1. ' This First Rent Appeal is directed against the order dated 10-8-1981 passed by the learned Rent Controller, Karachi, in Rent Case No,5025 of 1978, whereby the eviction application of the appellant was dismissed.
2. ' The brief facts which give rise to this appeal are that by a registered lease, dated 26-12-1968, the respondent entered into possession of plot of land bearing survey No,J.M. 551, situated at Dada Bhoy Nauroji Road, at Karachi. The lease was for a period of ten years effective from 18-9-1967. The lease inter alia gave the respondent option of renewal of the said lease for two further terms of ten years each on the same terms and conditions contained in the lease. It is also provided in clause 4 of the lease that such option shall be exercisable by the respondent company by notice in writing to the lessor not less than six months before the expiration of the current term of lease.
3. ' The appellant filed eviction application No,R.C. 5025 of 1978 against the respondent on the ground that the respondent failed to pay rent for the months of May, June and July, 1978 and committed default in payment of rent. The respondent filed written statement and resisted the eviction application.
4. ' On the pleadings of the parties the learned Rent Controller by his order dated 29-4-1979 framed the following two Issues:-
(1) Whether the respondent/opponent has committed default in the payment of the rent ?
(2) What should the order be?
5. ' The appellant landlord examined himself on his own behalf while the respondent/tenant examined Murtaza Hussain, legal executive in the respondent in support of the evidence.
6. ' The learned Rent Controller on the basis of evidence produced by the parties and taking into consideration the arguments advanced by the learned counsel for the parties, decided issue No,1 in the negative and dismissed the eviction application vide order dated 10-8-1981.
7. ' The appellant above named, being aggrieved by the order dated 10-8-1981 of the Xth Senior Civil Judge and Rent Controller, Karachi, has preferred this First Rent Appeal on the grounds mentioned in the Memo of Appeal.
8. ' Mr. Akhtar Mahmood Khan, the learned counsel for the appellant has raised the following contentions:
(1) Whether there was a renewal of lease?
(2) The rent is payable in advance in terms of the lease deed.
(3) That a notice of demand was not necessary before the default is said to have committed. The finding is misconceived and amounts to misreading and miss-interpretation of clause 5(a) of the lease deed.
(4) The finding of the learned Rent Controller that the respondent is not a willful defaulter in payment of rent is based on manifest misreading of evidence on record and calls for interference by this Court.
9. ' On the other hand Mr.Naseem Faruqui the learned counsel for the respondent has urged as follows:-
(1) The respondent has not committed default in payment of rent.
(2) As per clause 5(a) of the lease deed Exh.1/A, the respondent had special clause to protect itself from default.
(3) In the alternative the lease deed came to an end on 17-9-1977 and after the expiry of the lease deed the rights and liabilities of the respondent fell to be governed by the provisions of the rent terms which regulate the terms as to ejectment.
10. ' In order to appreciate the respective contentions of the parties it may be advantageous to reproduce herein below clauses 4 and 5 of the said lease deed Exh.1/A: (5)The company shall have the option to renew this lease for two further terms of ten years each on the same terms and conditions as herein contained and each such option shall be exercisable by the company by notice in writing to the lessor not less than six months before the expiration of the then current term of lease."
11. (6)Provided always and it is hereby agreed as follows:-
(a) That if the rent hereby reserved is not paid within thirty days after the same shall have become due and is demanded by the lessor or if the Company fails to observe or perform any of Vge covenants herein contained then and in any such event the Lessor may enter upon the land or any part thereof in the name of the whole and immediately thereupon this lease and all the rights of the company thereunder shall absolutely determine but without prejudice to the right of the Lessor in respect of any antecedent breach by the company.
(b) In the event that at any time during the term of lease hereby granted the company is prevented, debarred and or restricted in the use of the Ian,' as a Petrol Service Station due to any permits, Licenses or authorizations being refused, suspended or revoked by the Government or any other competent authority the Company shall have the option to terminate this Lease on giving three months' notice to the Lessor.
(c) Upon the determination of this lease for whatever reason the company shall be entitled to remove all structures, plant and equipment erected or installed by the company on the Land."
12. ' Adverting to the contention No,1 of the learned counsel for the appellant that there was renewal of lease in the instant case. The learned counsel for the appellant has placed reliance on the case of Muhammad Ashraf v. Muhammad Sharif and 3others PLD 1971 Lah.
610. The dictum in the above case was approved by the Hon'ble Supreme Court in the case of Muhammad Younus Malik v. Mst. Zahiruddin Irshad 1980 SCMR 184.
13. ' On the other hand Mr.Naseem Faruqui, the learned counsel for the respondent has contended that the appellant did not send any reply to letter dated 15-2-1977 as such the lease was not renewed and the respondent became statutory tenant. In this connection he took me through the cases (1)
14. Muhammad Yousuf v. Abdullah PLD 1980 SC 298; (2) Kaniyalal v. Muhammad Ismail 1982 CLC 1106; (3) Muhammad Ilyas v. Qamaruddin 1984 CLC 760 and Sheikh Abdus Sattar v. Malik Muhammad Afzal and others PLD 1985 SC 148. There is no doubt that these decisions can be referred to hear in support the contention of Mr.Naseem Faruqui that the Superior Court have held that when the lease is expired by afflux of time, the tenant becomes statutory tenant and is governed by the provisions of section 13(2)(i) of the Repealed Ordinance. However, in the instant case, it is not disputed that the lease deed was registered on 26-12-1968 for a period of ten years effective from 18-9-1967, and the respondent/tenant had the option to renew the lease for two further terms of ten years each on the same terms and conditions. Since the said period of ten years was to expire on 17-9-1977, the respondent by its letter dated 15-2-1977 Exh. 0/1, to the appellant expressed its desire to exercise its option of renewal. According to the appellant, since he did not send reply to the said offer the respondent continued to be in possession of the demised land and as was the practice between the parties, the respondent continued to deposit the aforesaid rent from time to time in his account in the Habib Bank Ltd. K.P.T. Branch, Karachi and the respondent continued to deposit rent up to April 1978. In these circumstances the lease was renewed for a period of ten years effective from 18-9-1977.
15. ' It was argued by Mr.Naseem Faruqui on behalf of the respondent on the footing that the provisions of section 13 of the repealed Ordinance could only be availed of by a landlord in the present case as the lease expired by afflux of time and no renewal was agreed upon by the parties.
16. Therefore, since the lease expired the lessee in the absence of any renewal was bound to tender rent within 60 days from the period for which the rent was payable. Mr.Naseem Faruqui argued that in the absence of any renewal of the lease if the respondent continued in possession of the disputed property was that of a statutory tenant and therefore no question of tendering rent within fifteen days after the expiry of the time fixed in the lease deed having to be given to him. The construction suggested by Mr.Faruqui would be contrary t the express language of the clause 4 of the lease. As already stated clause 4 requires that the respondent shall have the option to renew the lease for two further terms of ten years each on the same terms and conditions as contained in the lease and each such option shall be exercisable by the respondent by notice in writing to the appellant not less than six months before the expiration of the ten current terms of lease. Clause 5(c) requires that on determination of the lease by afflux of time or earlier determination the respondent has to hand over possession of the land after removing all the structures, plant and equipment erected or installed by the respondent on the land. What would happen in a case where the lessee is not informed and does not know whether its lease which is for a fixed term would be extended by a renewal or otherwise? If there is no provision for an option to renew and the appellant does not extend the term, it has, of course vacate on the expiry of the term, but where the lease provides for an option and the respondent exercises the option for renewal. According to the appellant since he did not send any reply to the said offer a such the respondent continued to be in possession of the demised land and as was the practice between the parties, continued to deposit rent in his account in the Habib Bank Ltd. K.P.T. Branch. I agree with the learned counsel for the appellant that in these circumstances the lease was renewed in terms of clause 4 of the lease.
17. In general the tenancies are created by statute or as usual b agreement of lease deed between the landlord and tenant and their terms and conditions are also regulated by the statute or the agreement of lease/lease deed between the parties accordingly as the case may be. In my opinion the term rent due means rent due under the agreement of lease/lease deed, if any and this would also include the rent du under any stipulation for the advance payment of rent.
18. ' The case of PLD 1971 Lah. 610 and specially at page 615:- "In the present case, as already stated, the agreement stipulated that the rent was to be paid in advance on the first of every month, and therefore if it is not so paid or tendered, within fifteen days after the expiry of the specified date the tenant would be in default. As the appellant did not pay or tender rent for September 1968 until the 25th of October 1968, and for the month of October 1968 until the 4th of November 1968, he was clearly in default within the meaning of clause (i) of subsection (2) of section 13 of the Ordinance."
19. ' The dictum laid down in the above decision was approved by the Hon'ble Supreme Court in the case of Muhammad Younus Malik v. Mst. Zahiruddin Irshad 1980 SCMR 184. The Hon'ble Supreme Court held as follows:- "But on the 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 sub-section (2) of section 13 of the Ordinance read as a whole. It expressly visualizes 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 it 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."
20. ' But for the reasons fully discussed above, I regret that I am unable to subscribe to this view canvassed by Mr.Naseem Faruqui.
21. ' The contention of Mr.Akhtar Mehmood as to notice of demand as provided for in the lease is not necessary because of the provisions of section 13 of the repealed Ordinance. The finding of the learned trial Court is misconceived and amounts to miss-interpretation of clause 5(a) of the lease deed. Clause 5(a) requires that if the rent is not paid within thirty days after the same shall have become due and is demanded by the lessor.
22. ' Sub-clause (a) of clause 5 of the lease deed lays down the condition of notice of demand first to be given and such notice not having been admittedly given his eviction application could not succeed. Clause 5(a) of the lease must be given effect to.
23. ' On the other hand Mr.Naseem Faruqui contended that notice of demand is necessary despite the provisions of section 13 of the repealed Ordinance. The argument is that on a true interpretation of section 13(1) of the repealed Ordinance, the point was that besides not depriving the rights of a tenant under a contract of lease or under the general law the section imposes further restrictions on the right of the landlord to evict a tenant. Therefore, a landlord is entitled to an order of eviction only (a) if he has first demanded rent as provided by clause 5(a) of the lease deed and (b) where the landlord fulfills the requirements of one or more of the several grounds in section 13(2) of the repealed Ordinance. The repealed Ordinance promulgated like similar Sind Rented Premises Ordinance promulgated in Sind is intended to prevent indiscriminate eviction of tenants and is intended to be protective statute to safeguard security of possession of tenants and therefore should be construed in the light of its being a social legislation. What section 13 therefore does is to provide that even where a landlord has served notices of demand by a proper notice such landlord can succeed in evicting his tenant provided he falls under one or more of the clauses of that section. Rent laws are not ordinarily intended to interfere with contractual leases and are laws or ordinances for the protection o tenants and are consequently restrictive and not enabling, conferring no new rights of actions but restricting the existing rights either under the contract or the general law. It is well settled that statutory tenancy normally arises when a tenant under a lease holds over, that is, he remains in possession after the expiry of the contractual tenancy. A statutory tenancy therefore comes into existence where a contractual tenant retains possession after the contract has been determined. The right to hold; that is, the right of removability, there is a right which comes into existence after the expiration of the lease and until that lease is terminated or expires by afflux of time the tenant need not seek protection under the Ordinance. For, he is protected by his lease in breach of which he cannot be evicted.
24. It is clear that the lessee was entitled to a notice of demand in the following events before the lessee could be required to vacate o lessor could enter the demised land (i) if the rent is not paid within thirty days after the same shall have become due and is demanded the lessor (ii) if on the demand the lessee fails to observe or perform any of the covenants therein contained, (iii) in any such event the lessor may enter upon the land or any part thereof.
25. ' The provisions of section 13 of the repealed Ordinance did not have effect of depriving a tenant of his right to have a notice of demand before entering the land if he had such a right under the lease.
26. ' Clause 1 of the lease requires that RS,2,500 is payable monthly in advance. According to clause 1 the rent for the month of May to be paid on 31st May, 1st July and 31st July.
27. ' Sub-clause (1) of clause 5 of the lease deed lays down the condition of notice of demand first to be given and such notice not having been admittedly given his eviction application could not succeed. Clause 5(a) of the lease must be given effect to.
28. In my view the construction as suggested by the learned counsel for the appellant is not correct. I am inclined to hold that the appellant F in the present case cannot serve an order for eviction without first establishing that he has validly demanded the rent.
29. ' As regards to the last contention of the learned counsel for the appellant that the finding of the trial Court that the respondent is not a willful defaulter in payment of rent for the months of May, June and July 1978, is contrary to evidence on record. The contention of the learned counsel for the appellant is that the appellant sent a letter dated 8-7-1978 Exh.1/B to the respondent requiring it to vacate. After the receipt of letter Exh.1/B, the respondent sent three pay orders of different dates Exhs.O/5, 0/6 and 0/7 by registered letter dated 18-7-1978 to the bankers of the appellant but these pay orders were returned by the bankers to the respondent with covering letter dated 24-7-1978 Exh.O/8 under the instructions from the appellant. In these circumstances according to the learned counsel for the appellant the default is clear and the terms and conditions regarding payment of rent in advance were violated.
30. ' It is the case of the respondent that pursuant to the decision of the Federal Government vide S.R.O.
31. No,1234(1)/76 dated 29-12-1976 read with notification No,S.R.O. 1239(1)/76 the entire undertakings of Premier Oil Company Limited and Pakistan National Oils Limited with all assets, properties, rights, privileges and powers stood transferred to and vested in Pakistan State Oil Company Limited under a Government scheme shown as Petroleum products Marketing Companies Amalgamation Scheme, 1976. As the result thereof the finance, management etc., of Pakistan National Oils and of the other two companies were centralized and the account of the Pakistan National Oils kept in the former Bank namely H.B.L., Club Road Branch became inoperative and Pakistan National Oils account was transferred to Habib Bank Limited P.I.D.C. Branch where Pakistan State Oils had their account. The Habib Bank Limited P.I.D.C. Branch was advised by Pakistan State Oils to send pay order for May, 1978 and for every subsequent month at RS,2,500 to the account of the appellant's account at H.B.L., K.P.T. Branch.
32. ' It is the case of the respondent that the respondent's bankers sent three pay orders which were drawn in favour of the appellant. The pay orders are dated 11-5-1978, 31-5-1978 and 2-7-1978 and were dispatched to appellant's Bankers namely H.B.L., K.P.T. Branch. It seems that the pay orders were returned by his bankers to the bankers of the respondent for want of complete address. The bankers again by letter dated 18-7-1978 dispatched to the appellant's bankers which were returned as per instructions of the appellant. It is contended by Mr. Naseem Faruqui that the respondent cannot be treated as willful and deliberate defaulter in the payment of rent for the disputed period.
33. Section 13(2)(i) lays upon the tenant to pay or tender rent to the landlord. If the landlord chooses not to accept the rent so tendered, the tenant cannot be made to suffer for such conduct on the part of the landlord. It would not be correct to hold under such circumstances that default had been committed.
34. ' I am of the view that Habib Bank Ltd. K.P.T. Branch are agent of the appellant. It was their duty not only to accept the pay orders on the dates when they were tendered to K.P.T. Branch but to credit the appellant's account. The burden was on the appellant to establish that the pay orders were not presented to his bankers on the due dates but were actually delivered by letter dated 18-7-1978. In the absence of such evidence it seems that the finding of the trial Court I in accord with the evidence on record.
35. ' Mr.Akhtar Mehmood has contended that default once committed cannot be wiped out by subsequent payment either before Controller or by sending through money ordeRS, In this connection he took me through the following cases:- (1 ) Subhan All alias Sabho v. Mst. Sat Bai PLD 1964 Kar.
36. 206.
(2) Dr.M. Fazil Zahir & others v. Mst. Begum Jan and others PLD 1966 Lah.
37. 53.
(3) Syed Jalilur Rehman and 7 others v. Mst. Rashida and 10 others PLD 1976 Kar.
38. 105.
(4) Muhammad Siddiq v. Seth Hirchan Roy and another 1976 PLD Kar.
39. 966.
(5) Ansar & Co. v. Syed Jalilur Rehman 1981 CLC 1186.
(6) Syed Shafiuddin v. A.Hakim Khan PLD 1978 Kar. 149 and
(7) Munammad Yakoob v. Suleman PLD 1978 Kar.
40. 515.
41. ' There is no doubt that numerous other decisions can be referred to here to support the contention of Mr. Akhtar Mehmood that superior Courts have consistently held that default once committed cannot be wiped out by subsequent payment either before the Controller or sending through money ordeRS, However, if it was merely a question of default once committed cannot be wiped out by subsequently payment, there would have been no difficulty at all in the way of the appellant. But the situation became changed because of clause 5(a) of the lease deed, that is, notice of demand was to be served as required by the sub-clause (a) of clause 5 of the lease deed.
42. Mr. Akhtar Mehmood, the learned counsel for the appellant, has contended that the learned Rent Controller has not exercised discretion judiciously. In this connection he took me through several cases, that is, Mst. Tayyaba Khatoon v. Muhammad Fariduddin PLD 1971 Kar. 747; Muhammad Alimullah v. Ziaul Islam PLD 1973 Kar. 56 and Haji Ghulam Hussain and another v. Muhammad Rafiq and another PLD 1965 Kar.
468. Under Section 13(2) and 13(2)(iii) of the repealed Ordinance, the Rent Controller had a discretion either to make or not to make an order of eviction against the respondent on proof of the circumstances mentioned in the aforesaid sections. This discretion however, was to be exercised by the Rent Controller judiciously keeping in view the principles laid down by the superior Courts for exercise of discretion in such cases. The exercise of discretion could be interfered with by this Court only if it was found to have been exercised in capricious or arbitrary manner or against the principles laid down by the superior Courts for exercise of such discretion. I find that the learned Rent Controller, in this case exercised his discretion in dismissing eviction application on sound reasoning's, which were in accord with the principles laid down by the superior Courts for exercise of discretion in such circumstances.
43. ' For the foregoing reasons, the appeal is hereby dismissed but in view of the legal question involved I leave the parties to bear their own costs.