SAJJAD ALI SHAH, J.---These appeals arise out of a common order of the High Court of Sindh whereby the said Court while partially accepting the writ petition of the landlord increased the fair rent from Rs,5,000/- per month to Rs,10,000/- per month from the date of filing ejectment application with further increase of 25% after every three years.
2. Briefly, State Life Insurance Corporation of Pakistan (hereinafter referred as 'Appellant landlord') on 16.01.1992 initiated proceedings for fixation of fair rent against their tenant M/s. British Head and Footwear Stores (hereinafter referred as 'Respondent tenant') by filing an application under section 8 of the Sindh Rented Premises Ordinance, 1979 (hereinafter referred to as "Ordinance 1979"). It was the case of the Appellant that the respondent is their tenant in respect of shop No, 4 in State Life Building No,5A, Zaibunnisa Street Saddar Karachi. It was claimed that the subject premises is situated in the heart of the city and prevalent rent of similar premises even inferior circumstances in the same and/or adjoining locality is at the rate of Rs,45/- per sq. ft. and in case the subject premises is let out to some one else, it is likely to fetch Rs,70/- per sq. ft. It was further asserted that the cost of construction, repair and maintenance since the commencement of tenancy has increased manifold. The new taxes such as Betterment as well as Property Taxes have been imposed. Likewise the bills of KWSB and another charges have been increased and since the opponent despite requests was not willing to revise the existing rent according to the rent prevailing in the area, therefore, the increase in rent at Rs,60 per sq. ft. from the date of filing of the application seeking fixation of fair rent was sought. The Respondent filed its written statement by asserting that since the rent in lump sum was agreed between the parties, therefore, the question of payment of rent on the basis of per sq. ft. does not arise. The Respondent further offered to increase the rent by 10% of the existing rate. As to the increase in taxes, it was asserted that the effect is so meagre that it was never claimed and if a proper claim would have been, made, the Respondent would have shared the burden. It was further asserted that the instances of prevailing rent detailed by the appellant were of the building having modern facilities whereas the building wherein the subject premises is situated was very old and has no modern facilities. Payment of pagri was also asserted and prayer for dismissal of application was made.
3. The Appellant adduced its evidence through its attorney and produced photocopy of various lease deeds in respect of its buildings under various tenancies showing payment of rent from Rs,22/- to Rs,45/- per sq. ft. Vouchers, tax receipts to show the increase and imposition of taxes were also placed on record. Likewise, the opponent appeared in the witness box and placed on record detail of repair and maintenance expenses, photographs and receipts etc. The learned Rent Controller framed a solitary issue regarding the entitlement of the appellant for fixation of fair rent and without discussing the evidence on record or assigning any reason, vide its order dated 28.5.1998, had fixed the fair rent at Rs,2,000/- p.m. However, on appeal the order was set-aside on 16.9.1998 with the directions to the Rent Controller to first inspect the subject shop and thereafter to fix the fair rent afresh. The Rent Controller consequently on 22.4.1999 inspected the subject shop and found the area of the shop on ground floor as 1084 sq. ft. and on mezzanine floor as about 400 sq. ft beside the shop had on the back side a bath room and a store, as well. The Rent Controller thereafter again determined the fair rent at Rs,2,000/- per month vide its order dated 26.7.1999 which order again was set-aside by the High Court with the directions to consider the area of the premises, the fact needed to be proved for determining fair rent and also to see as to whether the fair rent fixation should be adjudged from the date of filing of application.
4. The Rent Controller this time vide its order dated 15.1.2001 had fixed the fair rent at Rs,2,500/- per month from the date of filing of the application. The Rent Controller justified such fixation by holding that the appellant had proved the requirement of clause (b) imposition of new taxes and of clause (c) Annual value of the premises for the purpose of tax but had failed to prove the requirements of clauses (a) and (b) of section 8 of the Ordinance, 1979 by not placing on record the rent of similar premises situated in the similar circumstances in the same or adjoining locality or that there was any rise in the cost of construction and repair charges. The Rent Controller refused to fix fair rent on per square feet basis on the ground that the parties had agreed to a rent on lump sum basis. In appeal, the Appellate Court was of the view that though the appellant has failed to prove its case for fixation of fair rent at the rate of Rs,60 per sq. ft. per month but had proved clauses (b), (c) and (d) of section 8 of the Ordinance 1979, therefore, allowed increase in fair rent from Rs,2,500/- to Rs,5,000/- per month. The Appellate Court also refused to fix fair rent on per square feet basis for the same reason viz. that the parties had agreed to a rent on lump sum basis were as follows:- "However, it is an admitted fact on record that since the date of tenancy till today there is increase in government taxes and charges of repairs, cost of construction etc. have also been increased from time to time. It is also an admitted fact on record that the case premises situated in the heart of Karachi, therefore, in my view the rent as fixed by the Rent Controller at Rs,2500/ - per months is not sufficient and it should be enhanced".
Likewise, the High Court while maintaining the findings of the fora below in respect of clauses (b)
(c) and (d) of section 8 of the Ordinance, 1979 only took into consideration the time consumed by the Courts during fixation of fair rent and for this reason not only enhanced the rent to Rs,10,000/- per month again without assigning any reason but further directed the increase by 25% after every three years. The High Court also declined to fix fair rent on per square feet basis and that too without assigning any reasons.
5. Mian Mushtaq Ahmed, learned counsel for the appellant has contended that the appellant has placed on record the lease agreements in respect of various tenement in respect of their buildings Nos,5 and 11 situated in the same locality on rental ranging from Rs,22/- to Rs,45/- per sq. ft. and in view of this documentary evidence, there was no reason with the Rent Controller to fix lump sum rent Rs,2,000/- per month instead of per square feet. Per counsel the appellant has placed on record proof of increase in respect of all the four factors in terms of section 8 of the Ordinance, 1979, therefore, the increase of rent again on lump sum basis only to the extent of Rs,10,000/- per month was on a very lower side. It was urged that the rent fixed even by the High Court if converted to on per square feet basis come to around Rs,7/- per sq. ft. against the documentary evidence of Rs,45/- per sq. ft as placed on record. It was therefore, contended that such meagre increase could not be termed "Fair Rent" unless brought in consonance with the evidence on record.
6. Mr. K. A. Wahab learned counsel for the respondent conceded that the tenant is ready to pay the rent at the rate of Rs,10,000/- per month but has challenged the enhancement by 25% after every three years. Per counsel if this portion of the impugned order is expunged, the respondent would have no grievance so far as the fixation of rent at Rs,10,000/- per month is concern. Mr. Wahab without denying the documentary evidence placed by the landlord in support of their contention that the prevalent rent in building No,5 was at Rs,45 per sq. ft. per month and in building No,11 at Rs,22 to Rs,25 per sq. ft. per month contended that the shop which has been let out by the appellants at Rs,45 per sq. ft. per month, is a small shop and is on the entrance of the building, whereas, the premises in possession of the respondent is 1084 sq. ft. on the ground floor and 400 sq. ft. on mezzanine floor, therefore, a comparison between two cannot be drawn, whereas, the building No,11 is a brand new building with all modern facilities such as lifts and imported tiles etc., therefore, such rent cannot be demanded from the Respondent. Per counsel the increase demanded by the Appellants if allowed would render the respondents' business unfeasible and would leave no option for the respondents but to shift their business. He further contended that 25% increase after every three years granted by the High Court is against the spirit of section 9 of the Ordinance, 1979.
7. In response, Mr. Mushtaq while conceding to the area of shop as 1084 sq. ft. on the ground justifying the increase or 25% after every three years has placed reliance on the judgment of this Court in the case of Volkart (Pakistan) Ltd., Karachi v. Interavia Pakistan, Limited, Karachi (2001 SCM R 671) and M/s. Victor Restaurant v. State Life Insurance Corporation of Pakistan and others (2010 SCM R 745).
8. We.have considered the submissions of learned counsel for the respective parties and have perused the record.
9. In the instant case the appellant out of four factors, as provided under section 8 of the Ordinance, 1979, according to record have proved the last three. As to the fourth factor, as provided in clause (a), we find sufficient evidence produced by the landlord to prove the rent of similar premises situated in the similar circumstances, in the same or adjoining locality which was not accepted by the Courts below and in our opinion this is the only controversy where the evidence adduced by the respective parties in terms of the leave granting order need to be re-examined. At this juncture we would like to reiterate that by now it has been settled by this Court that it is not necessary for a landlord to prove hike in respect of all four factors as detailed in section 8 of the Ordinance, 1979, or that all four factors must co-exist in each and every case seeking fixation of fair rent. In fact the prime factor has always been the prevalent market rent of the similar premises situated in similar circumstances, in the same or adjoining locality and in the instant case all the Courts below have totally ignored the evidence produced by the landlord to prove this factor primarily on the ground that the evidence produced by the landlord though was in respect of similar premises situated in similar circumstances, in the same locality but the building in which the premises was situated was relatively a new one and secondly, that the parties had agreed for a lump sum rent instead of per square feet and therefore, increase claimed in rent on the basis of per square feet could not be allowed.
10. In our opinion the restraint exercised by the Court below from fixing fair rent on per square feet basis for the reason that the parties had agreed to a rent on lump sum basis totally appears to be misplaced, suffice is to observe that determination of fair rent is the sole domain of the Rent Controller and even an agreement between the parties barring each other from approaching the Rent Controller for getting fixation of fair rent cannot operate as a bar to the jurisdiction of the Rent Controller of fixing fair rent. Reference can readily be made to the case of Tariq Ali Baqar v. New Goodwill Computers (2011 SCM R 554). On the same principle the agreement between the parties for payment of lump sum rent cannot be a clog on the powers of the Rent Controller to fix fair rent on square feet basis in accordance with the prevailing norms and to ensure that the fair rent so determined is in consonance with the quantum of rent of similar premises situated in similar circumstances in the same or adjoining locality.
11.Now coming to the quantum of fair rent, the gist of the lengthy litigation appears to be that the Rent Controller as well as the Appellate Court while fixing the fair rent has held that the appellant had proved three out of four ingredients viz. clauses (b), (c) and (d) of Section 8 of the Ordinance, 1979. The respondent-tenant neither challenged the last order of the Rent Controller nor of the Appellate Court and, therefore, such findings had attained the finality. As to clause (a), the appellant to establish the prevalent rent in the locality had placed on record lease deeds in respect of various tenements in its building Nos,5 and 11 both situated on Abdullah Haroon Road, Karachi. There is no dispute that building No, 5A wherein the case premises is situated as well as buildings Nos,5 and 11 are situated in the heart of the city and in the same locality which is equally viable for the business. The rent charged from the shop situated in State Life Building No,5 which of course is an old building in the year 1992 was Rs,45/- per sq. ft. per month whereas in Building No,11 it ranges from Rs,22/- to 25/- per sq. ft. per month. The shop in building No,5 is very small and situated on the entrance of the building and therefore, the rent charged in respect thereof at Rs,45 per square feet cannot be termed as rent of similar premises situated in the similar circumstances and therefore, was rightly not considered. As to the rest of the premises which are situated in State Life Building No,11 and let out at monthly rental ranges from Rs,22/- to 25/- per square feet per month was not considered merely on the ground that such building was constructed in the year 1990 and had all modern facilities whereas the building wherein the subject shop is situated is an old building but the factors which the Courts below failed to take into consideration were that all the premises were situated in the similar circumstances in the same locality on the ground floor facing main road and that the rent was being charged at per sq. ft. and not in lump sum. None of the Courts below assigned any reason for declining the fixation of fair rent on the basis of per sq. ft. except that the payment of rent agreed between the parties was in lump sum. The order of the Courts below to the extent of fixing the quantum of fair rent in lump sum are totally whimsical and by ignoring the fact that the landlord has placed on record lease deeds in respect of the similar premises situated in the similar circumstances in the same locality from where the rent was being charged ranging from Rs,22/to 25/- per sq. ft. per month except with the difference of new and old building. Even if it is so still we do not find much difference as it appears to be an admitted position that the subject shop is on the ground floor and is road facing, therefore, non-provision of lift or tiling the building from inside is hardly of any relevance, specially, when in Rent Controller's inspection report it has come on record that front side of the subject shop was found in good condition. Consequently, the yardstick for fixation of rent should have been the rent on per square feet basis as was being charged by the appellant from his other tenants of the same locality and not on lump sum basis. The average rate of rent which the appellant was charging from his other tenants of the same locality was around Rs,22 per sq. ft. per month and keeping in view the location of the premises there appears to be no reason to claim or make a differentiation on the ground of old and new construction, the minimum fair rent ought to have been at Rs, 22/- per square feet per month for 1084 square feet on the ground floor and keeping in view the difference of utilization between ground floor and mezzanine floor Rs, 18/- per square feet per month for the mezzanine floor.
12. Keeping in view the fact that the parties are litigating since 1992 for getting fixation of fair rent and the record also reflects that the instant case was remanded to the Rent Controller on more than three occasions, therefore, it would be very unfair on our part to remand the case back to the Rent Controller for fixing the fair rent. We are also mindful of the fact that fixation of fair rent after lengthy litigation on account of accumulated arrears compels the tenant to surrender the tenancy leaving the landlord at the mercy of fresh round of litigation for recovering the arrears. In the circumstances, in order to do complete justice between the parties, we fix the fair rent of the subject premises at Rs,22/- per square feet per month for the ground floor and Rs,18/- per square feet per month for mezzanine floor from the date of filing of application, as has been directed by all the Courts below.
13. Coming to the question of increase of 25% every three years, as has been directed by the High Court, though Mr. Wahab has invited our attention to section 9 of the Ordinance, 1979 and contended that once the fair rent is fixed no further increase can be directed by the Rent Controller, however, this proposition was settled with by this Court in the case of Volkart (Pakistan) Ltd v.
Interavia Pakistan Limited, Karachi (2001 SCM R 671) wherein it was held that: "the subsequent events and circumstances in the locality, after the fixation of fair rent from the said date can be taken into consideration under section 9 of the Ordinance. Under its subsection
(1) where fair rent of the premises has been fixed, no further increase thereof would be made unless three years have elapsed from the date of such fixation and under its subsection (2) the increase should not exceed 10% per annum of the existing rent. The factors on the basis of which fair rent is fixed are not applicable for further increase in rent, under section 9 of the Ordinance, but for such increase inflation and other economic conditions can be taken into account".
In the instant case too the landlord has applied for fixation of fair rent in the year 1992 and such application remained pending with the Rent Controller for almost 13 years and thereafter before the High Court for almost 10 years and therefore in our opinion the increase of 25% after every three years allowed by the High Court after taking into consideration subsequent events' and prevailing circumstances and to avoid multiplicity of the litigation and for doing complete justice between the parties do not call for any interference. Consequently, the fair rent of Rs,22/- per sq. ft. for ground floor and Rs,18/- per sq. ft for mezzanine floor would be charged and would remain operative for the first three years i,e, from February, 1992 to January, 1995 and thereafter would be deemed to have been increased by 25% in the like manner after every three years till the date of this order.
14. In view of what has been discussed above, Civil Appeal No,100-K of 2015 of the landlord is allowed in above terms, whereas, Civil Appeal No, 101-K of 2015 of the tenant is hereby dismissed.