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Petitioner: Mst. SHIRINBAT VS Respondent: SALEEM JAMAL AND 7 Other
Court Name: Sindh High Court Judge(s): Durab Patel Title: Mst. SHIRINBAT vs SALEEM JAMAL AND 7 Other Case No.: Suit No. 129 of 1963 Date of Judgment:1969-12-23 Reported As: PLD 1970 Kar 657 Result: Q.
JUDGMENT
JUDGMENT 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
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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.
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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
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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
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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
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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."
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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…
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