The plaintiff is the owner of a property bearing Survey No. 21, sheet S. B. 4 situated on the corner of Invararity Road and Elphinstone Street, Karachi. There is a multi-storeyed building on this property.
The second and third floors and the terrace of this building (hereafter called the said premises) are occupied by a hotel known as the Excelsior Hotel and the dispute in this suit relates to the said premises.
2. According to the plaint, in 1957, this property consisted of a double-storeyed building and Shaikh Jamal Din, the first defendant, now deceased (hereafter called the deceased) was a tenant in the said building in which he ran a hotel known as the Regent Hotel. In 1957 the plaintiff wanted to rebuild her property and add two more floors to it, but before doing so, she entered into an agreement with the deceased on 16th May 1957, being an agreement of lease under which, after completing construction of the said additional floors, she was to lease the said premises to the deceased for a period of 15 years. Under this agreement the deceased had undertaken to pay a monthly rent of Rs. 1,300 to pay municipal taxes in respect of the said premises only and to execute a registered lease incorporating the terms of the agreement of lease. The construction of the said premises was completed on 3rd March 1958, and in anticipa--petition of the execution of the contemplated lease, the plaintiff permitted the deceased to occupy the said premises. Accordingly he took possession of the said premises and used them for running a hotel known as, the Excelsior Hotel. He was however heavily in debt, and the Bank of Bahawalpur (the second defend--ant in the suit before me) had filed a suit against him in this Court, being Suit No. 136 of 1960 in which it was appointed Receiver to run the business of the Excelsior Hotel. The plaintiff had repeatedly called upon both the deceased and the second defendant to execute a registered lease of the said premises but neither the deceased nor the second defendant did so. Further, the Karachi Municipal Corporation (hereafter called the K. M. C.) had for the purpose of Municipal tax assessed the value of the said premises at Rs. 7,200 p.m. And called upon the plaintiff to pay taxes for the said premises on the basis of that valuation, therefore she had first called upon the deceased and later the second defendant to pay their share of the taxes thus demanded from her by the K. M. C. But the deceased and the second defendant had failed to do so. She had meanwhile taken legal proceedings and filed suits to challenge the legality of the K. M. C's demand for additional taxes and this litigation was pending at the date of the suit. However, as the K. M. C. Had attached her property and threatened to disconnect its water con--nection, she had been compelled to make payment to the K. M. C. Aggregating Rs. 37,447.75. Despite this heavy payment by her, not only had the deceased and the second defendant not paid the share of the Municipal taxes as contemplated under the agree--ment of 16th May 1967, but they had not even paid her the agreed rent, therefore she had sent a notice to them through her Advocate dated the 8th/12th March 1963, terminating the permission given by her to the deceased to occupy the said premises and in the alternative the notice stated that even if the deceased had become a tenant of the said premises which was denied, that tenancy was terminated therefore the notice called upon them to vacate the said premises. As neither of the defendants handed over a vacant possession of the said premises to her in pursuance of the said notice, she filed the suit for the recovery of vacant possession of said premises from the defendants for compensation for use and occupation of the said premises and also for the reimbursement of the municipal taxes paid by her.
3. In his written statement the deceased admitted the agree--ment of lease dated the 16th May 1957, but he stated that, con--trary to the said agreement, the said premises had been con-- structed by him at his own expense and not by the plaintiff. He further stated that he had taken possession of the said premises after completing construction, and was running a hotel in the said premises known as the Excelsior Hotel which he had fur--nished at his own cost. He admitted that the second defendant had obtained a decree against him in Suit No. 136 of 1960 of this Court and had been appointed as Receiver to run the busi--ness of the Excelsior Hotel. He denied the allegations of the plaintiff that he had committed default in the payment of rent or that he had refused to execute a registered lease in respect of the said premises. As to the plaintiff's demand for municipal tax, he merely pleaded that the legal proceedings instituted by the plaintiff had not become final and that legal proceedings were pending. He admitted the receipt of the plaintiff's notice dated the 9th/12th March 1963, but he contended that in the events that had happened he had become a tenant of the said premises and that he could not be ejected. He died during the pendency of this suit, therefore his legal heirs were brought on record, and in their written statement they also denied all the allegations in the plaint except that the second defendant was a Receiver of the business of the Excelsior Hotel.
The second defendant has not only stated in his written statement that the said premises had been leased to the deceased but also that, in consequence, the suit was barred under the provisions of the West Pakistan Urban Rent Restriction Ordinance VI of 1959. This defendant has not admitted the plaintiff's allegations against the deceased has also denied that there had been any default in the payment of rent or any refusal to execute a registered lease was required under the agreement of lease dated the 16th May 1957. Finally as to the plaintiff's demand for municipal taxes, this defendant has pleaded that the legal proceedings instituted by the plaintiff had not been finalised, therefore it denied the plaintiff's claim for payment of municipal taxes.
Finally I may observe here that as Sheikh Jamaluddin died on 29th December 1965, his legal heirs were impleaded and an amended plaint was filed in due course, and the Bank of Bahawalpur was the 8th defendant in the amended plaint. However, for convenience, I shall refer to this defendant as the second defendant.
4. On these pleadings the Court settled the following consent issues
(1) Whether the suit is not maintainable?
(2) Whether this Court has jurisdiction to try the suit?
(3) Whether defendant No. 1 committed any breach of the terms of agreement of lease dated 16- 5-1957 ?
(4) Whether the defendant No. 1 was required to execute a lease deed in respect of the premises already leased out to him and whether the defendant failed to execute the same?
(5) Whether the assessm ent of taxes made by the Karachi Municipal Corporation has become final and is binding on the defendants?
(6) Whether the defendants committed default in the payment of the agreed rent and taxes?
(7) Whether the defendant No. 1 is in possession of the disputed premises as a licensee or a tenant?
(8) Whether the tenancy stands terminated?
(9) To what extent, if any, is the defendant No. 2 liable to the plaintiff?
(10) Whether the plaintiff is entitled to claim any com--pensation?
(11) To what relief, if any, is the plaintiff entitled to?
The plaintiff examined her husband who produced the corres--pondence between the plaintiff and the deceased and between the plaintiff and the second defendant. However, none of the defendants produced any evidence. I shall now consider these issues but, as the main issue in this suit is the 7th issue I shall first consider this issue with the connected issues.
5. Issue No. 7.-P. W. Fakhruddin, the plaintiff's husband, has produced in his evidence the document marked Exh. 6/12 on which the plaintiff's case is based. The agreement is described as an "agreement to lease". Although Exh. 6/12 is only a copy and is not signed by the parties. Mr. Fakhruddin, who has argued his case with very great fairness, admitted that this agreement was signed by the plaintiff through her attorney. The preamble to this agreement states that by another agreement with the deceased (which is Exh. 6/8) the plaintiff had proposed to construct the said premises and that the deceased was desirous of renting out the said premises. Thereafter clauses 1 and 2 of the agreement state "1. The lessor shall let and the lessee agrees to take on lease the second and third floor on the said Plot No. 21, which has been agreed to be constructed by the lessee for and on behalf of the lessor upon the terms and conditions set out in the hereinbefore recited agreement (which second and third floor on the said plot number will be here--inafter referred to as the demised premises) for the period of 15 years commencing (from) the date hereinafter stated.
2. The lessee having agreed to complete the construction of the demised premises within a period of 6 months from the date hereof it is agreed that the duration of the lease shall com--mence from the day of 1957 or from the date earlier if the said demised premises are completely constructed earlier."
I shall also briefly refer to the other clauses of this document. Clause 3 states that the lessee shall pay the lessor a monthly rent of Rs. 1,300, "payable in advance on the 5th day of the month commencing the lease." The 4th clause deals with the user of the said premises and prescribes that the deceased shall not sublet or assign them without the lessor's written consent, and whilst it gives the lessee an option to renew the lease on the expiry of the term of 15 years the period of such renewal has not been specified. Clause 5 deals with the payment of municipal taxes by the lessor and the lessee, whilst clause 6 deals with the lessor's power of re-entry, and also the consequences of a destruction of the premises by fire, tempest, earthquake etc. Finally, clause 7 states "It is agreed that at or before the commencement of the lease in the manner hereinabove provided the parties hereto shall execute a lease in respect of the demised premises incorporating the above terms and such other terms as may be agreed upon. Such lease shall be executed on proper stamp paper and shall be caused to be registered with the Registrar of assurances at Karachi. Stamp and registration charges shall be borne and paid by the lessee alone.
6. The question for consideration under this issue is whether the above document was intended to operate as a demise of property was only an agreement for a lease, as it purports to be. Section 105 of the Transfer of Property Act, 1882, defines a lease as the transfer of an interest in immovable property for a con--sideration which is called rent. This section does not Jay down the manner in which a lease has to be executed, which is left entirely to the intention of the parties, therefore it is settled law that the question whether an instrument amounts to a lease or is only an agreement to obtain a lease depends on the intention of the parties, which is to be gathered from the instrument as a whole, the circumstances in which it was executed and even from the conduct of the parties.
As was pointed out by Ellenborough, C. J. In a very old case Pool v. Bentley (104 E R 66) "The rule to be collected from all the cases is that the intention of the parties as defined by the words of the instrument must govern the construction . . . ."
7. Mr. Arfin laid great stress on the fact that the document refers to the premises as "the demised premises" and to the parties only as "lessor" and "lessee", and he also pointed out that even in the subsequent correspondence the parties had used the same expressions. The mere use of the terms "lessor" and "lessee" will not, by itself, convert an instrument into a lease if no demise of property is effected under it, but the circumstances and the manner in which the document (Exh.
6/12) was prepared lend support to Mr. Arfin's argument that this document is a lease. Thus, according to a letter by the deceased dated the 1st March 1957 (Exh. 6/1) the plaintiff had sent him a draft agree--ment before Exh. 6/12 was prepared, and there had also been meetings and discussions between him and the plaintiff or her attorney. Further, document Exh. 6/12 is a comprehensive and well considered document and it has been drafted by an advo--cate. In this context the fact that the expressions consistently used in the document are "lessor" and "lessee" and not, for instance, intending lessor and intending lessee is significant. Secondly, the language of clause 1 supports the case of the defendants that the document was a lease. As I shall presently show the words used in this clause "the lessor shall let and the lessee agrees to take on lease" are words which have been con--strued by the Courts as words which operate to create a demise. As the document has been prepared by an advocate, these words land strong support to the view that the document is a lease and not a mere agreement for a lease. But clause 7 expressly provides for the execution of a registered lease, and the question is whether this clause is sufficiently clear to nullify the effect of clause 1 and the other circumstances to which I have referred. Although drafted by an Advocate, it is significant that this clause does not expressly state that the document would operate as an agreement only until a lease was executed. This clause further states that the parties shall execute a registered lease "at or before the commencement of the lease in the manner herein--above provided". But under clause 2, which precedes this clause, the plaintiff had agreed to give possession of the said premises to the deceased immediately on the completion of construction ; therefore the words quoted appear to be inconsistent with the plaintiff's case that the demise of the said premises would take place only on the execution of a registered lease. Even if I am wrong in this interpretation this is a possible interpretation, and as the document has been prepared by the plaintiff, any ambiguity in it has to be construed against her ; therefore clause 7 is not in my opinion sufficient to nullify the effect of clause 1 and the consistent use of the words "lessor", "lessee" and "demised premises". In the circumstances discussed I am of opinion that this document (Exh. 6/12) is a lease and not an agreement for a lease.
8. I shall now briefly refer to the Judgments cited by learned counsel on this aspect of the case. As there is no judg--ment of our Courts on the point under consideration, Mr. Arfin relied on a Judgment of the Calcutta High Court in Ramjoo Mahomed v. Haridas Mullick and others (AIR 1925 Cal. 1087), in which Page, J. Held that the words "agreed to take . . . . . On lease" operated as a demise, whilst Mr. Fakhruddin, on behalf of the plaintiff relied on Judgments of the Allahabad High Courts and specially a judgment of Allsop, J. In Anand Sarup v. Taiyab Hasan (AIR 1943 All. 279). In the latter case Allsop J. Has criticised the view of Page, J. In Ramjoo Muhammad v. Haridas Mullick therefore according to learned counsel I have to decide which of these judgments is to be preferred.
9. 1 shall first examine the judgment of the Calcutta High Court in Ramjoo Mahomed v. Haridas Mullick on which Mr. Arfin relied. The material facts of this case were as follows. The plaintiff had desired to take the defendant's premises on a long lease, therefore he had written a letter to the defendant --landlord in which he had said "I do hereby agree to take by our personal settlement your house and premises No. 7. Bowbazar Street, on lease for 21 years under the following terms :--
(1) Four thousand rupees salami. (2) Rent Rs. 100 per month.
(3) Both taxes, owner and occupier, should be paid by me.
(4) Thorough repair will be done every five years.
(5) The period of lease will be entitled from 1st of December 1921."
The defendant landlord had written in reply "I do confirm your letter, dated 19th November 1921. All terms will be settled on the agreement."
I may point here that the terms and expressions used in these letters are similar to those employed in Exh. 6/12 and the question before Page, J. Was whether these letters constituted a present demise or amounted only to an agreement to obtain a lease. The learned Judge observed at page 1089 as follows ---It is well-settled that whether an agreement amounts to a present demise or not depends upon the intention of the parties which is to be gathered from the language in which the agreement is couched. The single question is, what was the intention of the parties using those expressions? Was it, that this agreement should confer the legal interest ; or was it not in their contemplation that there should be another instrument to give that legal interest ?' (per Lord Kenyon, C. J. In Doe v.
Ashburner 5 Term Rep. 163). And if the words of the instrument b; ambiguous, we may call in aid the acts done under it as a clue to the intention of the parties' (per Tindal C. J. In Doe Dem. Fearson v.
Ries I J C P 73).--- Having thereafter considered the Judgments of the Calcutta High Court and of Ellenborough C. J. In Pool v. Bentley to which I have referred, Page, J. Held that the "agreement in the two letters amounted to a present demise."
10. I have to observe here that the Bombay High Court has taken the same view as the Calcutta High Court. In Sultan All v. Taiyab Mohammad (AIR 1930 Dom. 210) a letter by the plaintiff to the defendant in which the plaintiff had stated that he had "agreed to take on lease" certain premises, which lie described as the demised premises, was treated as a lease and not as an agreement to a lease, although the latter stated that a formal lease was to be executed. It will therefore be seen that the operative words of clause 1 of Exh. 6/12 the lessor shall let and the lessee agrees to take on lease" have been generally treated by the Courts as wards which effect a present demises, and as this docu--ment was prepared by an Advocate, I am of the view that it is a lease and not an agreement for a lease.
11. However Mr. Fakhruddin argued that the view of Page, J. In the Calcutta Judgment, on which Mr. Arfin relied, was not correct and in support of this submission, as I have observed, he referred me to a judgment of Allsop, J. In Ahmad Sarup v. Taiyab Hasan in which Allsop J. Has criticised the Judgment of Page, J. And observed that "it rather ignored the fact that a lease is a transfer of property and is not a mere agreement or con--tract." Apart front the fact that this criticism does not appear to have been necessary for the decision of the case before Allsop J. The observations of Page, J., which I have quoted, show conclusively that he was fully conscious of the distinction between a leas- and a contract for a lease, therefore he had examined most of the leading cases on the subject to deduce the true principle for distinguishing a lease from a contract for a lease.
With great respect, I am not able to agree with the view of Allsop, J. In the Judgment cited.
12. Mr. Fakhruddin then submitted that his argument was supported by the view consistently taken by the Allahabad High Court that a Kabuliat could never be a lease. In K2dir Nath v. Shankar (AIR 1924 All. 308) and in Nand Lal v. Das (I L R 26 All. 308) the learned Judges of the Allababad High Court have held that even a registered Kabuliat could not operate as a demise because it was not signed by the lessor. But as already observed, section 105 the Transfer of Property Act does not state how a lease is to be executed, and nowhere does it state that an instrument cannot be a lease if it is not signed by the lessor, therefore the view or the Allahabad High Court was not followed by a Division Bench of Calcutta High Court in Dassi v. Mathure Mohan Day (I L R 39 Cal.
1016). However, it is not necessary for me to decide which of these views is to be preferred.
Assuming for the sake of argument that the Allahabad view is correct, it still does not help the plaintiff's case because Mr. Fakhruddin admitted that Exh. 6/12 had been signed by her or by her attorney. Accordingly, I hold that Exh. 6/ 12 was a lease and not an agreement to execute a lease.
13. As the lease was for a period of 15 years Mr. Fakhruddin then argued that even if Exh. 6/12 was a lease, as it was not registered, it was hit both by the provisions of sec--tions 17 and 49 of the Registration Act and of section 107 of the Transfer of Property Act, and in support of his submission he relief upon a Judgment of the Supreme Court in Abdullah Bhai v. Ahmed Din (PLD 1964 SC 106).
Under the provisions of sections 17 and 49 of the Registration Act a lease of immovable property exceedings" Rs. 100 in value is compulsorily registerable, and similarly under section 107 of the Transfer of Property Act a lease for a period for more than one year can only be created by a registered document therefore as the document Exh. 6/12 was not registered, prima facie it fails to create any tenancy.
14. I shall now consider the Judgment of the Supreme Court cited by counsel. The facts of that case were that the appellant before the supreme Court was the owner of a shop in Karachi and the respondent was in his occupation as a sub-tenant. The appellant had filed ejectment proceedings against the respon--dent and those proceedings had been settled by a compromise recorded before the Rent Controller Karachi on 20th April 1957. Under the compromise the respondent was described as a licensee, liable to pay compensation for use and occupation of the shop, and he was allowed to remain in occupation of the shop as a license up to 31st December 1959. The appellant thereafter filed an ejectment suit against the respondent who claimed that in the events that happened he had become a tenant of the said shop. This contention was accepted by the trial Court but was reversed in appeal by the First Appellate Court, there--fore the respondent filed an appeal which was allowed by this Court, which held that he had become a tenant, of the said shop under the compromise deed. The appellant then filed an appeal against the said Judgment in the Supreme Court. Their Lordships of the Supreme Court observed that the period of occupation fixed under the compromise recorded in the Rent Controller's Court was more than one year, that this compromise was not registered, and then observed at page 110 of the Judgment :- "According to section 49 of the Registration Act no docu--ment which is required by section 17 of the Registration Act to be registered can either create a right in immovable property or be received as evidence of such right. According to section 107 of the 'Transfer of Property Act, a lease for a period of more than one year can be created only by a registered instrument or by an oral agreement coupled with delivery of possession. The document with which we are dealing is hit by both these provisions. The Transfer of Property Act is applicable to the area with which we are dealing and the lease could not have come into existence at all by means of this document.
According to section 17 of the Registration Act a docu--ment evidencing a lease for more than one year is compulsorily registerable."
Then, after considering the provisions of section 53-A of the Transfer of Property Act, their Lordships observed at page 112 "A tenancy can, in spite of section 53-A, come into existence only in accordance with section 107."
15. I am in respectful agreement with this Judgment. The facts in the instant case are identical, therefore in view of the said Judgment I hold that as Exh. 6/12 was not registered, it did not operate as a lease.
16. However, Mr. Mansoorul Arfin advanced two arguments to which I may briefly refer here.
According to Mr. Arfin, Exh. 6/12, to which I shall hereafter refer as the unregistered lease, was itself a base and not a contract for a lease, therefore the provisions of section 53-A of the Transfer of Property Act were not applicable to it. However, he admitted that the Supreme Court had taken a contrary view in the Judgment cited, therefore I am not able to accept his argument and it is not necessary to discuss it further. The other argument advanced by Mr. Arfin was that even if the unregistered lease was void and failed to create any rights in favour of the defendants, sub-- sequent its execution, the plaintiff had accepted rent from the defendants, who had thereby become monthly tenants of the said premises. But in his cross-examination to Mr. Arfin P. W.
Fakhruddin has stated as follows ---It is correct as suggested to me that possession of the newly constructed area (the said premises) was given to Shaikh Jamal Din (the deceased) Under Exh. 6/12. His possession was to occupy the premises.--- Thus the argument now advanced by Mr. Arfin is contrary to his own cross-examination. Even in his arguments, Mr. Arfin was not able to specify when the alleged monthly tenancy arose. This plea has also not been raised in the written statements either of the deceased or of the second defendant, and as it raises a question of fact, it cannot be allowed to be raised at this stage. Secondly, the defendants have neither given any evidence in support of this plea nor, as already observed, have they even cross-examined the plaintiff's witness about it, there--fore there is no evidence whatsoever in support of this plea. However, Mr. Arfin argued that this plea was supported by the demand for rent contained in Exh. 6/23 which is a copy of a notice dated the 7th February 1962, by the plaintiff's advocate to the advocate of defendant No. 2. It is true that this notice contains a demand for rent, but as it also calls upon the second defendant to execute a lease in terms of clause 7 of the unregister--ed lease (Exh. 6/12), it is very clear that the demand for rent has reference only to the obligation of the deceased under the unregistered lease and not to any obligation under a monthly ten--ancy. Learned counsel's argument is without merit. I decide this issue against the defendants and hold that the first defendant was in possession of the said premises as a licensee not as a tenant.
17. Issue No. 8.---In view of my finding on issue No. 7 this issue becomes redundant.
18. Issues Nos. 1 anti 2.-Counsel for all the defendants sub--mitted that these issues related to the bar of this Court's jurisdic--petition under the provisions of the West Pakistan Urban Rent Restriction Ordinance, 1959. As I have decided the 7 issue against the defendants it follows that this Court has jurisdiction to try the suit, therefore these issues are also decided in the plaintiff's favour.
19. Issue No. 3.-According to Mr. Fakhruddin the defendants had committed breach of three obligations under the unregistered lease, the obligation to pay rent in advance, the obli--gation to pay municipal taxes and the obligation to execute a registered lease when called upon by the plaintiff. It will be convenient to consider first the alleged violation by the defend--ants of the obligation to execute a lease, and in this connection it is relevant to observe that the lease contains an express prohibi--petition against any form of sub-letting or assignment of the said premises without the lessor's written consent.
20. As the defendants have not produced any evidence, the only evidence on this issue is that of P.
W. Fakhruddin and the documents produced by him. P.W. Fakhruddin has said in evidence that heth knew the deceased and said that, although the plaintiff had repeatedly called upon the deceased to execute a lease the deceased had failed to do so. Not only is there no evidence whatsoever to contradict the testimony of this witness, but his evidence is supported by a copy of a notice dated the 1 January 1959 to the deceased by the plaintiff's Advocate (Exh. 6/13). The notice contains several demands, but for the purpose of this issue it is relevant only to observe that the notice states that a draft lease had been sent to him (deceased) for approval, that it had not been returned to him, therefore it called upon him to return the draft lease and to agree to the immediate execution of the lease deed failing which the plaintiff would take legal proceedings.
There is absolutely no evidence to show that the deceased had even cared to answer this notice, much less comply with the demand to execute a registered lease. It is therefore clear that during his lifetime the deceased had committed breach of his obligation to execute a lease.
21. I shall now consider Mr. Fakhruddin's argument that the second defendant also had illegally refused to execute a registered lease. By an undated letter marked Exh. 6/22, the second defendant had undertaken to discharge the arrears of rent, pay all taxes due by the deceased in respect of the said premises and execute a lease deed in pursuance of the stipulation in that respect contained in the unregistered lease. Later this defendant changed his stand and by a letter dated the 18th January 1962 Exh. 6/15 it had written to the plaintiff's advocate asking him to execute the lease in its own name. The period of the lease was to be 15 years. As there is no evidence to show that the financial condition of the deceased was such that the second defendant would have continued to act as the Receiver of the deceased for 15 Years, this demand of the second defendant for a lease in its own name instead of that of the deceased, was prima facie an attempt to change the terms and conditions of the unregis--tered lease. However, in reply the plaintiff's Advocate only asked the second defendant by his letter of 19 January 1962 (Exh. 6/ l6) to send its proposals for the amendment of the draft lease.
This does not appear to have been done. Then by his letter of 5th February 1962 Exh. 6/19 the second defendant's Advocate wrote to the plaintiff's Advocate making fresh demands. In this letter he said that the second defendant wanted to include the ground floor and part of the first floor in the proposed lease. He also said that the second defendant wanted the right to assign and sublet the said premises during the continuance of the lease and that according to his instructions the plaintiff's husband had agreed to this change. Both these demands were contrary to the express provisions of the unregistered lease, because the unregistered lease related only to the second and third floors of the plaintiff's buildings, and because it expressly prohibited the deceased from assigning or sub-letting the said premises without the plaintiff's written consent. Mr. Arfin did not even seek to defend the first proposal in this letter (Exh. 6/19) that the premises to be included in the lease should include the ground floor and the first floor. This demand was obviously illegal and was later dropped by the second defendant. However, the second defendant persisted in its second demand, and by his letter to the plaintiff's husband (Exh. 6/20) the second defendant's Manager wrote to him that he had "agreed to make the unexpired lease transfer--able". Thereafter, there was a meeting between the Advocates of the parties, the results of which have been recorded in a letter of the second defendant's advocate dated the 5th February 1962 (Exh. 6/21) to his own client. In this letter, the second defend--ant's Advocate has warned his client that the plaintiff's Advocate had not agreed to extend the lease to the ground floor and the first floor of the plaintiff's building. Further, it would appear from this letter that the second defendant had also wanted to increase the period of the lease from 15 years to 20 years, because the second defendant's Advocate informed his client in this letter that the plaintiff's Advocate had objected to extending the period of the lease to 20 years. As to the dispute about the claim of the second defend--ant to assign and sublet the said premises, the second defendant's Advocate advised his client to contact the plaintiff's husband about this demand. Meanwhile by his notice dated the 7thst th February 1962 (Exh. 6/23) the plaintiff's Advocate warned the second defendant's Advocate that the plaintiff's husband had never agreed and could not agree "with the General Manager of the Bank (the second defendant) to permit assignment or sub--lease of the premises", and that the plaintiff had "expressly instructed us not to agree with any variation of the agreed terms". He therefore by this notice called upon the second defendant as Receiver to execute a registered lease deed in terms of the conditions contained in the unregistered lease. Meanwhile, by his letter of 12th February 1962 (Exh. 6/24) the second defendant wrote to the plaintiff's Advocate informing him that it was awaiting a reply from the plaintiff's husband about its demand to assign the said premises.
In reply to this letter, the plaintiff's husband wrote to the second defendant's Manager the next day (Exh. 6/25) and told him that whilst they had had discussions with each other, he had never agreed to the second defendant's demand for sub-letting and assignment of the said premises. Finally, by another notice dated the 15th February 1962 to the second defendant (Exh. 6/26) the plaintiff's Advocate referred the second defendant to this letter by the plaintiff's husband (Exh. 6/25) and warned the second defendant to return the draft lease duly approved in terms of the unregistered lease.
22. Thus it will be seen that the second defendant had prevented the registration of a lease deed in terms of clause 7 of the unregistered lease, because of its contention that the plaintiff's husband had agreed to give it a right to assign and sub-let the said premises. But this was denied by P. W.
Fakhruddin in his evidence, and his denial is fully supported by the correspondence, yet the second defendant did not produce any evidence whatsoever in rebuttal. It is also extremely improba--ble that the plaintiff would ever have agreed to confer such a right on the second defendant. It is also relevant to observe here, as I shall presently show, that throughout this period, although the plaintiff had to pay heavy municipal taxes on the said premises, the second defendant had deliberately delayed even payment of monthly rent to her on the plea that her husband had agreed with its Manager to lease to it the said premises with the further right of assigning or sub-letting the said premises. As it did not examine its Manager, in the circumstances discussed, I do not believe the second defendant's plea of this alleged agreement, and I am of opinion that it deliberately with-- held payment of rent in order to bring pressure on the plaintiff to accept its terms. I have therefore no hesitation in holding that it had willfully delayed execution of a registered lease of the said premises.
23. However, after the notice of 15th February 1962, (Exh. 6/26) there was a meeting between the Advocates of the parties and the results of this meeting have been referred to in a letter by the second defendant's Advocate to the plaintiff's Advocate dated the 6th March 1962 (Exh. 6/28). In this letter the second defendant's Advocate suggested "that the bank/lessee should be given the right to assign the lease-hold rights with the consent of the landlady such consent not to be unreasonably withheld". By his letter of the same day (Exh. 6/29) the plaintiff's Advocate rejected this suggestion. But after about a week, by his letter of 15th March 1962 (Exh. 6/30) he wrote a personal letter to the second defendant's Advocate in which he informed him that the plaintiff had agreed to the proposal contained in his letter (Exh. 6/28) subject to the proviso that any assignment or sub-letting should be confirmed by the deceased. In his reply the second defendant's advocate on 5th April 1962 (Exh. 6/32) that the proviso imposed by the plaintiff was contrary to this Court's order. Then there is no correspondence between the parties for nearly a year, and on 9th March 1963 the plaintiff served notices both on the deceased and on the second defendant (Exhs. 6/35 and 6/36 respectively) and filed a suit.
24. According to Mr. Arfin, the plaintiff acted illegally in making any agreement between her and the second defendant conditional on the deceased's approval, because the second defendant had been appointed a Receiver by the Court. But the second defendant's appointment could have been terminated at any time by the payment by the deceased of his debts to it, therefore the plaintiff's proposal was a reasonable method for preventing future litigation between her and the deceased. The second defendant has not explained why it rejected a proposal that was so reasonable, nor was Mr. Arfin able to show how the proposal was improper or illegal, In any case, as the plaintiff's evidence that the deceased had refused to register the lease before the second defendant's appointment as Receiver stands unrebutted, prima facie he was not entitled to demand thereafter the registration of the lease when it suited him. There--fore the second defendant who could only enforce the rights that belonged to the deceased, was also not entitled to obtain a lease - on behalf of the deceased, much less for itself as it sought to do. Confronted with this difficulty Mr. Arfin could only stress the fact that the second defendant had been appointed a Receiver by this Court. But this appointment could not operate to the prejudice of the plaintiff nor could it wipe out the default of the deceased before this appointment. Further, and this is very important, as the estate of the deceased had not vested in the second defendant, as would have been the case, for instance, in the event of insolvency, it was not entitled to claim the right of sub-letting or assigning the said premises even with the plaintiff's consent, because that was a very valuable right which belonged to the deceased alone. If therefore the plaintiff had agreed to this demand, the fact that the second defendant was acting as Receiver of his business would not have been of any avail to the plaintiff in the event of a claim by the deceased. Mr. Arfin's arguments are without merit and I hold that the second defend--ant as Receiver wilfully delayed the execution of a registered lease.
25. Mr. Fakhruddin next argued that both the deceased and the second defendant had committed breach of the obligation to pay the monthly rent in advance under clause 3 of the unregistered lease. The only notice to the deceased in this respect is dated the 1 January 1959 (Exh. 6/13) but it does not specify the amount of arrears. There is also a dishonoured cheque apparently signed by the deceased bat it has not been Exhibited. However, the defendant's Manager's letter dated the 18th January 1962 to the plaintiff's Advocate (Exh. 6/15) contains a clear admission of the second defendant's failure to pay rent, this letter states ---Reference your telegram of 17th January 1962 demanding payment of arrears of rent which uptill January 1962 are for 16 months, we have pleasure to enclose a cheque for Rs. 10,000 as part payment of the amount . . . . .--- But the rent for 16 months amounted to Rs. 20,F:00 therefore by two letters dated the 12th January 1962 (Exhs. 6/16 and 6/17) the plaintiff's advocate warned the second defendant to pay the entire arrears of rent forthwith to avoid unpleasantness. As the letters were of no avail he wrote a personal letter on the 1st February 1962 to the second defendant's Advocate (Exh. 6/18). He has said in this letter ---You will appreciate that my client was promised this pay--ment (of rent nearly a year ago and in spite of repeated almost every day promises the cheque is not forthcoming ---------.--- Please therefore impress upon the bank to make immediate full payment to my client failing which I am afraid I will no longer be in a position to resist my client's instructions to treat the whole matter closed and proceed in a Court of law against Mr. Jamal and the bank."
I may observe here that on this date, rent of 18 months was admittedly due (vide Exh. 6/16, a letter by the plaintiff's Advocate to the second defendant's Advocate) yet the second defendant went on delaying the payment of rent, and this was in order to compel the plaintiff to agree to its demand for altering in its favour the proposed lease deed of the said premises. But as it could not succeed in its efforts, by his letter dated the 6th March 1962 the second defendant's Advocate had eventually sent a cheque to the plaintiff's Advocate for Rs. 32,050 "regarding the rent of the Hotel Excelsior premises." Thus it will be seen that, on the date of this letter, rent of more than two years was due, yet the second defendant demanded that this cheque should not be cashed until its unilateral demands for the alteration of the proposed lease had been accepted. This demand wasst rejected, the plaintiff cashed the said cheque, and a receipt for the same was forwarded by the plaintiff's Advocate with his letter of 20th March 1962 (Exh. 6/31). As it is not the second defendant's case that the payment of this cheque created a fresh agreement or amounted to an estoppel, the very fact that the cheque was for the sum of Rs. 32,050 establishes that the second defendant had failed to pay rent for two years.
26. However, Mr. Arfin argued that, according to the plaint, there were no arrears of rent due from the deceased when the suit, was filed or at the present date, therefore there was no default on the part of the defendants. The argument is totally devoid of merit. The question for consideration under this issue is not whether there were any arrears of rent now or on the date of the suit, but whether the defendants had committed any breach of the terms and conditions of the unregistered lease (Exh. 6/12). Under clause 3 of the unregistered lease, rent had to be paid in advance, therefore the very payment of Rs. 32,050 by the second defendant proves beyond any doubt that this defendant while acting as Receiver had committed breach of the obligations of the deceased under the unregistered lease.
27. Finally, the third stipulation material to this issue was the obligation to pay municipal taxes.
Clause 5(b) of the unregistered lease (Exh. 6/12) states as follows "5(b) That the lessor will pay the municipal tax on the property which is in force on the date of execution of this lease. In case any further and additional taxes are levied by the Municipality the lessor shall be entitled to recover such excess in taxes from the lessee, and the lessee shall be bound to pay the same to the lessor."
According to the copy of the plaintiff's Advocate notice to the deceased Exh. 6/13, the Karachi Municipal Corporation had not accepted Rs. 1,300 as the monthly valuation of the said premises but had valued them at Rs. 7,200 and had demanded additional taxes on the difference, and according to the plaint the additional taxes demanded by the K. M. C. For which the defendants were lisale, amounted to Rs. 14,973.06 per year. As admittedly the amount thus claimed by the K. M.
C. Had not been paid by the defendants Mr. Fakhruddin argued feebly that they had commit--ted breach of their obligation under clause 5-b quoted above. But the obligation under this clause was to pay the taxes levied of the municipality not these merely demanded by it. As Mr. Fakhruddin conceded that the plaintiff had succeeded, through the litigation filed by her, in obtaining a stay order against the municipality demands, it follows that the mere failure of the defendants to pay the amount demanded by the municipality did not constitute breach of contract. As they were entitled to the benefit of the arrangements made by the plaintiff they were liable only for a pro-- portionate share of the taxes actually paid by the plaintiff. Here unfortunately P. W. Fakhruddin has merely specified the amount paid by the plaintiff to the K. M. C. And the amount paid to her by the defendants. As he has not specified in his evidence the amount that should have been paid by the defendants as their share of the additional taxes paid to the K.M.C. It is not possible to hold that they had committed breach of clause 5-b. However as the plaintiff has proved beyond any doubt that the defendants have committed breach of the obligation to execute a registered lease and of the obligation to pay rent, I decide this issue in favour of the plaintiff.
28. Issue No. 4.-This issue really falls under the third issue, and, for the reasons given in my discussion of this issue I hold that the deceased and the second defendant, in its capacity as Receiver, have committed breach of the obligation to execute a registered lease-deed.
29. Issue No. 5.-As I have pointed out, according to the plaint, the plaintiff had filed suits to challenge the valuation of the said premises by the K. M. C. And the case of all the defendants is that this issue cannot be decided until litigation about the valuation of the said premises is finalised. It may observe here that the suits filed by the plaintiff about the valuation of the said premises have become infructuous on account of the judg--ment of the Supreme Court in Abdullah Mohammad Pir Mohammad v. Karachi Municipal Corporation (C. A. K.; 1 and other connected appeals). In that judgment, their Lordships have laid down the principles for the valuation of premises used as hotels, and, in the course of arguments, all the learned counsel admitted that the valuation of the said premises would have to be revised by the K. M. C. And by the Director of Excise on the basis of the principles laid down by their Lordships in this judgment. Mr. Fakhruddin further stated that proceedings in this respect were pending before the Director of Excise, therefore he made an oral request that I should not pronounce judgment until the Director of Excise had assessed the value of the said premises. As the defendants had stopped paying taxes on the said premises, this request could not prejudice their interests, therefore I deferred pronouncing judgment. The Director of Excise passed an order, on 13th October 1969 fixing the value of the said premises at Rs. 5,800 per month and on 26th November 1969 Mr. Fakhruddin filed an application to produce a certified copy of this order of the Director of Excise. Learned counsel for the defendants waived notice of this application, which was heard and allowed by me on 28th November 1969. Learned counsel for the defendants did not object to the production of this order, but they submitted that it was without prejudice to their contention that it was not final and binding, because it might be set aside in further legal proceedings. It is up to the parties to take such further proceedings as may be open to them in law to challenge this order. But until this order is set aside, the possibility of further litigation does not relieve the plaintiff of her obligation to pay taxes on the basis of this order, and unless it is set aside by a competent authority, it is binding on the parties. I therefore hold that the valuation of the said premises in this order is binding on the parties as long as it is not set aside.
30. Issue No. 6.-This issue is also part of the third issue and for the reasons given I hold that the deceased had committed default in the payment of rent and thereafter the second defendant had also committed wilful default in the payment of the agreed rent.
31. Issue No. 9.-It is common ground between learned counsel before me that the second defendant is liable to the plaintiff only to the extent of the assets received by it as Receiver of the deceased's estate, therefore it is not necessary to consider this issue further.
32. Issue No. 10.-As I have held that the deceased was a licenses and not a tenant, it follows that the plaintiff is entitled to claim compensation for the use and occupation of the said premises.
Accordingly this issue is also decided in the plaintiff's favour.
33. Issue No. 21.-The first question for consideration under this issue is the amount of compensation to which the plaintiff is entitled for the use and occupation of the said pre--mises. The plaintiff has claimed compensation in para. 23 of the plaint at the rate of Rs. 3,568 per month on the basis of the "previous agreed rent of Rs. 1,300 per month" plus Rs. 2,268 as taxes. There is no dispute before me about the payment of Rs. 1,300 per month on the basis of the previous agreed rent. The dispute is about the amount of taxes for which the defend--ants are liable. As I have observed, the assessm ent of the said premises has been revised, and by his order dated 13-10-1969 the Director of Excise and Taxation has now valued them at Rs. 5,800 per month. Mr. Fakhruddin accepted liability for all taxes on the valuation up to Rs. 1,300 per month, but he sub--mitted that under clause 5 (b) of the unregistered lease and in the events that had happened the defendants were liable for all taxes whatsoever on the difference between Rs. 1,200 per month and Rs. 5,800 per month. In view of the flagrant disregarded by the defendants of the provisions of the unregistered lease I accept Mr. Fakhruddin submission and hold that the plaintiff is entitled to recover from the defendants all taxes levied by the K. M. C. And/or any local authority including the urban immovable property tax, on the amount of Rs. 4,500, which is the difference between the monthly letting value of the said pre--mises as fixed by the Director of Excise and of the sum Rs. 1,300 per month on which the plaintiff had accepted liability for taxes under the unregistered lease. This means that the defendants have to pay approximately the sum of Rs. 1,600 per month to the plaintiff for additional taxes.
34. Turning now to the objection of the defendants that this order of Director of Excise dated 13th October 1969 was not final, as I have pointed out, until this order is set aside, it does not relieve the plaintiff of her objection to may taxes on the basis of this order, therefore she is entitled to reimbursement from the defendants in the sum of Rs. 1,500 per month (appro--ximately).
Secondly, even if this order is modified, whether the valuation of the said premises is increased or reduced, in either case, the parties will be entitled to adjustment of any excess payments made by them to each other so that their interest will not be prejudiced in-hny way by making payments on the basis of this order as long as it stands. The defendants cannot there--fore escape their liability for payment by advancing the plea that they may take legal proceedings to challenge the correctness of this order. In the result, I hold that the plaintiff is entitled to recover compensation from the defendants for the use and occupation of the said premises from 1-4-1963 up to the date when she receives vacant possession of the said premises at the rate of Rs. 1,300 p.m. Plus a sum of Rs. 1,500 (approximately) for additional taxes on the said premises, after deducting the payments received by her from the defendants. Unfortunately, as the defendants have not cared even to produce the plaintiff's receipts for the payments made by them, it is difficult to ascertain the exact amount paid by them for which they are entitled to credit. Further one of the defendants may still be a minor. I therefore consider it necessary to appoint a Commissioner to take accounts between the parties so that the exact amount due from the defendants may be determined.
35. I have said that the liability of the defendants for additional taxes is approximately Rs. 1,500. As I am appointing a Commissioner he should determine the exact liability of the defendants for additional taxes on the basis of my observations in para. 33.
36. The only question that remains for determinations is the plaintiff's claim for ejectment. Mr. Fakhruddin argued that the plaintiff is entitled to eject the defendants because of their flagrant breach of the provisions of the unregistered lease. On the other hand, learned counsel for the defendants argued that as the period of the unregistered lease was to have been 15 years, the defendants could not be ejected until the expiry of that period (which would be 15 years from 1-3- 1958) therefore, according to learned counsel, the suit was premature, and in support of this argument he relied on the provisions of section 53-A of the Transfer of Property Act, 1882.
37. Section 53-A of the Transfer of Property Act, in so far as it is relevant, reads as follows "53-A. Where any person contracts to transfer for considera--petition any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract taken pos--session of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in further--ance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwith--standing that the contract though required to be registered, has not been registered, or, where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefore by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract . . .--- On a plain reading of this section the defendants can rely on it only by proving that they had at all times been ready and willing to carry out their obligations under the unregistered lease. I am fortified in my opinion by a judgment of the Bombay High Court in Bechardas Damodardas Kachia v. Borough Municipality of Ahmadabad (AIR 1941 Bom. 346) in which in reference to the provisions of this section, a Division Bench of the Bombay High Court observed that ". . . It is primarily intended for the benefit of the transferee and that being so when the section speaks of the performance of his part of willingness to perform his part it must mean in our opinion complete performance or complete willingness so far as he is concerned . . . ." Accordingly, in order to claim the benefit of the equitable remedy conferred by this section the defendants have to prove that they had always been ready and willing to carry out their obligations under the unregistered lease. F As I have held that both the deceased and the defendants have committed flagrant breach of their obligations under the un--registered lease it follows that they are not entitled to the benefit of this section.
38. However, Mr. Arfin argued that the defendants were entitled to resist ejectment under section 53-A on the basis of the judgment of the Supreme Court in Abdullah Bhai v. Ahmed Din (PLD 1964 SC 106) and a judgment of a Division Bench of this Court in Pak. Employees Cooperative Housing Society v. Anwar Sultana (PLD 1969 Kar. 474). I have discussed the judgment of the Supreme Court in para. 14 and I may repeat here that in this judgment their Lordships have held that a person in occupation of premises under a lease, which required registration but was not registered, was a licensee and not a tenant, therefore they had decreed the landlord's claim for ejectment against him. For the purpose of Mr. Arfin's argument it is material to observe that the agreement under which the defend--ant-respondent in that case had claimed tenancy rights contained a provision that he should remain in occupation of the premises in dispute until 31st December 1959. In reference to the effect of section 53-A on this provision of the unregistered lease their Lordships observed at page 111 as follows "The only effect of this section is that when the person in whose favour the unregistered deed has been executed is a defendant in the suit the plaintiff' cannot enforce against him a right conferred upon the defendant by the deed. Till the 31st December 1959, the defendant-respondent could have used this deed as a shield against his ejectment, but that is all the protection that the defendant receives. The deed is of no avail to the defendant after 31st December 1959."
I am in respectful agreement with these observations. But it was not the appellant's case in the judgment cited that the defendant-respondent had committed breach of the terms and conditions of the unregistered document on which he had based his alleged tenancy rights. On the other hand, in the case before me, I have held that both the deceased and the second defendant have committed flagrant breach of the terms and conditions of the unregistered lease, therefore the judgment cited is distinguishable and does not help the learned counsel's argu--ment.
Similarly, in the judgment of this Court in Pak. Employees' Cooperative Housing Society v. Anwar Sultana the facts were the opposite of those in the instant case. In the judgment cited, the respondent had obtained possession from the appellant of a plot of land in Karachi under a document about which there was a dispute. The respondent contended that the document did not require registration because it was only an agreement for a lease, whilst, according to the appellant, the document was a lease and not being registered, it was a void and of no legal effect, therefore it was entitled to eject the respondent. The Court held that the document was an agreement of lease and not a lease, therefore it did not require registration. But it also observed that if the document was a lease, as the respondent had not committed any breach of her obligations under it she was entitled to rely on it under section 53-A of the Transfer of Property Act and could not be ejected for the duration of the agreed period of occupa--petition in the said document. This judgment is of no assistance to the case of the defendants because they have committed deliberate and flagrant breach of the terms of the unregistered lease, and in view of this finding the plaintiff is entitled to obtain vacant possession of the said premises.
39. The suit is therefore decreed with costs and the defend-- ants shall hand over vacant possession of the said premises to the plaintiff within two months of the date of this order. The plaintiff's claim for mesne profits is also decreed as stated in para. 33 of this judgment, but I shall appoint a Commissioner to take accounts, and the Commissioner will determine the exact liability of the defendants for mesne profits. Learned counsel for the plaintiff and learned counsel for the defendants should submit within two days the names of two Advocates who could be appointed as Commissioner and, after considering these names as I shall appoint a Commissioner.