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Petitioner: HAJI ABDUL KARIM VS Respondent: HAJI DAWOOD & CO
P L D 1960 (W
P L D 1960 (W. P.) Karachi 532
Before A. S. Faruqui, J
Haji ABDUL KARIM AND ANOTHER‑Plaintiffs
versus
Haji DAWOOD & Co.‑Defendants
Civil Suit No. 137 of 1959, decided on 22nd April 1960.
(a) Karachi Rent Restriction Act (VIII of 1953), Ss. 4 & 7 --Tenant bound to pay contractual rent unless fair rent has been determined by Controller.
(b) Karachi Rent Restriction Act (VIII of 1953), S. 9--- Increase in "rent" not covered by terms "fine, premium, Pagri, Mithai or other like sum".
The expression premium or any other like sum in section 9 of the Karachi Rent Restriction Act has no reference to the case of increase of rent. In any case rent increased by a previous landlord could not be said to affect a landlord who is a transferee of the premises from the previous landlord so as to make the addition illegal under the provisions of section 9 of the Act.
I L R 24 Cal. 895 and A I R 1924 Cal. 56 considered.
(c) Karachi Rent Restriction Act (VIII of 1953), S. 10 (1)-- "Ready and willing to pay rent"‑Means not a "pious wish" but connotes an element of "promptness and readiness" to pay-- Mere default is not absence of readiness.
(d) Karachi Rent Restriction Act (VIII of 1953), S. 10 (1) ---"So long as the tenant pays or is ready and willing to pay", and "performs other conditions of tenancy"‑Both conditions relate to tenant's conduct before institution of suit.
Both the conditions viz. (1) readiness to pay rent and (2) performance of other conditions of the tenancy relate to the conduct of the tenant before the institution of the suit.
Mothuradas v. Nathubhai A I R 1923 Bom. 387 ; Ismail Dada Bhamani v. Bai Zuleikhabai A I R 1944 Bom. 181 and Mohammad Hussain v. Messrs Pakistan Boot House P L D 1959 Kar. 360 ref.
S. K. Shaw & Brothers v. Brij Raj Krishna and another A I R 1949 Pat. 474 distinguished.
(e) Transfer of Property Act (IV of 1882), S. 114=Relief against forfeiture‑Month‑to‑month tenancy determined by land lord‑No question of "forfeiture"‑Section 114 inapplicable.
The power of the Civil Court to grant relief to a tenant whose tenancy has been duly determined is limited to the protection granted to the tenant under the Rent Restriction Act. Section 114, Transfer of Property Act (IV of 1882) is inapplicable to such a case.
A forfeiture necessarily presupposes the existence of an unexpired term of a lease, and the principle is that forfeiture being in the nature of a penalty, may be relieved against by putting the parties in the same position in which they would have been if the penalty had not been applied, provided the tenant removes the cause of the forfeiture by making a full payment of the dues. But when a month‑to‑month tenancy has been determined by a notice to quit, there is no forfeiture, and consequently there is no occasion to grant relief against it.
Iqbal H. Qazi for Plaintiffs.
Munawar Abbas for Defendants.
Dates of hearing: 3rd, 16th, 22nd and 24th March 1960.
JUDGMENT
This is a suit for rents, mesne profits and ejectment. The plaintiffs are the landlords of a building known as Central Hotel Annexe on the plot of land bearing survey No. 5 Sheet CL‑5 on the Victoria Road in the Civil Lines quarters of the City of Karachi in which building the defendants namely the firm of Haji Dawood & Co. are occupying a large show‑room of 78 x 34J feet on the ground floor of the said building on a monthly rent of Rs. 1,375 on a month‑to‑month tenancy.
2. The defendants fell into arrears of rent with the result that the plaintiffs terminated their tenancy with effect from 31‑5‑59 by a notice dated 24‑4‑59 and instituted the present suit for ejectment and for arrears of rent amounting to Rs. 23,375 due from 1‑1‑58 to 31‑5‑59 at the rate of Rs. 1,375 per month and mesne profits at the same rate from June 1959, till the date of suit and until possession.
3. The defendants pleaded that they had taken the premises in suit from the original owners namely the Karachi Syndicate under lease dated 15‑8‑50 on a rent of Rs. 1,250 per month; that this lease was for a period of 5 years and it was provided therein that if after the expiry of the said term the defendants desired to continue in occupation as monthly tenant they will be allowed to do so on a rent of Rs. 1,375. On the expiry of the said 5 years the defendants continued to occupy the premises and paid rent to Messrs Karachi Syndicate at the rate of Rs. 1,375 per month until June 1957, when the property was purchased by the present plaintiffs and thereafter they paid the same rent of Rs. 1,375 per month to the plaintiffs. It is asserted by the defendants that the agreement for payment of increased rent was in consideration of the continuance of the tenancy and was illegal and not binding on the defendants in view of the provision of section 9 of the Karachi Rent Restriction Act, 1953, and not only that the plaintiffs are not entitled to claim rent at the rate of Rs. 1,250 per month but that they are entitled to a refund of Rs. 3,687‑8‑0 which they have paid in excess of the original rent for the period 16‑7‑55 to 31‑12‑57 ; that after adjusting the said sum of Rs. 3,687‑8‑0 the defendants are only liable to pay Rs. 17,562‑8‑0 at the rate of Rs. 1,250 per month from 1‑I‑58 to 31‑5‑5y which the defendants alleged they were all along ready and willing to pay. 1t is further alleged that the defendants were always ready and willing to pay rent at the rate of Rs. 1,250 per month and that after January 1958, they had tendered rent at this rate several times to the plaintiffs claiming adjustment of the excess of payment made by them but the plaintiffs refused to accept it and that is how the rent accumulated.
4. The receipt of the notice of eviction was admitted but the validity of it was denied. It was further contended that there being a bona fide dispute between the parties as regards the quantum of rent the plaintiffs were not entitled to the relief of ejectment even if the question of quantum of rent is decided against the defendants.
Upon these pleas the following issues were framed (1) What is the rent of the premises in suit ?
(2) Whether the agreement for increase in rent is illegal and not binding on the defendant ? If so, what is its effect ?
(3) What is the amount of arrears against the defendant ?
(4) Whether the defendant was not ready and willing to pay the rent.
(5) Whether the tenancy of the defendant has been deter mined by notice.
(6) Whether the notice is invalid and improper ? 1f so, what is its effect ?
(7) Whether the plaintiff is entitled to a decree for posses sion.
(8) To what arrears of rent and mesne profits, if any, are the plaintiffs entitled ?
5. I shall take up issues 1, 2 and 3 together. The first question which arises for consideration is whether the agree ment between the defendants and the previous landlords for increasing rent was illegal because of the provisions of section 9 of the Rent Restriction Act and if so what is its effect on the plaintiffs' claim. Let me reproduce section 9 :‑
9. (1) No landlord, tenant, occupant, or any person acting on their behalf shall in consideration of the grant, renewal or continuance of a tenancy of any premises require the payment of any fine, premium, pagri or mathal or any other like sum in addition to the rent.
(2) Where any such payment has been made, the amount shall be recoverable by the tenant by whom it was made from the landlord, tenant, occupant or any person acting on their behalf and may, without prejudice to any other method of recovery, be deducted from any rent payable by him to the landlord, tenant, occupant or any person acting on their behalf.
(3) Nothing in this section shall apply to any payment made under any agreement entered into‑
(a) in the case of residential premises, before the first day of December 1941 ;
(b) in the case of premises other than residential premises, before the first day of December 1942
(4) Any landlord, tenant, occupant or, any person acting on their behalf who receives directly or through an agent any fine, premium, pagri or mithai or other like sum in addition to rent in contravention of subsection (1) shall be punishable with imprisonment for a term which may extend to six months or with fine or with both.
6. The contention of Mr. Munawar Abbas, the learned counsel for the defendants, was that the increase of rent from Rs. 1,250 to Rs. 1,375 at the expiry of the first lease was a consideration for the continuance of the tenancy of the premises in suit, and therefore, came within the description of "premium or any other like sum" mentioned in section 9 (1). The argu ment proceeds that the charging of such an amount by the landlord is in violation of section 9 of the Rent Restriction Act and renders the contract illegal to that extent in view of the provisions of section 23 of the Contract Act. It is further contended that sub‑clause (2) specifically enables the tenant to recover any such sum paid by him and he can therefore deduct that sum from any rent payable by him to the landlord. The validity of this argument depend's upon the question whether an increase in rent at the time of the renewal of the tenancy comes within the mischief of section 9 (1) of the Karachi Rent Restriction Act.
7. Reliance was placed by the learned counsel for the defendants on a number of cases which I shall now proceed to briefly examine. The first case is I L R 24 Cal. 895 and which is with reference to section 28 of the Bengal Tenancy Act, .which provided that
"Where an occupancy Rayiat pays his rent in money, his rent shall not be enhanced except as provided by this Act."
Section 29 of the said Act further provided that the money rent might be enhanced by contract but it must not be enhanced so as to exceed by more than two annas in the rupee of the rent previously payable by the Rayiat. In this case, the Zamindar had sued the tenant for the enhanced rent upon a contract, which increake was more than two annas in the rupee. The defence of the tenant was that this contract was in violation of section 23 of the Contract Act and was therefore, void. The plaintiff then said that he should at least be entitled to recover that much of enhanced rent which did not exceed two annas in the rupee. This contention was repelled on the ground that to give effect to such a contract in the manner proposed by the Zamindar would be injurious to the tenant and would be against the object of the Bengal Tenancy Act. It was further pointed out that the contract was to pay enhanced rent and qua the payment of the enhanced rent it did not consist of two parts; how then the Court was to sever the illegal from the legal part (within the limit of two annas in a rupee) of the contract. It was observed that to give effect to such a contention would amount to making of new contract for the Zamindar. This case has no application to the present case for the simple reason that here the contention of the landlord is that the increase in rent by the previous landlord did not contravene the provisions of any law and that in any case so far the present landlord is concerned he has not effected any increase.
8. The second case relied upon by the learned counsel is A I R 1924 Cal. 56. In this case at the time of the renewal of the lease the landlord asked for a higher rent which the tenant having failed to agree he (landlord) granted the lease of the premises to another person at a higher rent and that another person brought an action against the original tenant for recovery of possession. It was held in that case that :‑
"Where the object of the lease is of such a nature that if permitted it would defeat the provision of the Rent Act, the object being unlawful, the lease is void."
This was the view taken upon the particular fact of that case from which it was clear that this was an attempt to circumvent and defeat the provisions of the Rent Act which prohibited the increase of rent at the time of the renewal of the lease. It was found that the landlord had adopted the device of granting a lease to another person to enable him to recover a higher rent under a contract which he was not entitled to under the Act. It is plain that this case has no application to the facts of the present case because it is not the case of the defendants that the provision in the lease of, the defendants and Messrs Karachi Syndicate for an increased rent from the time of the renewal of the tenancy was a device to defeat the provisions of the Rent Restriction Act.
9. The last case relied upon by the learned counsel on this point is A I R 1955 Cal. 442. But in that case the contract of tenancy besides providing for payment of monthly rent of Rs. 110 also provided for payment of a sum of Rs. 7,000 "as con sideration" to the landlord for "accommodating the tenant". Upon these facts it was held that this contract offended the provisions of section 7 of the West Bengal Premises Rent Control Act which prohibited the claiming of receiving of any premium or salami in addition to the rent for grant, renewal or continuance of a tenancy. The facts of this case have therefore no resemblance to the facts of the present case and the decision therefore is of no assistance.
10. In my opinion, the question can be effectively answered with reference to the provisions of the Karachi Rent Restriction Act itself. Subsection (1) of section 9 speaks of fine, premium, pagri or mithal or any other like sum in addition to the rent. If therefore there is an increase in the rent itself I do not see how it could be argued that such an increase could be described as a sum "in addition to the rent". The Rent Restriction Act contains separate provision for the control of rent. These are sections 4, 5 and 7. Section 4 enables the Controller to determine the fair rent. Section 5 enables him to re‑determine the fair rent when there has been an improvement made to the building. Section 7 provides that when the fair rent of any premises has been determined the landlord shall not claim and shall not be entitled to any rent in excess of the fair rent ; that any agreement for payment of such excess shall be null and void ; and any sum paid in excess of the fair rent shall be recoverable by the tenant. Section 4 which empowers the Controller to determine the rent contains an express provision which prohibits him from determining the fair rent after the lapse of a period of 4 months next after the date on which the premises are first occupied. It will be seen that under section 7 of the Rent Restriction Act the tenant is entitled to recover only if the fair rent of the premises has been determined. If therefore when there has been no such determination the tenant is bound to pay the contractual rent and is not entitled to claim refund or adjustment of what he considers to be an unfair rent. In this case very much more than 4 months had elapsed after the date on which the premises were first occupied by the defendant or when the lease was renewed and it would not therefore have been possible for him to go to the rent Controller and have the fair rent determined under the Act. A contract between a landlord and a tenant for payment of a certain sum of money as rent is a perfectly valid contract under the Contract Act. The Rent Restriction Act merely lays down the method whereby the rent can be reduced by a determination by the Rent Controller and the effect of section 7 (b) of the Act is that notwithstanding the contractual rent the tenant shall be deemed to have contracted to pay only the fair rent, but this section ‑operates only when the fair rent has been determined. If therefore the defendants could not get any reduction of rent or any adjustment under the aforesaid provisions which relate to the control of rent it is idle to argue that he can fall back upon section 9 of the Act (which deals entirely with another subject) and claim adjustment or challenge the validity of the contract for the payment of an increased amount of rent. I am therefore clearly of the opinion that the expression premium or any other like sum in section 9 of the Act has no reference to the case of increase of rent. I am further of the opinion that even if the increase of rent in this case at the time of the renewal of the tenancy was hit by they provision of section 9 of the Act that would not in any manner, affect the present plaintiff who purchased the property in 1957 whereas the rent had been increased and the lease had been renewed in 1955. I would like to add that in this case the C defendants had never disputed their liability of paying rent at the rate of Rs. 1,375 per month nor was it their ground for withholding rent. But to this I will revert when I am dealing with the issue whether the defendants were ready and willing to pay rent.
In view of the conclusions reached above my findings on issue Nos. 1, 2 and 3 is as follows :‑
Issue No. 1‑The rent of the premises is Rs. 1,375.
Issue No. 2.‑The agreement for increase in rent was not illegal and it was binding on the defendants.
Issue No. 3.‑The amount of arrears of rent was Rs. 23,375 for the period 1‑1‑58 to 31‑5‑59.
11. I shall now take up issues No. 4 and 7 which deal with the question whether the defendants were not ready and willing to pay the rent and whether the plaintiffs are entitled to a decree for possession. It was the defendants' contention in the first instance that they were ready and willing to pay rent and in the alternative that having deposited in Court the entire amount of arrears after the institution of the suit no order of recovery of possession could be passed against them. Both these con tentions relate to section 10 of the Karachi Rent Restriction Act, 1953 and I shall deal with them separately but let me first reproduce the relevant portion of that section. "10. (1) Save as hereinafter provided, no order for the recovery of possession of any premises shall be made by any Court so long as the tenant pays or is ready and willing to pay the rent payable under this Act and performs the other con ditions of the tenancy.
(2) Nothing in subsection (1) shall apply where the landlord has obtained a certificate from the Controller certifying‑
(a) that the tenant has committed any act contrary to the provisions of clause (o) or clause (p) of section 108 of the Transfer of Property Act, 1882, or has been guilty of conduct which is a nuisance or an annoyance to adjoining or neighbouring occupiers, or
(b) that the tenant has sublet the premises without the permission of the landlord, or
(c) that the premises are reasonably and in good faith required by the landlord‑
(i) for the erection or reconstruction of a building, or
(ii) for his own use or for the use of any person for whose benefit the premises are held, or
(d) that the tenant has infringed any conditions of the tenure on which the premises are held by the landlord."
The plaintiffs have not obtained a certificate from the Rent Controller under subsection (2) of section 10 and his contention is that the defendants are not entitled to the protection of section 10 because they were not ready and willing to pay the rent.
12. With regard to the first contention of the defendants that they were ready and willing to pay the rent it is necessary to state certain facts which are not disputed. The plaintiffs purchased this property in February 1957 and the defendants attorned to them. They however fell into arrears of rent and we find that, by a registered letter dated 8th October 1957, Exh. 5. the plaintiffs drew the attention of the defendants to the fact that rent from June to October 1957 amounting to Rs. 6,875 was outstanding against them. They were then called upon to pay that sum in full settlement without any further delay.
Four days thereafter there was another registered letter sent to the defendants, Exh. 6, dated the 12th October 1957, which was a reminder for payment .of the sum of Rs. 6,875 within three days. There was no response from the defendants and the plaintiffs sent another registered letter on 16th October 1957, Exh. 7, telling them that unless they paid the rent due the plaintiffs will be compelled to take recourse to law for the realisation of their dues. The defendants then replied on the 23rd of October 1957, by Exh. 9 recording and promising that the plaintiff's bill will be paid up early next month. This letter was acknowledged by the plaintiffs on the same day by Exh. 10 in which the defendants were requested to pay rent which now amounted to Rs. 8,250, latest by the 5th of November 1957. A reminder of this was sent which is Exh. 11 and then at long last the defendants along with their letter dated the 2nd November 1957, Exh. 12, sent a cheque for Rs. 2,750 towards ‑the rent for the months of June and July 1957. The plaintiffs by their letter dated the 4th November 1957, Exh. 13, acknow ledged the receipt of Rs. 2,750 and enclosed a receipt for that amount, but complained that after making them wait for so many months the defendants had only sent them rent for two months and that this the plaintiffs considered to be an unbusiness like conduct. They then called upon them once more to pay up the entire arrears as the plaintiffs could not afford to wait indefinitely.
They followed it up by a registered letter dated 12th November 1957, Exh. 15. The defendants neither sent the money nor replied to these letters so that on the 29th of January the plaintiffs served a notice, Exh. 16, whereby they terminated the tenancy of the defendants and called upon them to hand over vacant possession of the premises and pay the arrears amounting to Rs. 9,625. They also published a notice in the Dawn to the effect that the tenancy of the defendants had been terminated and if anyone took over the premises from them he will do so at his own risk and cost. The aforesaid letter of the plaintiffs dated the 29th January 1958, was replied to by the defendants' lawyer three months thereafter on 30th of April 1958, Exh. 18, along with which a cheque for Rs. 6,875 was enclosed on account of rent from August to December 1957, at the rate of Rs. 1,375 per month as usual It is important to note that even though the plaintiffs had served a notice of termination of tenancy they accepted this rent and waived the termination. The defendants however having sent this cheque for rent up to December 1957, again went into deep sleep with regard to their obligation‑to pay rent so that exactly after one year the plaintiffs by their lawyer's letter dated 24th April 1959, Exh. 29, again terminated the defendants' tenancy and called upon them to hand over vacant possession of the premises on the 1st of June 1951. By 31st May the arrears .ad amounted to Rs. 22,000. About three months thereafter the defendants by their letter dated the 14th July 1959, Exh. 21, sent a cheque for Rs. 5,000 and promised to pay Rs. 5,000 per month until the arrears were wiped out, but the plaintiffs had now made up their mind to proceed against the defendants for possession and they said so in their lawyer's letter dated the l6th .July 1959, Exh. 26, along with which the cheque for Rs. 5,000 was returned to them as it had not been expressed to be appropriated towards the arrears of rent. Four days thereafter the plaintiffs instituted the present suit.
13. From what has been stated above, it is clear that the defendants were persistent defaulters in the matter of the payment of rent and did not avail of the facilities given to them by the plaintiffs. It should also be noted that throughout this period of default they did not say on a single occasion that they were only willing to pay at the rate of Rs. 1,250 per month which was the rent originally agreed between the defendants and Messrs Karachi Syndicate ; nor did they on any occasion say that they were withholding the rent because the plaintiffs were not willing to accept the original rent of Rs. 1,250 ; nor did they at any time say that they were willing to pay all the arrears after adjustment of the excess of the amount paid at the rate of Rs. 1,375. The only reference vaguely made to the fact of increase is in the letter of the defendants' lawyer dated the 30th April 1958, Exh. 18, but even then there is no assertion that the defendants did not want to pay rent at Rs. 1,375 or that they were willing to pay up at the rate of Rs. 1,250. The reference in para. 2 of that letter was obliquely made to the fact of increase to show the "gracefulness" of the defendants to pay even at the increased rate. Even the defendants' Manager, who is the only witness examined on behalf of the defendants, did not say that they had objected to the payment of rent at the rate of Rs. 1,375 per month or that they had at any time offered to pay up the rent at the rate of Rs. 1,250. In fact, in this state of the evidence Mr. Munawar Abbas, the learned counsel for the defendants conceded that there had never been in fact…
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