' IFTIKHAR MVHAMMAD CHAUDHRY, C.J.---The petitioner seeks leave to appeal against the judgment dated 21-4-2008 passed by the Lahore High Court, Rawalpindi Bench, Rawalpindi in S.A.O. No, 22 of 2005 whereby the second appeal against order filed by the respondent was allowed and the petitioner ordered to be evicted from the premises in question.
2. The facts in brief are that the petitioner is a" tenant of the respondent in respect of Shop No,4-A, Shafi Market, Bohr Bazaar Rawalpindi since July, 1973. Earlier, the respondent filed ejectment application against the petitioner on the grounds of default in payment of rent and personal bona fide need of the premises, which was dismissed by the. Rent Controller vide order dated 6-2-2001.
The appeal of the respondent was also dismissed by an Additional District Judge of Rawalpindi vide judgment dated 31-5-2002. It was, inter alia, held that the respondent had not made any demand of rent at the statutorily increased rate, therefore, the petitioner-tenant did not commit any wilful default in payment of the monthly rent as well as enhancement thereof by 25%. Hence, the instant ejectment application was filed by the respondent with the averments that the petitioner did not pay rent for the period from July, 1996 to July, 1999 and for July, 2002 to her at the enhanced rate, i,e, 25% every three years in terms of section 5-A of the Punjab Urban Rent Restriction Ordinance, 1959 (hereinafter referred to as the Ordinance). It was also pleaded that a demand of rent at the statutorily enhanced rate was made vide notice dated 31-7-2002, which was sent to the petitioner by registered post on 1-8-2002.
3. On the other hand, the petitioner-tenant pleaded that he had deposited the rent till the institution of the ejectment petition on 17-12-2002. He denied that any notice demanding rent at the enhanced rate was given to him, which was apparent from the fact that the respondent had failed to exhibit any such document.
4. The learned Controller observed in his order that a photocopy of the notice placed on the file of the case revealed that no specific enhanced amount was demanded therein. He held that the petitioner had paid rent @ Rs,813 per month from February, 2003 to May, 2003, and then @ Rs,900 per month till July, 2004, therefore, the petitioner did not commit any default in payment of rent. It was held that payment of rentRs,813 as against the original rent of Rs,650 per month showed that the rent was being paid at the enhanced rate by 25%. He, therefore, dismissed the ejectment application of the respondent. The appeal of the respondent-landlady was dismissed by an Additional District Judge vide judgment dated 5-7-2005. She then filed second appeal before the High Court, which was allowed vide the impugned judgment. Consequently, her ejectment application was allowed and the petitioner was directed to vacate the premises and hand over its possession to the respondent on or before 30-6-2008.
5. The learned Single Judge took pains to calculate the automatic increase with effect from 1-7- 1989 and held that after adding the statutory increase of 25% the rent payable from November, 1996 to 1-7-1998 was Rs,1268 per month, from July, 1998 to June, 2001, the rent payable was Rs,1585 per month, from July, 2001 to June, 2003, it was Rs,1981 per month and thereafter till the institution of the application, it was 2476 per month. As against above, the receipts produced by the petitioner and relied upon by the Courts below showed deposit of rent @ Rs,813 per month, that too with effect from February, 2003 onwards. The learned Single Judge held that default in payment of rent at the enhanced rate was clearly established on record.
6. The contention of the learned counsel for the petitioner precisely is that if no notice is served by the landlord upon the tenant for enhancement of rent in terms of section 5-A of the Ordinance, the landlord would not be entitled to the enhanced rent and tenant in such a case would not be held to be a wilful defaulter in respect of the nonpayment of the differential between the agreed rent and the statutory automatic increase. The learned counsel referred to the cases of National Development Finance Corporation v. Naseem-ud-Din (PLD 1997 SC 564), Ilyas Ali Abbasi v. Allah Rakhi (2001 SCMR 31), Muhammad Irfan v. Muhammad Zahid Hussain Anjum (2000 SCMR 207) and Agfa Colour Services (Pvt.) Ltd. v. Muhammad Asad (2006 SCMR 1537). On the other hand, the learned counsel appearing for the respondent has supported the impugned judgment.
7. We have gone through the record examined the relevant provisions of the Ordinance and the case law cited at the Bar.
8. Section 5-A was added by the Ordinance No, XIII of 1990 dated 6-6-1990. After the expiry of a period of three months from its promulgation this Ordinance stood repealed by virtue of Article 128(2) of the Constitution. However, the said provision was again brought on the statute book first by promulgating the Ordinance No, XIX of 1990, dated 5-9-1990, then by the Ordinance XXXI of 1990, dated 4-12-1990 and next by the Ordinance No, VIII of 1991 promulgated on 23-2-1991. Finally, it was enacted by the Punjab Urban Rent Restriction (Amendment) Act, 1991 (Act No, III of 1991) dated 16- 3-1991.
9. PLD 2010 Supreme Court 19 Subsection (1) of section 5-A of the Ordinance provides that the rent of a non-residential building shall stand automatically increased at the end of every three years of the tenancy by twenty-five per cent of the rent already being paid by the tenant. Under subsection
(2) of section 5A of the Ordinance, in the case of a tenancy existing for three years or more, the first statutory increase accrued on 1-7-1989. Under subsection. (3) ibid, where the rent has already been increased by an amount less than twenty-five per cent of the total rent, the amount of such increase shall be deducted from the automatic increase and if the rent has already been increased by, an amount equal to or more than the automatic increase, no automatic increase shall accrue until the expiry of three years from the date of such increase. Under subsection (4) ibid, the arrears becoming due as a result of the increase of rent under this section shall, unless paid earlier, be deemed to be rent due under clause (i) of subsection (2) of section 13, on the expiry of sixty days from the date of coming into force of the Punjab Urban Rent Restriction (Amendment)
Ordinance, 1990 (XIII of 1990).
10. A perusal of subsection (4) of section 5-A clearly shows that the arrears of rent becoming due as a result of the statutory increase shall be deemed to be rent due under section 13(2)(i) of the Ordinance. Thus, subsection (4) is to be read with section 13(2)(i) of the Ordinance. Section 13(2)(i) of the Ordinance provides that if the tenant has not paid or tendered rent due by him in respect of the building or rented land, within fifteen days after the expiry of the time fixed in the agreement of tenancy with his landlord, or in the absence of any such agreement, within sixty days from the period for which the rent is payable, the Controller may make an order directing the tenant to put the landlord in possession of the building and if the Controller is not so satisfied, he shall make an order rejecting the application. Under the former provision, the arrears becoming due as a result of the automatic increase of rent are treated as rent due under the latter provision. Thus, the arrears of rent accruing on account of automatic increase have been declared to be rent due envisaged in the latter provision. On the basis of the nexus thus created between the two provisions, the Court, on ascertaining the date of the agreement and the automatic accrual of 25% increase after every three years on the rent agreed between the parties at the time of the agreement, will proceed to deal with the case in terms of section 13(2)(i) of the Ordinance.
11. At this stage, we may examine the four cases cited by the learned counsel in, the instant case in the context of the question whether non-payment of increased rent in terms of section 5-A of the Ordinance without issuance of notice by the landlord making a demand for payment of rent at the increased rate can be considered default in payment of rent within the purview of the Ordinance making the tenant liable to be ejected on the ground. In the case of Nasim-ud-Din (supra), it was held that nothing was brought on record to suggest that the landlord in consequence of statutory increase in rate of rent sent any notice of such increase to the tenant. Therefore, the finding of the High Court that tenant had become defaulter by mere non-payment of rent according to statutorily enhanced rate was found not warranted so as to justify his ejectment in the circumstances of the case. It was held that the word "default" would denote something more than mere non-payment of rent.
12. In the same line is the judgment of another Bench of two Honourable Judges in the case of Illyas Ali Abbasi v. Allah Rakhi (2001 SCMR 31) where the ejectment application was filed on the ground of non-payment of rent at the increased rate as envisaged by section 5-A of the Ordinance. In this case, reliance was placed on Muhammad Ibrahim v. Abdus Salam Bhatti (1996 SCMR 1042) and Naseem-ud-Din's case (supra) and the issuance of notice by the landlord demanding rent at the increased rate by 25% in pursuance of section 5-A of the Ordinance was considered necessary before filing of the ejectment application: This case was decided on 21-10-1998, but reported in 2001 SCMR at p.31.
13. Next in the chronological order with reference to the date of decision is the case of Muhammad Irfan v. v. Muhammad Zahid Hussain Anjum (2000 SCMR 207). It was decided on 22-9-1999, but was reported in 2000 SCMR at p.207. In the case too, the ejectment application was filed for non- payment of rent at the increased rate of 25% as required by section 5-A of the Ordinance. In this case, reliance was placed, inter alia on the case of Syed Azhar Imam Rizvi v. Mst. Salma Khatoon (1985 SCMR 24) wherein it was held that the receipt of copy of the ejectment application and knowledge gained thereby would constitute due notice. In this case, note was also taken of the case of Muhammad Yousaf v. Mehraj-ud-Din (1986 SCMR 751) wherein it was held that rent having admittedly riot been paid even after the institution of the application for eviction, the factum of filing of eviction application would be treated as sufficient notice and the tenants would be held liable to be evicted. Further, in this case, three judgments of the Lahore High Court reported as Muhammad Ibrahim v. Abdus Salam Bhatti (PLD 1996 Lahore 308), Mumtaz Begum v. Wazir Begum (PLD 1997 Lahore 99) and Sh. Barkat Ali Cycle Works v. Waheed-ud-Din (PLD 1998 Lahore 196) were considered all of which laid down that the word "automatic" used in section 5-A of the Ordinance clearly negated the contention that service of notice by the landlord was necessary in order to avail of the benefit of that provision. It was held that the increase would become effective automatically. Though the case of Naseem-ud-Din (supra) was also taken note of in this judgment, yet it was finally held that increase of 25% in rent would become due on the expiry of three years and would be deemed to be rent due. Both Naseem-ud-Din as well as Muhammad Irfan (supra) were two-member Bench cases. In the former it was ruled that notice was required to be given by the landlord to the tenant, while in the latter, it was held that no such notice was required to be given.
14. Recently the issue was considered in an unreported judgment, by a three-member, Bench of this. Court (two of us, namely, Raja Fayyaz Ahmed, J and Iftikhar Muhammad Chaudhry, C.J., on it) in the case of Mian Shahid Iqbal v. Sheikh Tariq Mehmood (C.P. No, 650 of 2009). In this case, ejectment application, was filed on the grourid that the tenant had failed to pay the rent automatically increased by 25% in terms of section 5-A of the Ordinance. The tenant pleaded that as per agreement between the parties the rent was to be increased by 15% after every three years, therefore, section 5-A was not applicable to the case. However, the landlord Controller ordered the tenant to deposit the amount of arrears of rent, but the tenant, instated of complying with the order, filed a writ petition in the High Court. The writ petition was dismissed and later the tenant deposited the outstanding amount, but the learned Controller struck off his defence. It was held that by virtue of section 5-A the landlord was not required to call upon the tenant to pay the rent increased by 25% in terms of the said provision on the expiry of every three years. It was also held that a statutory duty having been cast upon the tenant to pay the rent at the increased rate by 25% the Controller was right in ordering the tenant to deposit the outstanding rent at the increased rate, and on his failure to comply with the order, the defence of the tenant was rightly struck off.
' 16(sic). On an examination of the provisions of subsections (1) & (4) of section 5-A in juxtaposition with clause (i) of subsection (2) of section 13 of the Ordinance, the liability of the tenant to be evicted from the premises where he has not paid or tendered the rent due is clearly spelt out.
Under subsection (4), the arrears becoming due as a result of the increase of rent under section 5A are to be deemed to be rent due. As ably described in the case of Muhammad Yunus Malik (supra), under section 13(2)(i) of the Ordinance a period of grace has been prescribed for the payment of the rent by the tenant to discharge his obligation. Therefore, he must pay or tender the rent within fifteen days after the expiry of the time fixed in the agreement of tenancy, or in the absence of any such agreement within sixty days from the period for which the rent is payable. The failure of the tenant to discharge his obligation within the time so stipulated brings him within the ambit of the penal consequence envisaged in subsection (2) of section 13 and makes him liable to be ejected on the ground. In a nutshell, section 5-A is a self-executory provision, which comes into operation without being prefaced by a prior notice of demand by the landlord.
17. Section 5-A does provide for automatic increase of rent of the non-residential buildings at the end of every three years of tenancy by 25% of the rent already being paid by the tenant. By the language employed in the provision, rented lands and residential buildings are excluded from its purview. It is a recent statutory development, which is aimed at regulating the relationship between landlords and tenants as regards the increase of rent in unambiguous terms. It further seems that in enacting the provision, the Legislature took into account the huge amount of litigation that would go into on the issue of increase of rent. In fact, whenever a landlord would demand increase in rent, the tenant would refuse it and the landlord would resort to litigation. The matter would be litigated for decision in several rounds of litigation. Therefore, section 5-A was enacted to regulate the increase of rent of nonresidential buildings and to bring about certainty in this aspect of the issue so as to relieve the landlords and tenants of their anxieties as to how much rent would be fixed after how much period.
18. It is also noticeable that the tenancities, and especially the tenancies of commercial premises are governed by written agreements. The automatic statutory increase of 25% with the passage of time having taken roots in the business communities, the lease agreement mostly contain a provision for increase of rent in the same or similar terms. Therefore, once an agreement makes a recital of the automatic statutory increase of 25%, or an equivalent amount or percentage, it constitutes a sufficient notice and the landlord stands relieved of making any further demand in the shape of notice as the automatic increase would always be in the knowledge of the tenant.
However, this does not mean that where a lease agreement does not incorporate a recital regarding automatic statutory increase of 25%, or a same or similar amount or percentage, or the tenancy is oral, the provision of section 5-A would not be attracted. Ignorance of law is no excuse.
Therefore, even -through a lease F agreement does not incorporate such a recital, the automatic statutory increase remains binding upon the parties and the tenant is required to pay or tender the rent due of course including the automatic statutory increase of 25%. The only eventuality in which the statutory increase is not applicable is envisaged in subsection (6) ibid where the landlord and tenant may agree to increase the rent by an agreement in writing executed before the Controller.
Thus, after the insertion of section 5-A, G where a tenancy is executed for a period of 10 years, the rent would keep on increasing by 25% after every three years and if the tenant does not pay the rent at the increased rate within fifteen days after the expiry of the time fixed in the agreement of tenancy with the landlord, or in the absence of any such agreement within sixty days from the period for which the rent is payable, the landlord would be well within his right to straightaway file application for his ejectment on the ground of default in payment of rent.
19. Under subsection (4), the arrears becoming due as a result of the automatic increase are deemed to be rent due under clause (1) of subsection (2) of section 13. The question what, is meant by the phrase "rent due" has been discussed in various judgments of the Superior Courts. In the case reported as Ashfaq-ur-Rehman v. Muhammad Afzal (PLD 1968 SC 230), Muhammad Hussain Patel v. Habib Wali Muhammad (PLD 1981 SC 1) and Badruddin v. Muhammad Yousuf (1994 SCMR 1900) the meaning of the terms "all the rent due", "rent" and rent due" were considered by this Court.
In the first mentioned case, it was held that the word "lawfully" though was not added to the words all the rent due in section 13(6), yet the effect remained the same and whenever rent was sought to be recovered by a legal process, the word "due" would carry the connotation of "due in law" or recoverable in an action at law.In, the second case, it was held that the term "rent due" including not only money specially described as rent in the rent deed or the lease agreement, but also all other moneys (except fresh taxes or amounts of increase in existing taxes) agreed to be paid by tenant to landlord, and the tenant by not paying any of those charge would be considered guilty of default in payment of rent and as such liable to be ejected. To the same effect is the ratio of the judgment in the third case.
21(sic). The phrase "rent due" was discussed at quite some length by this Court in the case of Muhammad Yunus Malik v. Zahida Irshad (1980 SCMR 184) and it was held as under:-- "It was also argued before us on behalf of the petitioner that under section 13(2)(i) of the Ordinance the tenant is liable for ejectment in case he has not paid or tendered "rent due" by him, within fifteen days after the expiry of the time fixed in the agreement of tenancy with his landlord, or in the absence of any such agreement within sixty days from the period for which the rent is payable. In this connection the learned counsel for the petitioners laid emphasis on the term "rent due" in the context and submitted that the rent can be said to have fallen due only after the expiry of the period for which it was payable and not in advance. According to the learned counsel a payment of the rent in advance and any stipulation to that effect in the terms of the tenancy merely operates as a permissive mode of payment of the rent but that under the law any failure to pay the rent in advance does not entail any forfeiture of the tenancy with all its penal consequences.
' But on a careful scrutiny we are unable to accept this narrower interpretation sought to be placed on the term. For a proper appreciation the term "rent due" has got to be interpreted in the context of clause (i) of subsection (2) of section 13 of the Ordinance read as a whole. It expressly visualises the payment or tender of rent due within fifteen days after the expiry of the time fixed in the agreement of tenancy or in the absence of any such agreement within sixty days from the period for which the rent is payable. It expressly recognizes the agreement of tenancy, if any, between the tenant and landlord, which is respected. In the matter of the payment or tender of rent emphasis is laid on and prominence is attached to the time fixed for the payment of rent in the agreement of tenancy with the landlord. So that the agreement, if any, has got to prevail. Now on a plain meaning the time fixed in the agreement for the payment of rent might as well be in advance.
' Under section 13(2)(i) of the Ordinance a period of grace has been prescribed for the payment of the rent by the tenant to discharge his obligation. He must pay or tender the rent within fifteen days after the expiry of the "time fixed in the agreement" of tenancy, or in the absence of any such agreement within sixty days from the period for which the 'rent is payable. This distinction in the phraseology employed between the time fixed in the agreement for the payment and the period for which the rent is payable is quite significant and lends support to the view that the time specified for the payment of the rent in the agreement might as well be in advance."
"Rent due" is also discussed in Pervez Akhtar v. Additional District Judge (PLD 1990 SC 986), Asad Brothers v. Ibadat Yar Khan (1991 SCMR 986), Niaz Khalil v. Muhammad Shafiq (1995 SCMR 791), Ghulam Siddique v. Nasrullah (2001 SCMR 140), Rabnawaz, v. Haji Muhammad Iqbal (2003 SCMR 1476) and Raja Sohail Javed v. Raja Atiq-ur-Rehman (PLD 2008 SC 470).
22. Clearly, the point of time at which rent becomes due is the expiry of 15 days after the date on which it is agreed to be paid. It may well be at the close of the period for which it is payable or even it be in advance, i,e, prior to the period for which it is payable. In all such cases, the law allows a grace period of 15 days. In the case of automatic increase, the rent becomes due as stated in subsection (4) of section 5-A.
23. Back on the moot point in the case whether issuance of notice is a condition precedent for filing ejectment application where the tenant has not paid or tendered rent duly increased by 25% after every three years under section 5-A in terms of subsection (4) of section 5-A read with section 13(2)(i) of the Ordinance. The short answer is "it is not". In the case of Muhammad Wan (supra), reference was made to the cases of Syed Azhar Imam Rizvi and Muhammad Yousuf (supra) where it was held that the filing of ejectment application would constitute due notice and a substantial compliance of section 13-A of the Ordinance. It may be observed that section 13-A explicitly provides that where the ownership of a building in possession of a tenant has been transferred, the new owner shall send an intimation thereof to the tenant. In the aforesaid two cases, this Court has treated the filing of ejectment application as a sufficient notice and compliance of the said provision. On the other hand, the provisions of section 5-A of the Ordinance do not require the landlord to send an intimation of statutory increase to the tenant. Thus, K on the filing of ejectment application on the ground of default in payment of rent as statutorily increased, the Controller would be fully justified to proceed in the matter in accordance with law. Even otherwise, as would be seen from the facts of the present case discussed in later part of this judgment, notices issued by the landlords generally fall on deaf ears and the tenants care two straws for it. The tenants, particularly of the nonresidential premises litigate the matter with the sole object of prolonging their tenancies. They are never interested in early resolution of their controversies. Requirement of notice will be nothing but to provide the tenant with another tool to delay and payment of the rent due and consequentially the proceedings.
24. The learned counsel for the petitioner also contended that in a civil matter, the consent, admission or acquiescence of a party, (or parties) was the supreme law and the statutory provision to the contrary would yield to the same. The learned counsel placed reliance on the provisions of subsection (6) of section 5-A of the Ordinance, which provides that the provisions of subsection (1) to (5) regarding automatic increase of 25% shall not apply if a landlord and a tenant agree to increase the rent by an agreement in writing executed before the Controller. The learned counsel placed reliance on order dated 27-2-1997 of the Rent Controller whereby the application for deposit of rent filed by the tenant (petitioner) was allowed and he was permitted to deposit the rent for the shop in dispute. It was observed that the landlady (respondent) may withdraw the rent so deposited. However, we are not inclined to agree to the proposition canvassed by the learned counsel. In the first instance, the aforesaid application was resisted by the respondent contending that the same was filed with a mala fide intention to avoid payment of remaining rent, which was due and to further avoid the consequence of default committed by him in the payment of rent. The rate of rent i,e, Rs,650 per month was also disputed. In the circumstances, reference to subsection
(6) of section 5-A was misconceived. The learned counsel failed to show from the aforesaid order of the Controller, or any other document on the record of the case, that the parties in the instant case had entered into any agreement before the Controller in terms of the said subsection (6). No admission, consent or acquiescence of any sort could be spelt out from the contents of the said order. Rather, the order in question was of interim nature inasmuch as the order itself mentioned that it was "subject to all just exceptions". The order in no way operated against the respondent landlady or debarred her from seeking her remedy, which was apparent from the following observation made in the said order:- "There is no denial to (of) the fact that the petitioner is tenant in the shop in dispute under the respondent. The questions regarding default and rate of rent are such which are to be heard and decided by the competent Court where ejectment petition, if any, would be adjudicated upon."
25. The learned counsel for the petitioner vehemently contended that the two Courts below had held that the respondent landlady was required to issue notice demanding payment of rent at the automatically increased rate, therefore, the non-payment of rent by the petitioner at the increased rate could not be treated as wilful default entailing the penal consequence of ejectment from the premises. We are not impressed by the self-destructive agreement of the learned counsel either.
The petitioner did not pay the rent at the increased rate, i,e, on filing of the ejectment application, or on issuance of notice by the respondent after the dismissal of the respondent's appeal by the Additional District Judge in the first round. Instead he continued to litigate the matter taking different pleas, at times self-contradictory and now even making self-destructive arguments.
Though the petitioner denied receipt of any notice on the ground that the same had not been exhibited at the trial, but the learned Controller, in his order, has referred to a photocopy of the notice placed on the file. Even now, the petitioner did not come forward to pay the rent at the increased rate; though the learned counsel made a bald statement that the petitioner was ready to pay the rent at this juncture. In our view, the said statement of the learned counsel was not sufficient to dispute the failure of the petitioner to pay the rent due in terms of subsection (4) of section 5-A. Had the petitioner (tenant) admitted his liability to pay the rent due at the increased rent as aforesaid on the first day of hearing before the Controller on the basis of second proviso to subsection (2) of section 13 of the Ordinance, which contemplated extending of concession in a case involving default in payment of rent of one month only, the Controller, if satisfied that the tenant had not made any default on any previous occasion, could have directed him to deposit all the rent due from him within fifteen days. However, in the instant case, the petitioner did not admit his liability to pay the rent as statutorily increased by 25% after every three years at the initial or any subsequent stage of the proceedings before the Controller. Even he did not do it at the first appeal on the second appeal stage. Admittedly, the respondent failed to discharge his liability within the period prescribed in clause (i) of subsection (2) of section 13 of the Ordinance. The first ever effort to make payment on the enhanced rate is being made before this Court when he has already become a defaulter. The default in payment of due rent having been established against the petitioner from the very beginning, no such concession could be extended to him at this belated stage by treating the same as not a wilful default.
26. The learned Courts below having not examined the receipts for payments of rent, the learned Judge in Chambers rightly set aside their judgments and while allowing the second appeal filed by the respondent, accepted the ejectment application and passed order for ejectment of the petitioner. We see no force in the instant petition, which is dismissed.
27. The learned counsel for the petitioner submitted that the petitioner was running business in the premises for the last several decades; therefore, he may be given some time to vacate the premises. The request is allowed. The petitioner is allowed four months' time to vacate the premises and hand over peaceful possession to the respondent on or before 12-10-2009. He shall continue to deposit rent with the Controller at the increased rate. In case he failed to pay the rent and/or hand over the vacant possession as aforesaid, the Controller shall issue the ejectment warrant with police aid without notice. The parties are left to bear their own costs.