ZIA MAHMOOD MIRZA, J.- This order will dispose of the applications C.M. 1673/L-92 and C.M.1674/L-92 moved by the Government of Punjab through Member Board of Revenue, Punjab (RP) and the application C.M. 1906/L-92 filed by the O.L.
2. The facts giving rise to these applications briefly, are that the land measuring 420 kanals situate in Rakh Chhbil and Kot Dooni Chand originally belonged to Bakhshi Ram Gopal, Bakhshi Amar Nath, Bakhshi Dewap Chand, Bakhshi Gulshan Kumar and Bakhshi Sudharshan Kumar who gave it on lease to Punjab Textile Mills Ltd on 19.3.1941 for a period of 99 years which period is to expire on 4.3.2040. On the eve of the partition of the Sub-Continent, evacuee owners of the land migrated to India and the lessee-company, which also was owned by non-Muslims, too, shifted its office to Abdullah Pur, District Ambala (East Punjab). The company, however, sold its assets including the lease hold rights in the aforementioned land in favour of West Punjab Textile Mills Ltd through a registered sale deed executed on 21st day of August 1948. The sale deed, it is stated, was confirmed by the them Custodian, Evacuee Properties. Abdul Rehman Gardee, one of the directors of the West Punjab Textile Mills Ltd, brought a petition (C.O.15 of 1985) for winding up of the said mills. Winding up order was passed on 23.10.1985 whereafter Machinery installed in the Mills was sold and sale confirmed on 28.3.1989. O.L submitted a report on 23.6.1992 seeking a direction for the sale of the land underneath the factory, which according to him, was the only matter left for completing the process of winding up. The request of the O.L was allowed by this Court vide order dated 24.6.1992 permitting the sale of the land underneath the factory through public auction for which, it was directed, due publicity be made. The auction of the aforementioned land (of course of the lease hold rights therein) was held on 30.7.1992 in which M/S Nobel Traders gave the highest bid of Rs.
1,25,00,000/- and the matter is now pending for confirmation of the auction sale.
3. As stated above, Government of Punjab through Member Board of Revenue, Punjab (RP) has now filed two applications, one for impleading it as a party in the auction proceedings and the other with the prayer not to confirm/approve the auction-sale of the property in dispute. It has been stated in these applications that the land in dispute which originally belonged to the evacuee owners had become evacuee property after their migration to India and has now come to vest in the Province of Punjab after the repeal of the Rehabilitation and Settlement Laws. It has been further averred that the management of West Punjab Textile Mills Ltd had been making the payment of rent of the land in dispute to the Rehabilitation/Settlement Department upto the year- 1973 but committed default thereafter with the result that the lease-hold rights stood forefeited and the petitioner has become entitled to take possession of the demised premises as per the terms of the lease agreement. The company under liquidation was thus left with no subsisting right or interest in the land in dispute which could not, therefore, be sold in auction in the liquidation proceedings.
The O.L in his reply has not denied the default in the payment of rent after the year 1973 but he has sought to explain it on the premises that the new lessor, i. e., the Province of Punjab gave no notice of the change of ownership nor conveyed its account number "nor the Bank deposit challan could be signed or stamped and authenticated by any competent authority on the pretext that the status of the new lessor is till to be clarified" and thereafter, the due rent/lease money could not be deposited on account of the closure of the Mills and the institution of the winding up petition.
Misplacement of the relevant record has been pleaded as yet another reason for the default. The O.L has controverted the applicant's contention that the lease-hold rights stood forefeited on account of non-payment of rent. It has been asserted that the applicant gave no notice for forefeiture nor did any other overt at for cancellation of the lease on account of default in the payment of rent. On the contrary, the applicant acquiesced in the default which amounts to waiver of the breach, if any. The lease-hold rights in the land in dispute thus still vest in the company under liquidation and the applicant has no right to object to the sale thereof for the Un-expired period of the lease. It is slated in the reply that the applicant can only claim the rent due which the lessee is prepared to pay. The O.L has, in fact, moved an application (C.M.1906/L-92) seeking permission for deposit of the arrears of rent/lease money due.
I have heard the learned counsel for the applicant in C.Ms. 1673 and 1674/L- 92 and the Official Liquidator. The factual position afore-noted is not in dispute. The question which requires determination, therefore, is whether the lease in favour of the company under liquidation stood forefeited by reason of nonpayment of the rent due since 1974 and it was no more in existence when the lease-hold rights were put to auction-sale. Learned counsel appearing for the Government of Punjab has submitted that under clause 3 of the lease agreement, in case of default in the payment of lease money for two consecutive years, the lessor was entitled to object/dispossess the lessee and also recover the entire lease money due together with the interest thereon and the costs of litigation. In the submission of the learned counsel, non-payment of rent by the lessee for a period of two years and even thereafter for such a long the resulted in automatic forfeiture of the lease which thus stood determined.
The Official Liquidator, on the other hand, relying upon the provisions of Section 111 of the Transfer of Property Act contended that mere non-payment of the lease money does not ipso facto put an end to the lease. It only gives a right to the lessor to determine the lease which right he can exercise by giving a notice in writing to the lessee of his intention to determine the lease. The Official Liquidator vehemently contended that the Government of Punjab gave no such notice to the lessee or to him with the result that the forefeiture of the tenancy did not take place in terms of clause, (g) of Section 111 of T.P A. The Official Liquidator further argued that the forefeiture, if any, of the lease stood waived by the lessor insofar as the lessor, the Government of Punjab took no overt action during all these years for ejecting the lessee and for entering into possession of the demised premises. It did not even call upon the lessee to pay the rent/lease money with the threat of any consequential ejectment. This conduct of the lessor, according to the Official Liquidator, quite clearly showed its intention to treat the lease as subsisting notwithstanding the non-payment of rent. Support for this submission was sought to be drawn from Section 112 of the Transfer of Property Act. The O.L also took a point that even if it be assumed for the sake of argument that the lease has determined by forefeiture for non-payment of rent, it was eminently a fit case for the grant of relief against forefeiture under section 114 of the Transfer of Property Act. He has submitted that he is prepared to pay the entire lease money due from 1974 onwards together with the interest due thereon for which purpose, he has already moved an application seeking permission to deposit the rent/lease money due. In support of his submission, the O.L has cited the following Rulings:-
1. Chiragh Din v. Muhammad Usman Khan and others.
(A.I.R 1924 Lahore 281 (2)).
2. Parg Narain and others v. Kadir Bakhsh and others.
(I.L.R XXXV Allahabad 145)
3. Varanasi Ramabrahman v. Kota Rami Reddi and others.
(A.I.R 1928 Madras 250)
4. Nagappa v. Venkat Rao (I.L.R XXIV Madras 265)
5. Balambhat Bin Ravjibhat and others v. Vinayak Patvardhan. Ganpatray (I.L.R XXXV Bombay 239)
In order to better appreciate the afore-noted submissions of the learned counsel for the applicant (Government of Punjab) and the Official Liquidator, it would be of advantage to refer to the relevant provisions of Transfer of Property Act. Section 111 of the Transfer of Property Act which provides for determination of lease insofar as it is relevant to the point at issue in this case, is re- produced hereunder:- "111. Determination of lease.-A lease of immovable property determines.
(a) ...........
(b) ...........
(c) .............
(d) .............
(e) .............
(f).............
(g) by forfeiture that is to say,- (1) in case the lessee breaks an express condition which provides that, on breach thereof, the lessor may reenter; or (2) in case the lessee renounces his character as such by setting up a title in a third person or by claiming title in himself; or (3) the lessee is adjudicated an insolvent and the lease provides that the lessor may re-enter on the happening of such event; and in any of these cases the lessor or his transferee gives notice in writing to the lessee of his intention to determine the lease;"
Section 112 which relates to waiver of forefeiture is as follows:- "112. Waiver of forfeiture.-A forfeiture under section 111, clause (g), is waived by acceptance of rent which has become due since the forfeiture, or by distress for such rent, or by any other at on the part of the lessor showing an intention to treat the lease as subsisting: Provided that the lessor is aware that the forfeiture has been incurred: Provided also that, where rent is accepted after the institution of a suit to eject the lessee on the ground of forfeiture, such acceptance is not a waiver".
Section 114 which makes a provision for relief against forfeiture for nonpayment of rent reads as under: - "114. Relief against forfeiture for non-payment of rent.-Where a lease of immovable property has determined by forfeiture for non-payment of rent, and the lessor sues to eject the lessee, if, at the hearing of the suit, the lessee pays or tenders to the lessor the rent in arrear, together with interest thereon and his full costs of the suit, or gives such security as the Court thinks sufficient for making such payment within fifteen days, the Court may, in lieu of making a decree for ejectment, pass an order relieving the lessee against the forfeiture; and thereupon the lessee shall hold the property leased as if the forfeiture has not occurred."
It is manifest from the afore-noted provision of Section 111(g) that in order to bring about forefeiture of the lease, there should not only be a breach pf the condition giving right to the lessor to re-enter the-demised premises but the lessor must also give a notice in writing to the lessee of his intention to determine the lease. In the instant case, the claim of the lessor, of course, based on clause 3 of the lease agreement is that by reason of the default committed by the lessee, the lessor became entitled to take possession of the demised premises but it is not denied that the less of never gave any notice to the lessee indicating its intention to determine the lease. That being so, forefeiture of the lease in question could not be said to have taken place in terms of clause 'g' of Section 111 T.P A.
In the case of Chiragh Din Vs. Mohammad Usman Khan (supra) which was a case of denial of landlord's title by the tenant, it was held that "this denial rendered the tenancy liable to forefeiture.
But in order to give effect to this forefeiture it was necessary for the plaintiff to do some at indicative of his intention to determine the lease". Similarly, in the case reported in I.L.R. XXXV Allahabad 145, it was held that a landlord wishing to take advantage of his tenant's denial of title trust do some at showing his intention to determine the lease before he can file a suit for ejectment. I also find force in the contention of the Official Liquidator that the forefeiture, if any of the lease in question stood waived by the lessor on account of its conduct. It is an admitted position that the Government of Punjab took no interest in the lease ever since it became vested with the rights of ownership in the land in dispute. It neither demanded the rent from the lessee nor gave any notice of ejectment. It may pertinently be observed that it is not the case of the lessor that it was not aware of the existence of the lease in question. In the Lahore case afore-referred, inaction of the landlord for a period of two years was considered enough for holding that he waived his right to forfeit the tenancy. I also feel persuaded to uphold the contention of the Official Liquidator that even if it be assumed that the lease in dispute has determined by forfeiture for non- payment of rent, it is a fit case for the grant of relief against forfeiture particularly in view of the conduct of the lessor and the fact that the lease-hold rights had already been sold in auction. It may pertinently be observed that Courts have always granted relief against forfeiture in appropriate cases by invoking the equitable provision embodied in Section 114 of the Transfer of Property Act. Refer AIR 1928 Madras 250, ILR XXIV Madras 265 and IIR XXXV Bombay 239.
In the aforesaid view of the n atter, I hold that the lease granted to West Punjab Textile Mills Ltd (under liquidation) still subsists. The applications (C.M.1673/L-92 and C.M.1674/L-92) moved by the Government of Punjab are accordingly dismissed. The application of the Official Liquidator for deposit of the arrears of lease money is, however, allowed and the Official Liquidator is directed to deposit the entire arrears of the lease money up-to-date together with interest due thereon within a period of one month.
OL's REPORT DATED 30.7.1992 ABOUT AUCTTON-SALE.
I would like to have the value of the property (lease-hold rights) assessed from some experience Evaluator dealing with the sale and purchase of immovable properties. Mr. Aftab Ahmad Khan, Advocate, counsel for the petitioner in the main petition has suggested the name of Indus Evaluators & Surveyors who are appointed to evaluate/assess the real worth of the property, the subject-matter of the auction-sale. The Evaluators shall submit their report before the next date of hearing. Their fee is tentatively fixed at Rs.10,000/-.
To come up on 2.2.1993.