51/2008 and 519/2008.

5. ' Learned counsel for the petitioner has argued that in view of Notification issued by the Government of Sindh under section 3(2) of Sindh Rented Premises Ordinance, 1979, the premises in question stand exempted from the application of the 1979 Ordinance and therefore, Rent Controller had no jurisdiction to entertain eviction applications. In support of this contention, learned counsel for the petitioner has relied upon the case of B.S. Khan v. Pakistan State Oil Company reported in 1989 SCM R 75. He further contended that the eviction applications have been filed by respondents Nos.1 and 2 on the basis of decision of the Supreme Court in the case of Lalazar Enterprises Pvt. Ltd. v. Oceanic International Pvt. Ltd. Reported in 2006 SCM R 140 but as the said judgment of two judges is in conflict with the decision of the earlier judgment reported in 1989 SCM R 75, which was delivered by three Judges, the judgment reported in 1989 SCM R 75 continue to hold the field and the Rent Controller ought to have dismissed the rent cases as not maintainable. Learned counsel also relied upon the judgment reported in 1999 SCM R 2518, wherein it has been held that if there is conflict between two judgments of the Supreme Court then the judgment delivered by a larger Bench shall prevail.

6. ' Learned counsel for the petitioner next contended that tax liability does not fall within the definition of rent and therefore respondents Nos.1 and 2 were not entitled to claim the same from the petitioner and whatever taxes that were paid in the past by the petitioner were paid on account of mistaken view of law, which does not bind the petitioner to pay the same.

7. ' The respondent No,2 Mrs, Zehra Karim appeared in person. She in reply argued that other tenants of the same building have been depositing rent in the Court of the Rent Controller and therefore the petitioner cannot claim that the Rent Controller has no jurisdiction to entertain cases filed by respondents Nos.1 and 2 under the provisions of Sindh Rented Premises Ordinance. In response to the legal objection that by virtue of a notification, the premises in Karachi Port Trust area have been exempted from the application of Sindh Rented Premises Ordinance, 1979, the respondent No,2 argued that applicability of the notification has been interpreted by the Supreme Court in Lalazar's case reported in 2006 SCM R 140, wherein it has been observed that where a building is constructed on the land leased out by Karachi Port Trust then owner of the building is entitled to seek eviction of his tenant under Sindh Rented Premises Ordinance. She contended that keeping this distinction in mind, the Supreme Court in its decision reported in 2006 SCM R 140 held that Rent Controller had the jurisdiction to proceed in such matter's, In reply to the other contention of the learned counsel for thc petitioner that taxes do not fall within the definition of rent, the respondent No,2 referred to Clauses 3 and 14 of the Tenancy Agreement, wherein the petitioner has itself taken upon itself the obligation to pay taxes and charges. She submitted that now the petitioner cannot turn around and deny its own contractual commitment. She also contended that under clause 6 of the tenancy Agreement tenant was also liable to pay electricity charges directly to the landlord and therefore in case of non-payment of electricity charges as well the respondents Nos.1 and 2 were within their rights to disconnect the supply and seek eviction order.

8. ' Learned counsel for the petitioner in reply to the contentions of respondent No,2 argued that other tenant of the building may have been depositing rent in the Court of Rent Controller but this has not been done by the petitioner and 4n any case jurisdiction of Rent Controller is to be determined on the basis of decision given by Honourable Supreme Court in the case reported in 1989 SCM R 75.

9. ' I shall first proceed to examine the question whether Rent Controller had jurisdiction to entertain the eviction applications of the petitioner.

10. Section 3(2) of the Sindh Rented Premises Ordinance, 1979 empowers the Government to exempt through notification any particular building or class of buildings or rented land or lands from the application of 1979 Ordinance. Pursuant to such powers, the Government of Sindh issued Notification No,VIII (3) SOJ/75 on 15-3-1981, which is reproduced as follows:-- "In exercise of the powers conferred by subsection (2) of section 3 of the Sindh Rented Premises Ordinance, 1979 and in supersession of all orders issued previously the Government of Sindh are pleased to exempt the premises belonging to Karachi Port Trust, Karachi from the application of the said Ordinance".

11. ' Through this notification all premises belonging to Karachi Port Trust were given immunity from the operation of Sindh Rented Premises Ordinance, 1979. Now the question that needs to be addressed in these and other connected cases is whether the above referred notification grants immunity also to buildings and other constructions, which are though built on the land belonging to Karachi Port Trust but are not owned by Karachi Port Trust but by the lessees of Karachi Port Trust.

12. ' The Karachi Port Trust grants lease of open lands to individuals and other entities usually for a term of 25 years, Depending upon the terms of the lease, the lessee utilizes the land either as an open plot or raises construction of a permanent nature. A lessee may, either rent out the land as it is to a third party or he does so after raising building thereon. The grant of lease by Karachi Port Trust and renting out of the building by the lessee are to separate and independent situations. In the first situation Karachi Port Trust is owner of the land and in the second the lessee is owner of the building. Both the situations give rise to the concept of duel ownership. One of the Karachi Port Trust and the other of the owner of the building and this concept has to be given due recognition' as two separate legal implications are associated with it. If this concept of dual ownership is ignored and the lessee's ownership of the building is considered to be non-existent then no basis would be left for the tenant to regard him as owner. Such cannot be the intent behind section 3 of the 1979 Ordinance and the notification issued there-under. Thus the ownership of Karachi Port Trust in the land has no relevance, when it comes to exercising ownership rights of the lessee in the building constructed on the land owned by Karachi Port Trust. Therefore the exemption granted under the notification has no application when a dispute arises between a lessee who owns the building and the person IA who occupies it as tenant.

13. ' The Supreme Court in Lalazar's case reported in 2006 SCM R 140 after examining the interpretation given in 1989 SCM R 75 held that in the said case exemption under the notification was extended only for the reason that in the case reported in 1989 SCM R 75 the premises was an open plot and when a premises is an open piece of land, a portion of the plot or an open ground then the exemption becomes applicable but it shall not be applicable to premises which is built by the lessee of Karachi Port Trust. On the basis of such interpretation of the Supreme Court, Lalazar's case distinguished the case reported in 1989 SCM R 75.

14. When the Supreme Court of Pakistan interprets the effect of any provision of the Constitution or a law or its own judgment, it becomes law of the land. When the Supreme Court interprets the legal effect of its earlier judgment in a certain manner that it is not open to the High Court to differ from such interpretation. All Courts have to examine a controversy in the light of such interpretation unless the Supreme Court itself overrules it through its subsequent decision. However, as long as a judgment of the Supreme Court stands, it has to be given effect to by all Courts including the High Courts. The judgment in Lalazar's case reported in 2006 SCM R 140 was delivered by the Supreme Court on 20-10-2005 and since then it reflects the intent behind issuance of Notification No,VIII(3)

15. SOJ/75 dated 15-3-81. The respondents Nos.1 and 2 filed rent cases in the year 2006. Thus on the date of filing of the Rent cases, the meaning that this Court can give to section 3(2) of the Sindh Rented Premises Ordinance, 1979 would be as interpreted by the Supreme Court in Lalazar's case being the law of the land and it matters not that prior to Lalazar's case, the respondents Nos.1 & 2 have themselves taken a different position in their earlier legal proceedings. A party through its conduct could neither confer nor take away jurisdiction of a Court which is to be purely determined in accordance with the Taw that for the time being regulate the jurisdiction. For the purpose of the present case, it is the Lalazar's case which holds the field since 20-10-2005 and gives answer to the applicability of the notification. Therefore, interpretation given in Lalazar's case is to be applied to all these cases.

16. The applicability of Sindh Rented Premises Ordinance, 1979 to the present case can be examined from yet another angle also. Section 3(1) of the 1979 Ordinance exempts such premises from the applicability of the 1979 Ordinance which are owned by the Federal or a Provincial Government. The Notification that was issued under section 3(2) also provides that all premises belonging to Karachi Port Trust are exempted from application of Sindh Rented Premises Ordinance.

17. 1979. If the exemption granted under the notification dated 15-3-1981 was also to be applied to the building which is constructed on leased land then similar interpretation under section 3(1) of the 1979 Ordinance would become applicable to the building that are constructed on lands leased out by the Federal or a Provincial Government. Such a strict interpretation of ownership would lead to disastrous consequences as the concept of ownership if taken only in its etymological sense would mean that the building that are built by lessees on the land leased by Federal and the Provincial Government have to be exempted from the application of Sindh Rented Premises Ordinance, 1979 Almost all buildings in urban areas would then come under the umbrella of exemption as they are mostly built on the lands owned either by Federal Government or Provincial Governments. This would amount to doing violence to the meaning of ownership. Under section 3(2) read with the Notification dated 15-3-1981 one cannot give one interpretation to the meaning of the ownership of a premises which is built by a lessee on the land owned by Karachi Port Trust and another to the premises which is built by a lessee on the land owned by the Federal or a Provincial Government.

18. This was not the intention of the lawmakers while enacting provisions of sections 3(1) and 3(2) of the Sindh Rented Premises Ordinance, 1979. Therefore, the concept of ownership as provided in the notification issued on 15-3-1981 under section 3(2) of the 1979 Ordinance is to be given the same restricted meaning that is being given to the concept of ownership under section 3(1) of the 1979 Ordinance.

19. ' This concept of duel ownership has also been very aptly discussed by the Indian Supreme Court in the case of Smt. Shanti Sharma v. Smt. Ved Prabha reported in AIR 1987 SC 2028. In this case it was held that the term "owner" not only includes to be the person who holds absolute ownership in the land but also includes a person who on the strength of a long lease of a piece of land from the authority constituted by the State, owns superstructure that has been build on the leased land. It would be worthwhile to reproduce here paragraphs 13 and 14 of the said judgment in order to examine this concept of duel ownership:-

13. Admittedly if this contention of the learned counsel for the appellant is accepted in Delhi more than 50% of the properties stand on leasehold plots and therefore it would not be possible for any landlord to seek an order or decree for eviction on the ground of bona fide requirement. It appears that it is therefore clear that if the Legislature had this narrow meaning of ownership in mind, it would not have used it. As it could not be contended that the Legislature did not keep in view that in most of modern township in India the properties stand on plots of land leased out either by the Govt. Or the Development Authorities and therefore it was not contemplated that for all such properties the landlord or the owner of the property used in common parlance will not be entitled to eviction on the ground of bona fide requirement and it is in this context that we have to examine this contention.

14. The word 'owner' has not been defined in this Act and the word 'owner' has also not been defined in the Transfer of Property Act. The contention of the learned counsel for the appellant appears to be that ownership means absolute ownership in the land as well as of the structure standing thereupon. Ordinarily, the concept of ownership may be what is contended by the counsel for the appellant but in the modern context where it is more or less admitted that all lands belong to the State, the person who hold properties will only be lessees or the persons holding the land on some term from the Govt. Or the authorities constituted by the State and in this view of the matter it could not be thought of that the Legislature when it used the term `owner' in the provision of section 14(1)(e) it thought of ownership as absolute ownership. It must be presumed that the concept of ownership only will be as it is understood at present. It could not be doubted that the term "owner" has to be understood in the context of the background of the law and what is contemplated in the scheme of the Act. This Act has been enacted for protection of the tenants. But at the same time it has provided that the landlord under certain circumstances will be entitled to eviction and bona fide requirement is one of such grounds on the basis of which landlords have been permitted to have eviction of a tenant. In this context, the phrase 'owner' thereof has to be understood, and it is clear that what is contemplated is that where the person builds up his property and lets out to the tenant and subsequently needs it for his own use, he should be entitled to an order or decree for eviction, the only thing necessary for him to prove is bona fide requirement and that he is the owner thereof. In this context, what appears to be the meaning of the term 'owner' is vis-a-vis the tenant i.e, the owner should be something more than the tenant. Admittedly in these cases where the plot of land is taken on lease the structure is built by the landlord and admittedly he is the owner of the structure. So far as the land is concerned he holds a long lease and in this view of the matter as against the tenant it could not be doubted that he will fall within the ambit of the meaning of the term 'owner' as is contemplated under this section. This term came up for consideration before the Delhi High Court and it was also in reference to section 14(1)(e) and it was held by the Delhi High Court in T.0 Rekhi v. Smt. Usha Gujaral, 1971 Rena 22 p. 326 as under:-- "The word 'owner' as used in this clause has to be construed in the background of the purpose and object of enacting it. The use of the word 'owner' in this clause seems to me to have been inspired by the definition of the word 'landlord' as contained in section 2(e) of the Act which is wide enough to include a person receiving or entitled to receive the rent of any premises on account of or on behalf of or for the benefit of any other person. Construed in the context in which the word 'owner' is used in Cl.(e) it seems to me to include all persons in the position of Smt. Usha Gujral who have taken a long lease of sites from the Government for the purpose of building houses thereon. The concept of ownership seems now to be eclipsed by its social and political significance and the idea of ownership, in case like the present in one of the better right to be in possession and to obtain it. To accede to the contention raised by Shri Kapur would virtually nullify the effect of Cl.(e) and would render all such landlords remediless against tenants however badly they may need the premises for their own personal residence. I do not think such a result was intended by the Legislature and I repel the appellant's contention. I consider t proper before passing on to the next challenge to point out the the word 'owner' as used in Cl.(e) in section 14(1) does not postulate absolute ownership in the sense that he has an absolutely unrestricted right to deal with the property as he likes. To describe someone as owner, and perhaps even as an absolute owner of property is to say two things; it is to assert that his title to the property is indisputable and that he has all the rights of ownership allowed by the legal system in question. Rights of ownership may, therefore, be limited by special provisions of law and include in those provisions such as are in force in New Delhi according to which citizens are granted long leases of sites for constructing buildings thereon. Now the words of a statute, though normally construed in their ordinary meaning may contain inherit restrictions due to their subject-matter and object and the occasion on which and the circumstances with reference to which they are used. They call for construction in the light of their context rather than in what may be either their strict etymological sense or their popular meaning apart from the context (See Halsbury's Laws of England Third Edition Vol. 36 Para 893, P.394). The meaning of the word 'owner' in Cl.(e) is influenced and controlled by its context and the appellant's construction is unacceptable because it seems to be quite clearly contrary to the reasonable operation of the statutory provision."

20. In view of the above discussion it is absolutely clear that exemption granted under the notification issued under section 3(2) of the Sindh Rented Premises Ordinance is not attracted when the lessee of Karachi Port Trust after raising construction of permanent nature rents it out to a third party.

21. As far as the obligation for payment of taxes and other charges are concerned, Clauses 3, 14 and 6 of the Tenancy Agreement need to be examined which are reproduced herein below:-- Clause 3 Rent & Taxes ' The Tenant shall pay rent amounting to Rs,72,128 (Rupees seventy two thousand one hundred twenty eight) only per mensum for the premises referred above. The tenant shall also be liable to pay any increase in the present taxes and charges made by lawful authorities from commencement of this lease. However, any increase in taxes on account of increase in the rent shall be paid by the landlord.

22. Clause 14 Taxes ' The tenant shall pay subject to covenant (3) herein referred above, all additional rates, taxes and assessm ent including the Urban Property Tax as shall be laviable and can be additionally levied on the said premises by the Government, Municipality or any other competent authority prevailing at present rate.

23. Clause 6. Electricity ' Should tenant desire to use landlord light and power meters and landlord having agreed to their use the tenant shall pay to landlord their use the tenant shall pay to landlord their standard charges for electricity consumed in the premises.

24. ' Under Clauses 3 read with Clause 14 of the Tenancy Agreement, the petitioner has taken upon itself the obligation to pay all increase in taxes and charges over and above that were leviable at the time of execution of rent agreement as well as all such rates. And taxes that shall be additionally levied on the rented premises by the government municipality or any other competent authority. Now, the question that needs to be answered is whether rates and taxes, that are imposed on the properties under any law by the government or any municipal or tax imposing authority, which the tenant under the terms of tenancy has undertaken to pay the same, can be treated as rent. In this regard the definition of rent as provided in section 2 (i) of the 1979 Ordinance needs to be examined, which is reproduced as follows:-- 2(i) "rent" includes water charges, electricity charges and such other charges which are payable by the tenant but are unpaid.

25. The definition of rent as provided in section 2 (i) of the 1979 Ordinance is not exhaustive. It is for this reason that its definition proceeds with the words "rent includes" and not "rent means" When the word "includes" follows after the word that is sought to be defined then the definition clause cannot be treated as exhaustive as the word "includes" leaves room for extending the definition clause provided it does not come in conflict with the real intent behind defining a term and does not contradict the context in which the law was made which necessitated the legislature to define a particular term. Thus the word "includes" leaves room to incorporate within the meaning of rent any other financial obligation which can also be defined as rent. The phrase "such other charges which are payable by the tenant" as provided in section 2(i) of the 1979 Ordinance also clearly encompasses within its meaning any amount that a tenant undertakes to pay the landlord irrespective of its nomenclature. Therefore, if a tenant takes upon himself any financial obligation which he is required to pay directly to the landlord in addition to ordinary monthly rent that is required to be paid for the use and occupation of the rented premises then whether it is a tax or electricity, gas or other charges are to be regarded as rent. In the present case, the petitioner after taking upon itself the obligation to pay to the landlord taxes and charges under Clauses 3 and 14 of the Tenancy agreement, cannot turn around and say that taxes and charges do not fall with the definition of rent. These charges, on the basis of terms and condition of tenancy, are to be regarded as part of rent and if not paid when they fall due for payment, would give rise to the same consequences as are provided for non-payment of rent.

26. ' In view of the above discussion, it is evident that the Rent Controller acted within his jurisdiction while passing rent order even with regard to taxes and charges as the petitioner itself undertook to pay the same to the landlord and this Court finds no legal justification to interfere with the rent orders, ' Similar controversy is involved in the connected constitutional petitions bearing Nos.561 of 2008 and 563 of 2008 as similar rent orders were passed and, therefore, these two cases are also to be regulated through this common judgment. With regard to C.P. No,S-194/2009, in this petition petitioner has sought criminal action against respondents Nos.1 and 2 for disconnecting the electricity supply. In terms of clause (c) of the Tenancy Agreement the petitioner has committed itself to pay electricity charges that are consumed in the premises directly to the landlord, thereby giving right to respondents 1 and 2 to disconnected the electricity supply in case charges are not paid. However, the petitioner is carrying on commercial activity and supply of electricity cannot be disrupted even if there are outstanding dues without first serving notice of disconnection upon the petitioner. Hence, respondents Nos.1 and 2 are restrained from disconnecting the electric supply without first giving seven days notice on account of non-payment of electricity charges. While issuing such notice, respondents Nos.1 and 2 shall annex with the notice the electricity bill that is required to be paid. In case there are arrears towards electricity charges that are to be paid by the petitioner, the same shall be communicated in writing by respondents Nos. 1 and 2 to the petitioner and upon receipt of such communication the petitioner shall make payment of arrears within seven days of the receipt thereof.

27. ' In the light of the above common judgment C.Ps. Nos.S-518 of 2008, 519 of 2008, 561 of 2008 and 563 of 2008 are dismissed and C.P. No, S-194/09 is partly allowed.

Cited by 3 cases

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