ANWAR ZAHEER JAMALI, J.---This civil appeal with leave of the Court, vide order dated 28-2-2006, arises out of ejectment proceedings under section 17 of the Cantonments Rent Restriction Act, 1963 ("the Act of 1963"), instituted by the appellant/landlord against the respondent/tenant on the grounds of default in the payment of rent from November, 1994 to August 1997 and subletting of the premises, as detailed in paragraphs 6 and 7 of Rent Case No,115 of 1997. The claim of the appellant was resisted by the respondent in his written statement filed before the Court of the Rent Controller on 5-3-1998, wherein he took the plea that rent was being regularly sent to the appellant through cross-cheques, and there was no subletting of the premises to Messrs Kohinoor Consultant (Pvt.)
Ltd., Messrs Avisery (Pvt.) Ltd. And Messrs Adept (Pvt.) Ltd., as alleged by the appellant.
2. After due contest between the parties, where the parties led their respective evidence, vide judgment dated 23-5-2000, the ejectment application was dismissed by the Rent Controller on both grounds, with the observation that there was no subletting by the respondent, as claimed by the appellant, and there was delay of only ten days in the payment of rent for one month, which was condoned by the Rent Controller. The appellant, aggrieved by the order of the Rent Controller, preferred First Rent Appeal No, 1060 of 2000 before the High Court of Sindh at Karachi, which was heard and dismissed, vide impugned judgment dated 7-10-2005, as the appellate Court concurred with the view of the Rent Controller on both grounds.
3. We have heard the arguments of Messrs Sharifuddin Pirzada, learned Senior Advocate Supreme Court and Mr. Abdul Qadir Khan, Advocate Supreme Court for the appellant and Mr. Wasim Sajjad, learned Senior Advocate Supreme Court for the respondent. Mr. Abdul Qadir Khan, in his submissions, after narration of relevant facts of the case, strongly criticized the merits of the two impugned judgments passed against the appellant by the fora below. He contended that the two Courts neither properly appreciated the legal position as regards the applicable laws to the facts and circumstances of the present case relating to the question of default and subletting nor the evidence adduced by the parties in this context was properly appreciated, rather misread. On the point of default, he argued that admittedly there was a written lease agreement executed between the parties on 6-3-1979 and in terms of clause (2) of the said agreement the respondent/tenant was liable to pay monthly rent in advance by the 5th of every month. Even after expiry of the three years period of this tenancy agreement, in view of the judgment in the case of Zarina Khawaja v.
Mahboob Shah (PLD 1988 SC 190), the term for regular payment of rent for every month by the 5th of each calendar month was in force and binding upon the respondent, but both the Courts below failed to appreciate this legal position. He further contended that as per admitted facts of the case, for the first time, in respect of the rent for the month of November, 1994, rent was remitted by the respondent through cross cheque in favour of the appellant on 11-2-1995, after commission of default of more than three months and this practice continued in many subsequent months, as detailed in paragraph No,8 of the ejectment application. The Rent Controller and the Appellate Court, however, in this regard misread the evidence of the parties. He further argued that tender of rent by the respondent through cross-cheque was not a legal or valid tender in the eyes of law.
Even otherwise, the appellant had not encashed any of these cheques, therefore, it cannot be argued by the respondent side that any default in the payment of rent committed by the respondent was acquiesced, waived or condoned by the appellant.
4. On the point of subletting, learned Advocate Supreme Court referred to paragraphs Nos.6 and 7 of the ejectment application to show that the specific plea of subletting to Messrs Kohinoor Consultant (Pvt.) Ltd., Messrs Avisery (Pvt.) Ltd. And Messrs Adept (Pvt.) Ltd. Was taken by the appellant, which was vaguely denied by the respondent in his written statement. At the stage of evidence, the appellant categorically supported his stance on this issue, which remained un- shattered in his cross-examination. Not only this, but the respondent in his cross-examination flatly conceded to the plea of subletting by making material admissions in this regard. The two Courts below, however, in their respective judgments patently misread the evidence and for fanciful reasons decided the issue of subletting against the appellant, which finding is contrary to the case record. In support of his submissions, learned Advocate Supreme Court placed reliance upon the following cases:--
(i) Zarina Khawaja v. Mahboob Shah (PLD 1988 SC 190)
(ii) Asghar All Imam v. Muhammad Ali (PLD 1988 SC 228)
(iii) Shezan Limited v. Abdul Ghaffar (1992 SCMR 2400)
(iv) Alima Ahmad v. Amir All (PLD 1984 SC 32)
(v) Yasmeen Khan v. Abdul Qadir (2006 SCMR 1501)
(vi) Reckitt and Colman of Pak Ltd. v. Saifuddin G. Lotia (2000 SCMR 1924)
(vii) Citizens Foundation v. Director, SESSI (2010 SCMR 1659)
(viii) Manek J. Mobed v. Shah Behram (PLD 1974 SC 351)
(ix) Saeeda Begum v. Shameem Ahmad (1994 SCMR 791)
(x) Hyder All Bhimji v. Vlth Additional District Judge etc. (2012 SCMR 254)
5. In the case of Zarina Khawaja (supra), with reference to regulating the terms and conditions of tenancy between the landlord and tenant, inter alia, following question was framed:--
(4) Whether on termination of an agreement of tenancy when the tenant remains in occupation as of right subject to liability under the Rent Restriction Law, the terms of agreement become irrelevant for regulating the tenancy?"
After detailed discussion, it was answered as under:-- We accordingly answer the 4th question in the negative and hold that the terms of an expired agreement as such, continue in operation, to the extent they are not repugnant to the Rent Law.
Indeed same would be the position with an unexpired agreement also.
6. In the case of Asghar Ali Imam (supra), the above view taken by this Court was affirmed and it was held that the terms of the expired agreement would continue to operate notwithstanding its expiry.
7. In the case of Shezan Limited (supra), another Bench of this Court re-affirmed that the terms of an expired tenancy agreement as such, continue to remain operative, to the extent they were not repugnant to the Statue.
8. In the case of Alima Ahmed (supra), the question of default in the payment of rent was considered at length and it was held that after the commission of default, the tenant is bound to face its consequences, which cannot be relaxed or diluted on the grounds of economic well being, fairness or in the name of justice.
9. In the case of Yasmeen Khan (supra), the question of default in the payment of rent was considered in a situation where the tenant had directly deposited the rent due in the Court of the Rent Controller without first offering it to the landlord or tendering it through money order. It was held that it was not a valid tender of rent thus, a default in payment of rent had occurred.
10. In the case of Reckitt & Colman of Pakistan Ltd. (supra), the question of default was taken into account with reference to tendering of rent to the landlord and it was held that rent sent through cheque, being not a valid tender, would not wash out the effect of default.
11. In the case of Citizen Foundation (supra), general principles as regard the authority of the Court to exercise discretion were discussed and it was held that when an authority is conferred with the power of exercising discretion in any matter, such power is to be exercised in a judicious; transparent and impartial manner, keeping in view the fundamental principle of non- discrimination qua reasonable classification, and not in an arbitrary or capricious manner and without any sound criteria for doing so.
12. In the case of Manek J. Mobed (supra) the issue of sub-letting was discussed and it was held that if a person obtains lease-hold rights in his own name and subsequently assigns them to a firm or to a private limited company consisting of his family members it cannot be said that no change has taken place in the status of the tenant or that it is not a case of subletting or assignment of lease-hold rights.
13. In the case of Saeeda Begum (supra), the issue of subletting was examined and it was found that the lessee had entered into a partnership and as a consequence parted with the possession of the rented premises. It was observed that once the landlord proves that the tenant has parted with possession of the demised premises, the burden would shift on to the tenant to prove that he has not handed over possession in favour of another party. It was held that the case was one of subletting as the tenant cannot be permitted to do indirectly what he cannot do directly, because of the prohibition under the law.
14. In the case of Hyder Ali Bhimji (supra), it was held that handing over of possession of the rented premises to some other person, exposes the tenant to the consequences of subletting and the burden will be on him to discharge that parting of such possession of a portion of the rented premises does not amount to subletting. The Court further observed that "subletting" and "handing over the possession" continue to be used interchangeably in the field of legal practice and also in some courts.
15. Conversely, Mr. Wasim Sajjad, learned Senior Advocate Supreme Court for the respondent strongly supported the two judgments passed by the fora below against the appellant, which, according to him, are based on proper appreciation of the legal position as well as the evidence adduced by the parties to the case. He contended that after the expiry of the tenancy agreement dated 6-3-1979, which was admittedly for three years, the respondent had become a statutory tenant, therefore, for the purpose of computing default, he was entitled to sixty days' grace period.
He further contended that under the Act of 1963 discretion for condoning the default was very much available with the Rent Controller, which, looking to the overall facts and circumstances of the case, was rightly exercised by him in favour of the respondent. Thus, no exception could be taken to such finding, which has been also maintained by the appellate Court. As regards subletting, he made specific, reference to the reply to the rent application submitted by the respondent to show that there was specific denial about the plea of subletting raised by the appellant and this fact was also reaffirmed by the respondent in his affidavit in evidence. Thus, on the mere allegation that respondent had sublet some portion of the rented premises to three companies was of no legal value, more so, as it was also not covered within the meaning of "subletting", as defined under section 17(2)(ii)(a) of the Act of 1963. Learned Senior Advocate Supreme Court, when confronted with some material admissions made by the respondent in this regard during his cross-examination before the Rent Controller, contended that such admissions were to be read in conjunction with his pleadings and other evidence. Moreover, no other substantive proof was brought on record by the appellant to prove the allegation of subletting. To fortify his submission, learned Senior Advocate Supreme Court placed reliance upon the following cases:--
(i) Forward Traders v. M.F.M. Y. Industries Ltd. (PLD 1995 Karachi 510)
(ii) Habibullah v. Rent Controller (1998 SCMR 2656)
(iii) Taj Muhammad Abbasi v. Ferozesons (Rawalpindi) Pvt. Ltd. (1996 SCMR 97)
16. In the case of Forward Traders (supra), it was held that in proceedings before the Rent Controller, being quasi-judicial in nature, technicalities of law could not be over-stretched as to defeat very purpose of administering substantial justice to parties. Such observations were recorded by the learned single Judge of the Sindh High Court in the context, where the Managing Director of a tenant (company) was not authorized by the Board of Directors to appoint and nominate witness as attorney, in a case filed against the company on the point of default. It was further observed that it is not disputed nor it could be disputed that the Rent Controller has discretion to refuse eviction of the tenant in spite of the default, if the circumstances so warrant.
17. In the case of Habibullah (supra), the question of subletting was considered in the context of entering into a partnership business and it was held that induction of outsiders as partners in the business carried out in rented premises would not by itself constitute subletting unless tenancy rights are partly or wholly surrendered in favour of the said partner.
18. In the case of Taj' Muhammad Abbasi (supra), the issue of subletting was discussed and it was held that where the tenant delivered the possession of a portion of the premises for a consideration of 'commission' without the tacit or implied consent of the landlord, such fact clearly showed an unlawful subletting and transfer of tenancy rights.
19. Having been benefited by the able assistance of the learned Advocate Supreme Court for the parties and the ratio of the above discussed judgments, we now firstly take up the plea of default in the payment of rent as agitated by the appellant, which has been decided by both the fora below against the appellant. The case of the appellant as regards default is pleaded in paragraphs Nos.8 to 10 of the ejectment application. In paragraph No,8 of the ejectment application the details of uncashed cheques issued and sent to the appellant and the relevant months have been shown by the appellant in chronological order, which is reproduced as under:-- S. NO.CHEQUE DATECOVERING LETTER DATEDSENT BY REGISTERED POST ONRENT FOR THE MONTH
1. 2-11-1994 10-11-1994 11-2-1995 November 1994
2. 2-12-1994 10-12-1994 11-2-1995 December 1994
3. 2-1-1995 10-1-1995 11-2-1995 January 1995
4. 2-2-1995 10-2-1995 12-3-1995 February 1995
5. 2-3-1995 10-3-1995 10-4-1995 March 1995
6. 2-4-1995 8-4-1995 10-5-1995 April 1995
7. 2-5-1995 8-5-1995 10-6-1995 May 1995
8. 2-6-1995 8-6-1995 19-6-1995 June 1995
9. 2-7-1995 3-7-1995 19-9-1995 July 1995
10. 2-8-1995 3-8-1995 4-10-1995 August 1995
11. 2-9-1995 3-9-1995 31-10-1995 September 1995
12. 2-10-1995 2-10-1995 4-12-1995 October 1995
13. 2-11-1995 2-11-1995 4-12-1995 November 1995
14. 2-12-1995 2-12-1995 26-12-1995 December 1995
15. 2-1-1995 5-1-1996 27-1-1996 January 1996
16. 2-2-1996 5-2-1996 19-2-1996 February 1996
17. 2-3-1996 5-3-1996 28-3-1996 March 1996
18. 2-4-1996 2-4-1996 2-5-1996 April 1996
19. 2-5-1996 2-5-1996 1-6-1996 May 1996
20. 2-7-1996 2-7-1996 21-8-1996 July 1996
21. 2-8-1996 3-8-1996 21-8-1996 August 1996
22. 2-9-1996 2-9-1996 13-10-1996 September 1996
23. 2-10-1996 2-10-1996 2-1-1997 October 1996
24. 2-11-1996 2-11-1996 2-1-1997 November 1996
25. 2-12-1996 2-12-1996 2-1-1997 December 1996
26. 2-1-1997 5-1-1997 31-3-1997 January 1997
27. 2-2-1997 5-2-1997 31-3-1997 February 1997
28. 2-3-1997 5-3-1997 32-3-1997 March 1997
29. 2-4-1997 3-4-1997 26-5-1997 April 1997
30. 2-5-1997 3-5-1997 26-5-1997 May 1997
31. 2-6-1997 3-6-1997 18-6-1997 June 1997
32. 2-7-1997 2-7-1997 18-9-1997 July 1997
33. 2-8-1997 2-8-1997 18-9-1997 August 1997
20. To examine the plea of default in the payment of rent, we have to see whether it is a case where the respondent, after the expiry of the tenancy agreement in the year 1982, is to be benefited with a grace period of sixty days in the payment of rent or fifteen days, as per clause 2 of the lease agreement dated 6-3-1979, which reads as under:-- The lessee shall pay the lessor every month's rent in advance i,e, by the 5th of every month.
21. The legal position in this regard has been amplified in the cases of Zarina Khawaja, Asghar Ali Imam and Shezan Limited (supra), which show that even after the expiry of tenancy period, the terms as regards the mode and time of payment shall continue to remain in force between the parties, being not repugnant to the statutory provisions. Thus, the payment of rent in the instant case for the month of November, 1994 became due on the expiry of 5th day of November, 1994 and after grant of the statutory grace period of fifteen days, the respondent became defaulter in the payment of rent upon his failure to pay rent for the month of November, 1994 before the 21st of November, 1994. Similar will be the position of default as regards the payment of rent for the months of December, 1994 and January, 1995, which was required to be paid on or before the 5th of each calendar month, but was admittedly tendered by the respondent through cheque sent via registered post with the covering letter dated 11-2-1995. As per the terms of the tenancy agreement dated 6-3-1979, the parties have mutually agreed for advance payment of rent for each month and the said term was binding on the parties even after the expiry of the terms of tenancy agreement. Thus, at the very initial stage the respondent had committed default in the payment of rent for three consecutive months and not of ten days, as held by the two Courts below. This practice of tendering of monthly rent through cheques after the commission of default persisted almost every month, with the exception of a very few, as is evident from the month-wise details reproduced above. In this regard, the question of acquiescence or waiver also does not arise from the side of the appellant, as these cheques were never encashed by the appellant, and the whole arrears of rent were received by the appellant from the respondent after the filing of the ejectment application in terms of section 17(2)(ii)(b) of the Act of 1963, which till then had remained outstanding.. Indeed, from the comparative reading of the provisions regarding default in the payment of rent in the two statues i,e, Sindh Rented Premises Ordinance, 1979 and the Act of 1963, it can be validly inferred that Rent Controller, Cantonment, had the discretion to condone such default in the payment of rent in a just, equitable and fair manner, but in the present case such discretion has been exercised by the Rent Controller and the Appellate Court on the wrong notion that default in payment of rent committed by the respondent was only in respect of one month and that too for only ten days. In view of the above discussion, we are of the view that findings of both the Courts below on the point of default are the result of misreading and non-reading of evidence, thus, liable to be reversed.
22. While discussing the question of default in the payment of rent, it will also be pertinent to mention here that in the instant case, the respondent has allegedly sent rent for the disputed period of default through cross cheques drawn in favour of the appellant, contrary to the contemplation of the provisions of the Act of 1963 in this regard. The cheques were not encashed by the appellant and not even once rent was remitted by the respondent through money order, as per the requirement of law, nor the rent was deposited in the miscellaneous rent case as an alternate arrangement permissible under the law, subject to refusal of rent remitted through money order. Thus, the remittance of rent through cross cheques made by the respondent to the appellant was even otherwise of no consequence as it violated the said provision of law and thus by itself constituted a default in the payment of rent in clear terms, as also held in the case of Reckitt & Colman of Pak. Ltd. (supra).
23. As regards the plea of subletting raised by the appellant in paragraphs Nos.7 and 8 of the rent case, this contention was flatly denied by the respondent in his written statement. However, at the stage of cross-examination, the respondent has made such admissions, which have completely exposed his false denial of the plea of subletting. For this purpose, some portion from the cross- examination of the respondent recorded before the Rent Controller on 22-3-2000 is reproduced as under:-- ' It is correct to suggest that Messrs Kohinoor Consultants (Pvt.) Ltd. Carrier on the business in the premises in question for 4 to 5 years. Voluntarly says that my family had interest in the Kohinoor Consultant (Pvt.) Ltd., my brother namely Mr. Pervaiz Haseeb Malik was chief operating officer in the said company. I do not remember at the moment how much share of my brother is in Kohinoor Consultants (Pvt.) Ltd. I say that a couple of rooms were occupied by Messrs Kohinoor Consultants (Pvt.) Ltd. to run their business/registered office and the business run of the Queens Road. The Avisery a private Ltd. Company, has three Director, Namely I. Mrs. Q Malik, my mother 2.
Mr. Pervaiz Haseeb, my brother and myself. I am a major share holder, 50% of the demised premises is occupied this company. Messrs Adept (Pvt.) Ltd. Have 2 Directors myself and my brother Mr. Pervaiz having equal shares and 45% of the remaining floor area is with Adept. It is incorrect that the landlord has not given me any permission to operate these companies from the demised premises. Voluntarily says since he has given the the permission to operate business from there for these companies I am the Director of the Companies operating from there. It is correct that I have not filed any letter/documents stating that the landlord has given me the specific permission to operate the above referred companies. It is correct to suggest that tenancy agreement has been executed in between the applicant and opponent but no tenancy agreement has been executed in between the applicant and above said Ltd. Companies.
[Emphasis Added]
24. As can be seen from the foregoing, that in the instant case, whole defence of the respondent, on the point of subletting, was changed by him during his cross-examination, where he has stated that the said subletting/handing over of possession was with the permission/consent of the landlord for which he had not obtained any written permission from the appellant. In this context, a bare reading of the relevant provision of the Act of 1963 reveals that it was incumbent upon the tenant to have obtained prior written consent of the landlord. Thus, the material contradiction in the stance of the respondent on the point of subletting, one taken in his written objections and affidavit in evidence and the other in the cross-examination has fully demolished his defence, as even otherwise, he could not have set up any other defence beyond his pleadings. Once the respondent has admitted parting with the possession of the premises to three different companies, the burden of proof that it does not amount to subletting, had squarely shifted upon him in terms of section 17(2)(ii)(b) of the Act of 1963, which reads as under:-- -(2) A landlord who seeks to evict his tenant shall apply to the Controller for an order in that behalf and the Controller may after giving the tenant a reasonable opportunity of showing cause against the application, make an order directing the tenant to put the landlord in possession, if he is satisfied that--
(i) .......
(ii) the tenant has, without the written consent of the landlord,
(a) Transferred his right under, lease or sublet the building or any portion thereof or
(b) .....
25. The respondent has failed to discharge the burden, as discussed above, and in light of the observation contained in the case of Hyder Ali Bhimji (supra), wherein the Court observed that "subletting" and "handing over the possession" (as used in section 15(2)(iii) the Sindh Rented Premises Ordinance, 1979) are used interchangeably in the field of legal practice and also by courts, it can be said that the respondent had sublet the premises in question.
26. The submissions of Mr. Wasim Sajjad, learned Senior Advocate Supreme Court for the respondent that no proof of payment of rent to the respondent by these companies has been produced by the appellant, therefore, mere parting with the possession of the premises or any portion thereof to these companies does not amount to subletting, in our opinion, is devoid of any legal force, in view of the clear language of above reproduced provisions of law and the case-law discussed herein above. Even otherwise, it may be observed that the respondent entered into the lease agreement for the rented premises in his personal capacity and not as the Director of any of the three companies, which have admittedly been enjoying physical possession of the rented premises. It is settled law that a company is a legal entity independent and separate from its Directors or shareholders. Therefore, the lease agreement, entered into by the respondent, cannot be said to be a lease entered into on behalf of the said companies, and the admitted parting of possession in favour of the companies would amount to subletting, regardless of, whether the respondent was a Director or shareholder of the said companies. Furthermore, the plea of subletting raised by, the appellant in this context, is also supported by other documents such as the advertisement of the company in the Daily Dawn dated 22-2-1995, and the relevant forms submitted to the Securities and Exchange Commission of Pakistan, which note the registered address of the companies as being the sane as of the rented premises. These facts have not been disputed or denied by the respondent. Thus, keeping in view the above discussed facts of the case and the ratio of judgments cited at the bar by the learned Advocate Supreme Court for the appellant, we have no hesitation to hold that appellant have succeeded to bring home its case against the respondent on the plea of subletting, which has made him liable for eviction.
27. As a sequel of above discussion this appeal was allowed in terms of the short order dated 5-1- 2015, which reads as under:- "After hearing the arguments of both the learned ASCs for the parties, for the reasons to be recorded later, on separately, this appeal is allowed. However, the respondent is allowed 90 days' time to vacate and handover actual physical possession of the premises to the landlord."