' By this F.RA. The appellant has challenged the negative finding of the Controller on the issue of subletting given in his judgment dated 28-4-1987. The other finding in the same judgment related to the non-maintainability of the application which was challenged before this Court in the same F.RA. And was upheld, but on appeal to Supreme Court, the finding as to non-maintainability was reversed, and the F.R.A. Has been remanded to this Court for hearing on merits.
2. The appellant is the landlord of the rented shops which are situated in commercial area of Phase-II of Defence Housing Authority, Karachi. Respondent No,1 was tenant in the said shops @ Rs,800 per month. On coming to know that respondent No,1 had sublet the said shops to. M/s. Property Links (Pak.) Ltd. Who were carrying on business in the said shops, the appellant filed an application under section 17 of the Cantonments Rent Restriction Ordinance and prayed for eviction of the respondent.
3. The application was contested by the respondents, who filed a joint written statement admitting the relationship of landlord and tenant between the parties as well as the rate of rent. It was stated that when the shop was taken on rent, respondent No,1 was carrying on business therein first in the name and style of Property Links. He then changed its name to Property Links (Pvt.) Ltd. 3-4 years ago which was within the knowledge of the appellant. Respondent No,1 denied to have transferred his right of tenancy to any one else or to have sublet the shop or any part thereof.
4. The appellant examined himself and his Attorney Mirza Mujeeb Ahmed, while respondent No,1 examined himself. The learned Controller embarked upon the issues as to maintainability and subletting and after taking into consideration the evidence so recorded, decided both the issues against the appellant and dismissed his application.
5. I have heard Mr. Mubarak Ahmed, learned counsel for the appellant and Mr. S. Ali Ahmed Tariq, learned counsel for the respondent.
6. It was forcefully contended by the appellant's counsel that respondent No,1, who was his tenant, had sublet the disputed premises to respondent No,2.. Illucidating his point, he submitted that initially when these shops were leased out to respondent No,1, he was carrying on business in these shops in his personal capacity or at the most as proprietor of the business concern under the name and style of Property Links but then sublet it to a Limited Company. The appellant has produced the Registration Certificate of the said Private Limited Company which shows that the principal office of the said Company is situated in these shops. The appellant's Attorney has stated on oath that respondent No,2 is carrying on business in the said premises without obtaining permission to sublet the premises to them and that he came to know of the same from the statement of respondent No,1 in Rent Case No,19 of 1981. The Attorney of the appellant was cross- examined at length, but no question was put about the permission to sublet the premises to respondent No,2 and this statement has gone unchallenged. Respondent No,1 filed his affidavit- inevidence. Respondent No,2 did not file affidavit-in-evidence. Respondent No,1 contrary to his statement in written statement took the plea that though respondent No,2 is carrying on business in the said premises, but he is also carrying on business in his personal capacity and the respondent No,2 has no concern with the tenancy rights. A limited company is a legal juristic person which can sue and be sued. Reliance in this connection is placed on 1983 CLC 1042 (M/s. Franksons v. Mian Muhammad Hussain), where it was held as under:-- "According to law a company is a separate juristic person distinct and different from its shareholdeRs, It is not a mere alias for its shareholders nor merely an agent for them. Any individual shareholder cannot idemnify the company against the debts which it incurred except to the extent of his share in the capital. His liability is limited to that extent and he can only be called upon to contribute in event of a winding up of the company to the extent of his own share.
' The status and interest of the company is quite distinct from that of its shareholders, though shareholder has close identity with interest of company and their interests are interlinked with each other but company is a separate juristic person and interests of Company and its shareholders are separate."
' PLD 1974 Supreme Court 351 (Manek J. Mobed v. Shah Bahram) is an illustrious case on this point.
The property known as Paradise Cinema was leased out to Jehangir J. Mobed, who converted his business into a private limited company whereupon the landlord filed a case on the ground of subletting and it was held by the Supreme Court that where a person obtains leasehold rights in his own name and subsequently assigns the same 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 case is not one of subletting or assignment of leasehold rights.
7. According to the respondent No,1 himself, he converted his own business into private limited company as it is clear from para.3 of the written statement. It is further admitted by respondent No,1 that respondent No,2 is working in the disputed premises. It has been established beyond any shadow of doubt that respondent No,2 is carrying on business in the disputed premises and this fact was conveyed to the Joint Stock Companies by the respondent No,2 itself which information was mandatory under the law. Exh.OW1 is Form-VI which was filed by the respondent No,2 showing the permanent address of the respondent No,2. Respondent No,1 further admitted that he was not under any legal obligation to seek permission from or notify the appellant about conversion of his proprietary concern to a limited company.
8. Mr. Sycd All Ahmed Tariq, learned counsel for the respondents, tried to distinguish this case from the case in the above ruling and submitted that since respondent No,1 was in possession of these shops and was paying rent in his personal capacity, therefore, by the mere fact that the office of respondent No,2 was situated in the shop or it was carrying on business therein would not amount to subletting. He placed reliance on the followig cases:--
(1) 1983 CLC 2872 (Nasir Mehmood v. Mustajabi Begum).
(2) PLD 1982 Kar. 188 (Najmuddin v. Zameer Ahmed).
(3) PLD 1968 Kar. 635 (Motal Bai v. Abdul Aziz).
(4) 1983 CLC (Lah.) 2872 (Nasir Mehmood v. Mustajabi Begum).
(5) 1985 CLC 993 (Tahir Shaikh v. Ahmed A. Dama).
(6) 1980 CLC 155 (Majeed Hussain v. Muhammad Rafique).
(7) PLD 1982 SC 79 (Premier Mercantile Service v. S.M. Younus).
(8) 1986 CLC 953 (Roshan Ali v. The Standard Insurance Co. Ltd.
9. I have gone through these rulings. There can be no cavil with the proposition propounded in the rulings, but in view of clear admission that respondent No,2 was carrying on business in the shops and had established its head office in the same, the above rulings would not help the respondent.
Respondent No,1 has stated that he was paying the rent in his personal capacity and that the Property Links (Pak.) Pvt. Ltd. Was not paying rent. The appellant has challenged this statement.
Respondent No,1 was specifically asked about the accounts of the respondent No,2 and his personal account, but he showed his inability to produce the accounts. A specific suggestion was made that he is deliberately suppressing the accounts as he is realising the rent from respondent No,2. It may be pointed out that the respondent No,1 is the Chairman and his son is the Managing Director of respondent No,2. His refusal to produce the accounts leads to irresistible conclusion that he is deliberately suppressing evidence which is in his possession as Chairman of respondent No,2 which could have been produced.
10. Another pertinent ruling on this point is PLD 1982 SC 2 (M/s. Premier Mercantile Services v. S.M.
Younus). In this case the tenant, which was a registered partnership firm, had after dissolving itself converted into a private limited company without informing or getting permission from the landlord. It was held that in the circumstances, a distinct legal entity different from firm, came into existence. Such legal entity possessed altogether different rights and was subject to different liabilities with respect to third parties including the landlord. Such a change could not be brought about unilaterally so as to transform legal existence of partnership firm in a manner affecting their liability. The landlords in the circumstances, could object and make it a ground for ejectment. In other words, the Hon'ble Supreme Court was of the view that in such a case not only there is a change of tenants, but the liabilities of the new tenants are under the law restricted and therefore, the landlord in his capacity as credit& cannot recover more amount than which is limited according to the Companies Laws and there are many other restrictions. I am A in respectful agreement with the view expressed by the Hon'ble Supreme Court in the above decision.
11. A decision of this Court which is equal on all fours to the present case is of Saeeduzzaman Siddiqui, J. (now Chief Justice, High Court of Sindh) in Roshan Ali v. Standard Insurance Co. Ltd.
(1986 CLC 953). In this case the tenant had acquired the premises in personal capacity. It was held that 'he could not establish the office of Limited Company which is separate legal entity, in the said premises without permission of the landlord. Setting up of such an office in the premises would amount to subletting and entitling the landlord to evict the tenant.
' In view of the above discussion, I am satisfied that the appellant has successfully established that respondent No,1 has sublet the premises to respondent No,2 and therefore, both the respondents are liable to eviction. I, therefore, allow the appeal, set aside the impugned order and direct respondents Nos,1 and 2 to hand over the vacant possession to the appellant within six months subject to the respondents continuing to pay the current monthly rent before the 10th of every succeeding month.