SHAFI-UR-RHHMAN, .1.-The petitioners seek leave to appeal against the judgment of the Sind High Court dated 18-1-1981 whereby their ejectment from a rented premises was ordered.
Petitioner No. 1, a registered partnership firm, through one of its partners Captain Haleem. Siddiqui obtained on $ rent from the respondents' premises, Room No. 21/3 on the 3rd floor of a building known as Writers Chambers on Dunnoli Road, Karachi. The monthly rent payable was Rs. 357 excluding the electricity charges. The date of the execution of the rent note is 23-9-1972 and the advance rent was realised for the period 1-10-1972 to 30-10-1973. On 17-3-1.973 the partners, it appears, dissolved the firm and constituted a private limited Company and got it registered under the Companies Act on that date. This was without informing or getting permission from the respondents-landlords. On 24-11-1973 the landlords complained to petitioner No. 1 against their act of placing a table in the common passage outside their office for preparing tea etc. Thereby causing inconvenience to other tenants. The reply to this was sent no.. By the partnership but by the Company. The landlords took note of this fact and informed petitioner No. 1 as follows; "Since the tenancy is in the name of the firm, we regret we are unable to treat the letter of the Company as a reply front your end. In this connection we may point out that we grave not been formally advised of any change in your status.
Therefore, if your firm has since merged with the Company and you want us to recognize the Company as our tenants, a copy of the Memorandum and Articles of Association of the Company along with the names of its present directors be supplied to us."
Petitioner No. 2 did not supply the required documents till 31-5-1975 after receipt of a reminder from the landlords in this respect. The rents, howevere, were tendered by petitioner No. 2 and the receipts were given by the landlords in favour of Petitioner No. 1. On 9-7-1975 the respondents filed an application seeking eviction of petitioner No. I and the sub-tenant on the ground of subletting.
The main defences of petitioners were mainly two. The first one was that though such a merger and conversion of the partnership into a Private Limited Company had taken place the fact remained that the same partners continued to be members of the private limited Company. Hence there was only a formal change not affecting at all the relationship of landlords and tenants, in no case amounting to subletting as may entitle the landlords to seek and obtain eviction. The other ground was one of waiver or estoppel pleaded on the ground that the landlords had notice of the fact that the partnership had come to an end and a Private Limited Company had come into existence and yet they did not object for about two years and continued to receive the rent and to give the receipts in the name of the partnership.
3. The learned Rent Controller after framing the issues and recording the evidence came to the conclusion that there was no subletting at all. The learned District Judge on first appeal held that there was subletting but there had taken place waiver on the part of the respondents on account of their silence and in activity in giving effect .To their objection to , such a a subletting immediately or soon after it came to their notice.
4. The learned Judge of the High Court relied on the decision in Manek J. Mobed and another v.
Shah Behranr and others PLO 1974 SC 351to hold that the legal entity substituting the partnership was a different one and it could not be said that there was no subletting. On the question of waiver also the learned Judge in the High Court was of the view that the respondents-- landlerds had objected to such a change, had asked for further particulars and on receipt of them bad taken appropriate proceedings. They had not at any stage recognized or otherwise approved of the change. They had taken all the steps necessary to preserve and protect their rights in the matter and had taken proceedings as soon as the required material was provided to them on their asking by the petitioners. Hence ejectment of the petitioners was ordered.
5. The learned counsel for the petitioners has made the same submissions as were made before the learned Judge in the High Court arid have been dealt with in the judgment. His contention was that the Court could go behind and lift the veil of incorporation to find out the true state of affairs and determine the rights of the parties accordingly. According to the learned counsel if this were done it would have at once been noticed that the partners of the firm and the members of the private limited Company were identical. There was ho change so far as the members constituting the partner or composing the private limited company concerned. The tenancy on that account, according to the learned counsel, remained unchanged. On the question of waiver also it has been submitted that the landlords had come to know of such a change and should not have kept quiet for two years and in any case should not have recognized petitioner No. I as their tenant after the dissolution of the firm. The fact that they did so and allowed petitioner No. 2 to carry on the business for such a long period all the time receiving rent tendered by them and giving the receipt in the name of peti--tioner No. 1 would show that they had waived their right in the matter, had submitted to the change and had accepted petitioner No. 2 al the tenant.
6. We would agree with the learned counsel for the petitioners that it is necessary and appropriate in certain cases to lift the veil of incorporation with a view to find out the true state of affairs and to determine the rights and liabilities of the parties. Nonetheless on doing so in this case we find that the result is not to the advantage of the petitioners. A distinct legal entity different from the firm had come into existence. It was so whether the 'veil of incorporation was lifted or not. Such a legal .
Entity had an altogether different rights and liabilities with respect to .Third parties including the landlords. Such a change could not be unilaterally brought about by the tenants so as to transform their very legal existence in manner to affect their liability. The landlords could object. They could make it a ground for proceedings under the Rent Laws.. Such a tenant as had permitted itself to be dissolved and then effaced and substituted by a different legal entity could be ejected for this act alone, having not taken the landlord into confidence.
7. As regards the question of waiver we are clear that the landlord fad expressed themselves unequivocally that they were not accepting the change that they wanted clarifications and by issuing receipts in favour of respondent No. 1 had in fact not accepted the change and the time that elapsed was more on account of the conduct of petitioner No.-2, I.e. The delay in supplying the relevant documents which could enable further action. As petitioner No. 2 wanted to establish a relationship with the landlords it was its responsibility to show its locus standi, to supply the landlords with the documents asked for notwithstanding the fact that these were public documents and their copies could be obtained in the normal course. The very fact the landlords continued to issue receipts in the name of the dissolved partnership, the actual tenant of the property, would show thatthere was a manifest refusal on their part to recognize any one else as tenant of the property.
8. We find that the petitioners have no case on any of these two grounds and their eviction was rightly ordered. On the request of the learned counsel for the petitioner's, we have allowed three months' time from today for voluntarily surrendering the possession of the property to the landlords subject also to the payment of the rent for this period in accordance with the terms of the tenancy.
With these observations the petition is dismissed.