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Civil Appeals Nos. K‑18 of 1967 and K‑1 of 1969, heard on 7th February 1974.

(On appeal from the judgment and order of the High Court of West Pakistan, Karachi Bench, Karachi, dated the 17th August 1966, in Letters Patent Appeal No. 9 of 1960).

(a) Landlord and tenant‑

--Lease‑Person holding lease‑hold rights in his own name but subse quently assigning them to a firm or private limited company consist ing of his family members‑Cannot be said in circumstance that no change had taken place in status of tenant or case not one of sub letting or assignment of lease‑hold rights.

If a person obtains lease‑hold rights in his own name and subsequently assigns them to a firm or to a private limited company consisting of his family members it cannot be said that no change has taken place in the status of the tenant or that it is not a case of subletting or assignment of lease‑hold rights.

Peebles v. Crostwaite (1896‑97) 13 T L R 198 ; Chaplin v. Smith (1925) 1 K B 198 ; Gian Singh & Company v. Devraj Nahar & Company (1965) .1 All E L R 768 ; Yenidje Tobacco Company Limited (1916) 2 A E L R 1050 and Ladli Parasad Jaiswal v. Karnal Distillery Company Limited P L D 1965 S C 221 distinguished.

(b) Karachi Rent Restriction Act (VIII of 1953)‑‑

S. 10‑Application of provisions of‑Tenant failing to pay or not ready and willing to pay rent‑Landlord could sue for possession with out certificate of Controller‑Similarly tenant failing to comply with condition of tenancy (not to sublet or assign lease‑hold rights without permission of landlord in writing)‑Civil suit for possession and mesne profits by landlord not barred.

If a tenant failed to pay rent or was not ready and willing to pay rent, the landlord could sue for possession without the certificate of the Controller. Similarly‑ if the tenant failed to perform other conditions of the tenancy the landlord could sue for possession without the certificate. There is no logic in the contention that if a tenant failed to perform the condition not to sublet or assign lease‑hold rights without the permission of the landlord the bar imposed by section 10 was attracted and it was necessary to obtain a 'Certifi cate under section 10 (2). Clause (b) of subsection (2) of section 10 of Karachi Rent Restriction Act, 1953 became applicable only to cases in which the agreement of lease did not make provision against subletting or assignment of lease hold rights without the permission of the landlord in writing. The interpretation placed by the Letters Patent Bench of the High Court was therefore correct that section 10(1) was not a bar to the competence of the suit since tenant had failed to perform one of the conditions of the tenancy namely; not to sublet without the permission and consent of the landlord in writing.

(c) West Pakistan Urban Rent Restriction Ordinance (VI of 1959)‑

Ss: 13 & 2‑Section 13 speaks of "a tenant in possession;'‑‑M assigning unexpired portion of his lease‑hold rights to B‑M ceases to be a tenant within meaning of S. 13 and bar contained in subsections (1) & (2) of S. 13 not attracted.

Section 13 has no application where it speaks of a tenant in possession.

The defendant No.1 had assigned the unexpired portion of the lease to defendant No. 2 and defendant No. 2 was therefore not a tenant within sec tion 13 the bar contained in section 13(1) that a tenant in possession shall not be evicted therefrom in execution of a decree passed before or after the com mencement of the Ordinance, did not apply to this case. On the same ground subsection (2) of section 13 which excludes the jurisdiction of Civil Courts to entertain suits for possession against tenants was not attracted: The‑safeguard contained in this section is confined to tenants who remain‑ in possession and do not sublet or assign their lease‑hold rights to others except with the permission in writing of the landlord.

(d) Landlord and tenant‑

‑‑‑‑‑ M assigning his lease‑hold rights to B‑Formerly M paying rent to his landlord A by means of cheques‑Cheques after assignment of lease‑hold rights to B still sent by M to landlord A signed as previously by M but with description added "Managing Director"‑Held : mere addition of words "Managing Director" on cheques did not constitute notice of subletting to landlord A.

A. K. Brohi and Dingomal R. Ramchandani, Senior Advocates Supreme Court (S. M. Sadiq and S. M. Hafiz, Advocates Supreme Court with them) instructed. by G. A. Memon, Advocate‑on‑Record in C. A. No. K‑1 of 1969 and Shah Maqsood, Attorney (absent) in C. A. No. K‑18 of 1 967 for Appellant.

J. H. Rahimloola, Advocate Supreme Court with Zafar Ali Khan, Advocate Supreme Court instructed by V. A. Kidwai, Advocate‑on‑Record for Respondents.

Dates of hearing : 5th, 6th and 7th February 1974.

JUDGMENT

MUHAMMAD YAQUB ALI, J.‑These two connected appeals arise out of Suit No. 80 of 1954 filed by Boman Abadan Irani in the defunct Chief Court of Sind on the 15th December 1953, for ejectment of Jehangir, J. Mobed, defendant No. 1, and the Paradise Theatres Limited, defendant No. 2, from Cinema building known as Paradise Cinema situated in Plot No. 271‑Victoria Road, Karachi, and for mesne profits.

The learned Judge who tried the suit rejected the plaintiff's claim for possession and by judgment dated 21‑12‑1959 decreed the suit for payment of rent only. The plaintiff thereupon filed a further appeal before the Letters Patent Bench which was allowed and decree for possession and mesne profits was passed in his favour against both the defendants.

The plaintiff and the defendant No. 1 died during the pendency of the Letters Patent Appeal and were substituted by their respective legal representatives Shah Behram, Shah Faridon, Mst. Motibai Boman and Mst. Daulat Boman, as plaintiff‑appellants and Manek J..Mobed, Jimmy J. Mobed and Mrs. Parin R. Bomboat, as defendant respondents.

Certificate of fitness to appeal to this Court was granted by the High Court as the value of the subject‑matter in dispute, in suit as well as in the appeal' was over Rs. 20,000. The defendants also applied for special leave to appeal out of abundant caution in case it was held that the High Court did not have the jurisdiction to grant the certificate after the coming into force of the 1962‑Constitution. Leave to appeal was, granted on the 15th March 1967.

The facts relevant to the decision of the Appeals are that the Cinema House known as Paradise' situated in Karachi City originally belonged to Dr. Nariandas Hashmatrai Mirchandani who leased it out on the 9th September 1943 for a period of ten years at monthly rate of Rs. 774 to Jehangir J. Mobed who carried on business in Karachi as Film‑exhibitor in the name and style of Capital Theatres. Under clause 9 of the agreement of lease it was expressly provided that the lessee shall not sublet the cinema building or any part thereof to any one without the written permission and the‑consent of the lessor within the period of lease which shall not be unreasonably withheld.

During the subsistence of the lease Dr. Naraindas Hoshmatrai Mirebandani sold the building to Boman Abadan Irani and Jamshed Kbudamm Minocher under a registered sale deed dated the 2nd February 1949. There after the vendor migrated to India arid on the application of the said Vendees the sale deed was confirmed by the Custodian of Evacuee Property, .Karachi, on the 13th January 1950. On the 16th February 1950, Jamshed Khudaram Minocher relinquished his share in favour of Boman Abadan Trani and the latter became the exclusive owner of the Paradise Cinema. After the sale there was attornment by the lessee by payment and acceptance of rent at the stipulated rate to Boman Abadan Irani.

In the year 1952 the lessee converted his business into a private limited company under the name and style of Paradise Theatres Limited, the shareholders being the lessee, his son Manek J. Mobed, his daughter Mrs. Parin R. Bomboat and daughter‑in‑law Mrs. Khurshid wife of Manek J. Mobed. On the 9th September 1952 the defendant No. 2 was registered and from the same date it took over as going concern The Paradise Theatres,

On the 8th November 1952 Boman Abadan Irani sent a notice through his Advocate to the defendant No. 1 calling upon him to quit the premises of Paradise Theatres on the expiry of the lease on 31‑8‑1953 and deliver peaceful possession as the premises were required by him for his own use. The defendant No. 1 failed to vacate the premises by the due date where upon Boman Abadan Irani filed an application under section 10 of the Karachi Rent Restriction Act, 1953 in the Court of the Rent Controller impleading Jehangir J. Mobed and the Paradise", Theatres as opponents for the grant of a certificate to eject the lessee on the ground of personal requirement. It was specifically averred in the application that before the expiry of the lease and after the service of notice to quit the defendant No. 1 had floated a private Limited Company, opponent No. 2, in the year 1952, of which opponent No. 1 was the Managing Director. During the pendency of the application under section 10 Boman Abadan Irani sent another notice to the defendant No. 1 on 20‑10‑1953 complaining that he had floated the Paradise Theatres Limited Company without his consent and transferred the lease hold rights to it to jeopardise his interest. The application was opposed by the opponents and was dismissed‑by the Controller on 21‑12‑1953 on the finding that the premises were not required by the applicant in good faith for his personal use. The plea of subletting was completely ignored in the order.

Boman Abadan Irani thereupon filed a revision petition in the Court of the Chief Judge, Small Causes Court, which was dismissed on 6th August 1954, affirming the finding that the premises were not in good faith required by the applicant for his personal use. Boman Abadan Irani finally instituted the present suit for ejectment and mesne profits against the defendants in the Chief Court of Sind at Karachi on the original civil jurisdiction out of which this Appeal has arisen.

It was alleged in the plaint that after the expiry of the period fixed in the agreement of lease on 31st August 1953, and issuance of notice to the defendant No. I on the 20th October 1953 the defendant No. 2 was occupying the premises as trespasser. The plaintiff was therefore entitled to recover possession from him and every one claiming under him. Mesne profits were demanded at Rs. 500 per day with interest at the rate of 6 % per annum. In the joint written statement filed by the defendants 1 and 2 the plaintiff's claim in the suit was denied on numerous grounds including the plea of estoppel by virtue of acceptance of rent from defendant No. 2 and the bar contained in section 10(2) of the Karachi Rent Restriction Act, 1953,

On the pleadings of the parties the learned trial Judge framed the following issues:

(1) Is section 10 of Karachi Rent Restriction Act a bar to the suit

(2) Is half of the property in dispute evacuee property

(3) If so, is the suit barred under sections 12 and 34 of Administration of Evacuee Property Ordinance

(4) Is the suit bad for non‑joinder of parties

(5) Is defendant No. 2 a sub‑tenant of defendant No. 1

(6) If so, is not the plaintiff in view of the allegation made in paras. 9 and 10 of the written statement by accepting rent estopped from raising this plea

(7) Can this Court go into the question raised in issues Nos. 5 and 6 in view of the provisions of section 10 of Karachi Rent Restriction Act

(8) Is the order of the Rent Controller dated 28‑11‑1953 Exh. 8 ultra vires

(9) Whether the defendants are entitled to retain the premises after the expiry of the lease

(10) Can this Court proceed without the plaintiff obtaining a certificate from the Rent Controller under section 10 of the Karachi Rent Restriction Act

(11) Is the plaintiff entitled to mesne profits at Rs. 500 per day

(12) To what amount is the plaintiff entitled

(13) Are the defendants entitled to compensatory costs under section 35‑A C. P. C. and

(14) General Relief

The only witness examined in the case was Jehangir J. Mobed. The documentary evidence produced by the parties consisted of (i) the lease deed dated the 9th September 1943, (ff) the Articles of Association of defendant No. 2, (iii) the cheques drawn by the defendant No. 1 as the Managing Director of defendant No. 2 in payment of rent for the Paradise Theatres from 14‑10‑1952 to 31‑8‑1953, (fv) copies of the orders of the Custodian of Evacuee Property, (5) copies of the orders of the Rent Controller and the Chief Judge, Small Causes Court, Karachi and copies of the notices dated 8‑11‑1952 and 20‑10‑1953.

The trial Judge overruled the objection that section 10(2) of the Karachi Rent Restriction Act, 1953 barred the suit, but felt "compelled to think, in the circumstances of this case, that neither the payment of rent through the cheques drawn on the account of defendant No. 2 (by the lessee) amounted to subletting the premises in form or substance; nor its acceptance by the plaintiff amounted to notice of sublease or recognition of sublease." issues Nos. 5 and 6 which covered this controversy were, accordingly, found against the plaintiff and it was held that the defendant No. 2 was the licensee of the defendant No, 1 which assignment did not amount to breach of the terms of the agreement of lease. The prayer for possession was refused and the suit was decreed for arrears of rent only amounting to Rs. 6,104 at the stipulated rate of Rs. 1,774 p.m. for the period 1st September 1953 to the 15th December 1953, with proportionate costs against the defendant No, 1.

On appeal the Letters Patent Bench reversed the findings of the learned Single Judge and held that the transfer of lease hold rights by the defendant No. 1 to the defendant No. 2 amounted to subletting whereupon the defendant No. 1 had ceased to be in possession. This resulted in breach of the terms and conditions of the agreement of lease and deprived the defendant No. 1 of the safeguards incorporated in section 10(t) of the Karachi Rent Restriction Act VIII of 1953. The application. of section 13(1) of the West Pakistan Rent Restriction Ordinance VI of 1959 which had come into force during the pendency of the Appeal and in effect provided that no civil Court would be competent to pass a decree or order for eviction of a tenant, was also ruled out on the same ground.

The plea that the plaintiff had by accepting rent from the defendant No. 2 consented to subletting was rejected on the finding that the cheques were drawn in the name of the Paradise Theatres Limited and signed by Jehangir J. Mobed and there was an express condition in the lease deed for written permission and consent of the lessor which displaced the plea of implied acceptance of subletting. The contention hat the defendant No. 2 did not constitute a separate identity and was in fact a family partner ship was likewise rejected, as defendant No. :1 had after the registration of the defendant No. 2 on 9‑9‑1952 "merged totally into the company". The precedent cases mostly from foreign jurisdiction cited by the learned counsel for the defendants were distinguished on the ground that the law on the subject was contained in different statutes in Pakistan which required inter pretation independently of the decisions in those cases.

The question whether the Chief Court had the jurisdiction to entertain the suit in the, face of the bar contained in section 10(1) of the Karachi Rent Restriction Act VIII of 1953 was answered by the learned Judges in the following terms:

"18. On consideration of the arguments raised before us the question. in our opinion, for the purpose of the present case resolves itself thus: Firstly, whether subsection (1) of section 13 applies to this case because if it does, we have no doubt that we cannot pass a decree for eviction of the defendants. Secondly, if subsection (1) does not apply to this case whether in view of the procedure provided by sub section (2) the jurisdiction of this Court to pass a decree for eviction is impliedly barred.

19. With regard to the first question, the conclusion that we have reached is that it applies only to a tenant in possession. Sub section (1) says so expressly and we do not think that it can be interpreted in a manner so as to protect a person who has parted with possession by transferring his right to another person. This subsection no doubt also covers cases of tenants whose tenancy has been terminated. This, however, in our opinion, still relates to a tenant who continues to be in possession after determination of his tenancy. Such a termination can take place either by efflux of time or by notice. But we are not dealing with such a case. The tenant in the present case, as we have found, had transferred his rights by a sub‑lease in contravention of clause 9 of the lease. This took place in 1952. According to law, as it then stood, a suit for possession upon the ground that the tenant had violated a condition of the tenancy was permissible and was not barred. The present suit was brought in the year 1954 and, in our opinion, it could be frustrated now only if it could be held that subsection (1) of section 13 of the present Ordinance applied to it. The cases which were cited before us on behalf of the respondents and to which we have referred were all cases of tenants in possession and we are for that reason of the opinion that the ratio in those cases does not apply to this case. The question which we are now examining did not arise in any of those cases; may be for the simple reason that the tenant in those cases were still in possession and were being sought to be evicted. It must be noted that we are dealing with a statute which militates against the right of property as available under the general law or local usage. This law must, therefore, be strictly construed for the said reason and also because it seeks to oust the jurisdiction of the ordinary Courts and even renders certain decrees to be nugatory. If a case does not strictly come within the scope of this section we do not think we should be justified in applying it by giving it a liberal construction. In the view, that we have taken, we hold that section 13(1) of the Ordinance does not oust the jurisdiction of the Court in the present case and an effective decree for eviction can be passed against the defendant No.1 because he is not a tenant in possession and also against the defendant No. 2, the limited company, because it is not a tenant within the definition of the term. We answer the first question accordingly.

20. With regard to the second question it would be necessary to examine the history of this law. When this suit was instituted it was the Karachi Rent Restriction Act which held the field and we have found in respectful agreement with the learned Single Judge that section 10 of that Act did not bar the suit. After the establishment of West Pakistan certain legislations were passed but they did not affect the Karachi Rent Restriction Act which continued to apply to the Federal Capital which then was Karachi. The first amongst these legislations is West Pakistan Urban Rent Restriction Ordinance XIX of 1950. This, however extended only to certain districts of West Punjab. This was followed by the West Pakistan Urban Rent Restriction Act IX of 1957. By subsection (2) of section 1 of this Act it was extended to all the urban areas in West Pakistan, except the Federal Capital and the Special Areas were still excluded from its operation so that the federal territory of Karachi continued to be governed in these matters by the Karachi Rent Restriction Act. Then on 7th June 1962 two Ordinances were published. One of these was a Central Ordinance (Ordinance XLVIII of 1962) described as the Karachi Rent Restriction (Amendment) Ordinance, 1962. This came into force at once and by section 5 of this amending Ordinance section 1.0 of the Karachi Rent Restriction Act was amended so as to bring it into line with section 13 of West Pakistan Ordinance VI of 1959. The other was a Provincial Ordinance (Ordinance XXXVIII of 1962). By this Ordinance the Karachi Rent Restriction Act of 1953 in its application to areas other than cantonment areas was repealed. However, this Ordinance did not come into force at once and it was provided by subsection (2) of section 1 that it shall come into force on such date as the Provincial Government by notification in the official Gazette, may appoint. Such a notification was published on 1st July 1963. Thus it was only as from the lst of July 1963, that the West Pakistan Ordinance VI of 1959 came to be applied to Karachi. Now, by the Central Ordinance XLVIII of 1962 whereby section 10 of the Karachi Rent Restriction Act was amended so as to bring it in line with section 13 of the Ordinance of 1959 there were savings which were provided by section 12. Subsection (1) of section 12 provided that notwithstanding anything contained in this Ordinance any person exercising the powers of a Controller under the said Act (The Karachi Rent Restriction Act) shall continue to exercise such powers. By subsection (2) all applications pending before the Controller immediately before the promulgation of this Ordinance for obtaining a certificate under subsection (2) of section 10 of the Karachi Rent Restriction Act were to be deemed to be applications under the provisions substituted by this Ordinance. By the third saving clause which is important it was laid down that "save as provided in sub section (2) nothing in this Ordinance shall affect any suit or proceedings or any application for revision pending before any Court or authority immediately before the promulgation of this Ordinance.

21. Having regard to the savings in the aforesaid subsection (3) of section 12 it would follow that the present suit for eviction which was not barred by section 10 of the Karachi Rent Restriction Act would be saved. This position was not altered by the Provincial Ordi nance XXXVIII of 1962 which applied upon the notification dated 1st July 1963. The saving provisions in this amending Ordinance are contained in its section 3 but they do not expressly or by implication affect a pending suit such as the present one and which had been saved by subsection (3) of section 12 of Ordinance No. XLVIII of 1962."

The next contention that subsection (2) of section 13 of the West Pakistan Rent Restriction Ordinance VI of 1959 was a bar to the jurisdiction of the Letters Patent Bench to pass a decree for possession in favour of the respon dent was repelled by the learned Judges for the following reasons:

"22. Coming back to subsection (2) of section 13 of the present Ordi nance it may be observed that it provides for a procedure which the landlord has to follow when he seeks to evict his tenant. This provision, in our opinion, is not retrospective, and, therefore, it cannot be pressed into action for the purposes of the argument that in so far as a procedure for obtaining eviction of a tenant including a tenant whose tenancy has expired or who has sublet the premises the jurisdiction of the civil Court is ousted in respect of the present suit. As we observed this suit was instituted in 1954 and the civil Court was competent to pass a decree for possession having regard to the provisions of section 10 of the Karachi Rent Restriction Act. This suit could, therefore, be displaced on the ground of absence of jurisdiction only if subsection (1) of section 13 was applicable to it or if it could be found that subsection (2) of section 13 had the effect of excluding the jurisdiction of the civil Court in a case of this nature. This we have held it does not. Our conclusion, therefore is that the jurisdiction of this Court is not barred either on the ground of section 13(1) or section 13 (2) of Ordinance VI of 1959."

On these findings the appeal was allowed and the respondents who had by then been brought on the record as legal representatives of the plaintiff were granted a decree for possession in terms of the prayer contained in Para. 15(a) with costs. Mesne profits were, however, allowed at the rate of Rs. 1,774 p.m. because the plaintiff had failed to furnish any proof in support of his claim for Rs. 500 per day.

In support of the appeal Mr. A. K. Brohi argued; firstly, that there was no subletting, secondly, that the suit was in the absence of a certificate under subsection (1) of section 10 of the Karachi Rent Restriction Act VIII of 1953 barred in law and thirdly, that though the defendant No. 1 had converted his partnership business into a limited company he himself continued to be in possession of the demised premises.

In our opinion the decision of the appeal turns on the finding whether the defendant No. 1 was in possession of the Paradise Theatre when the suit was filed. If the answer is in the affirmative, the suit was in the absence of the certificate under subsection (2) of section 10 of the Karachi Rent Restriction Act VIII of 1953 barred by law. Similarly in that case sub section (1) of section 13 of the West Pakistan Rent Restriction Ordinance VI of 1959 which had by then been extended to Karachi on the 1st July 1963 excluded the jurisdiction of the High Court to pass a decree for possession in favour of the plaintiff.

To meet the finding recorded by the Letters Patent Bench that defendant No. 1 had assigned the unexpired portion of the lease to the defendant No. 2 and parted with possession Mr. A. K. Brohi relied on the cases: Peebles v. Crostwaite ((1896‑97) 13 T L R 198), Chaplin v. Smith ((1925) 1 K B 198) and Gian Singh & Company v. Devraj Nahar & Company ((1965) 1 All E L R 768). The learned Judges of the Letters Patent Bench expressed the view that the dictum in these cases did somewhat help the defendants but declined to follow them as the law in Pakistan was contained in different statutes which must be interpreted independently of the decision in those cases.

In Peebles v. Crostwaite the action was brought by the tenant Peebles and was continued after his death by his executors. The cause of action was that the landlord had effected substantial changes in the premises which interfered with the right of way of the plaintiff: The defence was raised by the landlord that there had been no breach of covenant in the lease relating to prohibition against assigning, underletting or parting with possession. The facts as they appear were that on the demise of Peebles the premises and business were sold by the executors to a limited company A. M. Peebles & Son (Limited). The property was not assigned to the company. Mr. Justice Romer who tried the action had on facts concluded:‑

" . . . . . the lessee's executors had never been out of possession, possession had been retained for one reason because it was desired that no breach of covenant should be committed and also because the purchase by the company was not fully completed; and it was not desired that while the action was pending the rights of the parties should be interfered with. The executors were still in possession. The legal possession was still theirs, although pending completion of the . . . . . and a licence to assign they had sold to company to use the premises for the purposes of the company. Doing so was not a breach of the covenant. If a lessee retained possession he had not committed a breach of such a covenant by allowing other persons to use the premises."

The matter coming up in appeal Lord Justice Lindley observed:‑

" . . . . . the executors had agreed to sell their testator's business, including the demised property, to a limited company, but they were advised to be careful what they were about or else they would forfeit the property. They were informed by their solicitor Mr. Soames that they should not part with possession."

Then follows the observation on which Mr. A. K. Brohi strongly relied: "No doubt they let the company into possession, but they did not part with possession themselves and so long as it was true in fact that the lessee had not parted with possession they had committed no breach of the covenant". So portions had been handed over, but not the lease hold property.

In Chaplin v. Smith the plaintiff claimed possession of a piece of land and appurtenances for breach of a covenant not to assign or underlet or part with possession thereof contained in a lease of which the defendant was the lessee. On December 15, 1919, a private company had been registered in the name of Swiss Cottage Motor Company Limited. Its objects were among others "to acquire or establish and carry on the business of motor engineers, garage proprietors and manufacturers; to purchase, take on lease, rent, hire, or otherwise acquire any real or personal property, and in particular any land, buildings, plants, machinery, stock in trade, patents, and any estate or interest therein." Before the lease of November 24, 1920, was executed the defendant informed the plaintiff that he proposed to carry on the business by means of a company, and the plaintiff's solicitors wrote to the defendant saying that before consenting to any assignment or underlease to a company the plaintiff would require particulars and the scope and objects of the company. After the particulars had been furnished the plaintiff declined to accede to defendant's proposal, but made a counter proposal which, however, was not assented to. The defendant carried on the business of the Hampstead and Swiss Cottage Motor Company Limited upon the demised premises. There was no document, in writing, defining the interest, if any, of the company in the premises. It had its name exposed there. On May 3, 1923, a private company was incorporated under the name of William Sanderson's Motor Company Limited. The directors were one William Sanderson and the defendant, who was the Managing Director. During the negotiations for the transfer of the business and good will of the Hampstead Company to William Sanderson's Motor Company the defendant consulted his solicitor, who advised him that he could not assign the lease or underlet or part with possession of the premises. On May 30, 1923 "he wrote to Mr. William Sanderson, his co‑director in William Sanderson's Motor Company and the chairman of that company that the company will have only the use of the premises as he must remain in possession all the time. Mr. Sanderson assented and the business of William Sanderson's Motor Company was carried on without further agreement or variation until some months after July 6,1923, the date on which action was raised. On facts Shearman, J. gave judgment for the plaintiff on the ground that the defendant had parted with the possession of the premises in breach of the covenant. The decision was reversed on appeal on the finding that the authorities bound the Court to say that the defendant had not parted with possession of the premises or any part thereof. Scrutton L. J., agreeing with the judgment by Bankes L. J., remarked

"In these cases the Court relaxes somewhat its usual upright attitude and leans away from the forfeiture. This explains many of the decisions. The learned Judge seems to have proceeded thus: He found the company in occupation; he treated it as being in exclusive occupation and therefore in possession, and concluded that the lessee must have parted with possession and so incurred a forfeiture. The flaw in this reasoning is that the occupation was merely that of a licensee. Such an occupation is not necessarily exclusive. In truth there was no evidence of possession by the company; and if in law the lessee did not part with possession there was no breach of the covenant."

The decision in this case is distinguishable as possession was expressly retained by the tenant. He simply allowed the user of the premises to William Sanderson's Motor Company Limited. The term "possession" has acquired a technical meaning in relation to the law relating to "landlord" and "tenant" in England. Moreover Mr. Smith, the defendant, was found to have been constantly in the premises himself and kept the key with him. He allowed the company to use the premises while he himself remained in possession of that.

In Gian Singh & Co. v. Deverai Nahar & Co. the appeal was by the landlord, Gian Singh & Company, from an order of the Court of Appeal of the Supreme 'Court of the Federation of Malaya allowing the respon dents' appeal from a judgment of Dato Hashim, J., ordering that the respondents should quit and deliver possession to the landlords of shop premises in Kuala Lumpur. The landlords were the chief tenants of the shop premises. At the end of 1955, the tenant took over his father's business in the premises on an oral monthly tenancy. In 1958, the tenant took two partners into his business. By the partnership deed, the partners were to be entitled to the capital and property for the time being of the partnership and to the goodwill of the business in equal shares, the capital of the partnership was to consist of the net value of the stock‑in‑trade, book debts and other assets of the business, less its outstanding liabilities and the business was to be carried on at the premises or at such other place or places as the partners might from time to time agree on. The deed contained no specific reference to the tenancy, nor any other indication as to what rights or duties any party should have with regard to it. The landlords claimed possession of the premises on the ground that, by assigning to the partnership, the tenant had broken his covenant not to assign or sublet the premises without the landlords' written consent which they had admittedly refused to give. It was observed that the fact that the premises were an asset to the business did not bear on the question whether they were an asset that was transferred to the partnership, for the use of the premises by the business might have been dealt with in other ways; accordingly, any assignment must rest on the partnership deed and, as that could not be construed as constituting an assignment of the premises by the tenant, there was no breach of the covenant and landlords were not entitled to possession. The decision in this case rests on the finding of fact that there was no assignment of the premises. At page 770 of the Report it is stated:‑

"The respondents' Advocate never made any admission that there was an assignment and the Judge's notes of the submissions are brief. The efforts of the respondents to secure receipts in the name of "Nahar & Co." after the partnership had been formed might well support an inference against there having been any assignment. The tenant certainly, and the other respondents probably, knew that the landlords had for some time past been maintaining a clear refusal of permission to any assignment; and it could well be that they considered it too dangerous to commit themselves to anything that could constitute an assignment and might jeopardise the tenancy, and preferred rather to wait and see whether it was possible for the partnership by some manoeuvre to insinuate itself or infiltrate into the tenancy. The requests for receipts made out to Nahar & Co. could be such a manoeuvre, and, if granted, might have succeeded in that object. Be that as it may, their Lordships are of opinion that it is to the deed that the landlords must look if they are to establish an assignment.

Hill, J. A., in the Court of Appeal, aptly quoted from Lindley on Partnership (12th Edition) p. 365, under the heading "property used for partnership purposes not necessarily partnership property" the following words

"Again, it by no means follows that property used by all the partners for partnership purposes is partnership property. For example, the house and land in and upon which the partnership business is carried on often belongs to one of the partners only, ether subject to a lease to the firm, or without any lease at all."

He also relied on Peebles v. Crosthwaite and Chaplin v. Smith, as establishing that a lessee who retains possession does not commit a breach of the covenant against parting with possession by allowing other people to use the premises. When one person is proprietor of a business, the question which assets are included as assets of the business may not always be clear. There is no certainty that the tenant regarded his personal tenancy, albeit used by him as premises for carrying on the business, as an asset of the business, which passed with the business, and if, under the deed, the tenancy was being assigned to the partnership, one would certainly expect to find clearer provision with regard to it. The tenancy might have been dealt with by the tenancy giving to his partners a licence to trade with him there or by his constituting himself a trustee for the partnership, or merely by giving the partners no express rights at all. From a practical point of view, the incoming partners were, even if no arrangement at all was made about the premises, adequately protected by clause 4 which provided that the business should be carried on at the premises "or at such other place or places as the partners may from time to time agree upon." In the face of that it is difficult to see how the incoming partners could be ousted from the premises by the tenant; and they may well have been content to leave the tenancy vested in the tenant rather than play with fire by seeking an assignment. But whatever be the motives that lay behind the deed, their Lordships cannot construe it as constituting an assignment. They are, therefore, in agreement with the Court of Appeal that there was no assignment and that the tenant should not have been ordered to vacate the premises."

Before proceeding further we may advert to the facts of the present case. The lease was obtained by the defendant No. 1 in his own name. The ten years period of lease was to expire on 31‑8‑1953. On 8‑11‑1952 the landlord issued notice to the defendant No. 1 to quit on the expiry of the lease on 31‑8‑1953. The landlord filed an application in the Court of the Rent Controller for grant of a certificate under section 10(1 ) of the Karachi Rent Restriction Act, 1953 to file a suit against the defendant for ejectment. On 20‑10‑1953 the landlord gave another notice to the defendant No. 1 that after the notice to quit was given he had incorporated defendant No. 2 in order to jeopardise the proprietary rights of the landlord, and in breach of the agreement of lease transferred the lease hold rights to the company.

Article 12 of the Association of defendant No. 2 (Exh. 20) recites that the Paradise Limited was being incorporated with the object of forthwith entering into an agreement with the proprietors of the Paradise Theatre, Picture House Theatre, Capital Theatre and Mauripur Theatre and to acquire and take over the said joint concerns including existing contracts and agreements with all or any of their assets and liabilities, right, title and interest. The agreement with the proprietors was not disclosed by the defendants in their evidence, but it is admitted that the business of these cinemas was taken over by the defendant No. 2 from the date of its registration. The defendant No. 1 maintained that tenancy rights were not transferred and he was in possession, but to determine the issue whether the plea was correct, it will be necessary to refer to the statement made by him in Court on 6‑11‑1959 in extenso

"Examination‑in‑Chief to Mr. S. M, Hafiz

There are four share‑holders of defendant No. 2, they are; myself, my son Manek J. Mobed, my daughter Parin and my daughter‑in‑law Khurshid wife of Manek J. Mobed. I am the Managing Director of the defendant No. 2. I am lessee of the premises in suit. The tenancy rights have not been transferred to defendant No. 2. Nor have they been sublet or assigned to defendant No. 2. I am in possession of the premises which have been leased out to me and are the subject‑matter of this suit. I am in continuous occupation of these premises from the commencement of the lease upto now. I occupy a room in the premises which I use as an office. I am in occupation of that room from the date of the lease deed and even before that. My occupation of the room continues.

To Mr. Chundrigar

To Court.‑I have no arrangement with defendant No. 2. Defendant No. 2 does not pay me anything. Defendant No. 2 is in partnership with me, but I am solely incharge of everything. Defendant No. 2, has nothing to do with the premises in suit. I earn the profits and distribute them am angst the shareholders.

To Mr. Chundrigar.‑I distribute the profits amongst the shareholders as the Managing Director of defendant No 2. 'The capital of defendant No. 2 is divided into 64 shares. I hold 20 shares out of them. They belong to me. The shares are held by the four share holders as stated in the memoranda and articles of association of the Company Exh. 20. Defendant No. 2 commenced functioning from its date of incorporation, i.e. 9th September 1952. The Company was to take over "as a going concern business" of the four theatres mentioned in clause 3(1) of memorandum of association of the Company. The Company did take over the business of the four theatres in pursuance of that provision. I do not know the difference between acquisition' and taking over', but the Company has done exactly as stated in clause 3(l) of the memorandum of association. From the date of the registration of the Company I am drawing remuneration from the Company viz., defendant No. 2, as its Managing Director. The remuneration is paid to me from the profits made by the defendant No. 2. It is true that the premises in suit are used for cinema business by defendant No. 2 from the date of its registration. The premises, however, belong to me. It is true that the rent of the premises was paid by me through cheques after the registration of the Company. The cheques were drawn on behalf of the defendant No. 2, but were signed by me. The money came from the profits of the business. I signed the cheques as the Managing Director of the Company and not in my personal capacity. The money was paid from the business of the Company. The money paid by cheques was not debited to my personal account. I had my personal accounts in other Banks. There is an account in my own name. Four shareholders of the Company have their accounts in the books of the Company. This money was not debited to my account. The rent was paid from the account of the company from the date of its registration. The rent was paid by the Company with my consent.

To Court.‑I did not intimate the plaintiff that I was forming a Company because it was to consist of my own daughter and family, but the plaintiff knew of it; otherwise he would not have accepted the cheques.

To Mr. Chundrigar.‑I did not obtain permission of the plaintiff in writing or orally for allowing defendant No. 2 to use the premises because defendant No. 2 consists of my own family."

There was even no suggestions in the statement of Jehangir J. Mobed that the premises were taken over by the defendant No. 2 as a licensee under him. On the contrary in para. 10 of the joint written statement defendant No. 2 claimed to be a tenant in its own right. In reply to the averments in para. 10 of the plaint that the defendants were occupying the premises as trespassers defendants replied:‑

"10. The allegations made in para. 7 of the plaint are denied. The plaintiff is put to the strict proof of the said allegations. As stated above the plaintiff recognised defendant No. 2 as tenant or in any case as sub‑tenant by accepting rent under the lease from them through cheque. In fact the plaintiff knew of this position and for this reason impleaded defendant No. 2 as party before the Rent Controller in Case No. 269/53 decided on 23rd November 1953, for certificate under section 10 of the Karachi Rent Restriction Act. Besides the plaintiff did not take this plea before the Rent Controller, Karachi and did not ask for a certificate under section 10 on this ground. It is submitted that even if the plaintiff could raise the alleged objection he has waived the same and in law is now estopped to raise the same.

In any case the plaintiff has filed the present suit without having obtained a certificate under section 10 of Karachi Rent Restriction Act and the suit is liable to be dismissed for this reason."

We thus have it that as from the date of the registration of the defendant No. 2 rent was paid by the said defendant and the amount was not debited to the account of defendant No. 1. No steps were taken to safeguard against forefeiture on account of subletting. On these facts the dictum in these cases; Peebles v. Crostwaite, Chaplin v. Smith and Gian Singh & Company v. Devraj Nahar & Company, relied upon by Mr. A. K. Brohi, was not attracted.

In support of the contention that the conversion of the firm Capital Theatre into a private Limited Company did not result in any material change in the status of Jehangir J. Mobed as a tenant Mr. A. K. Brohi relied on the principle enunciated in Yenidje Tobacco Company Limited ((1916) 2 A E L R 1050) that:‑

"If this were a case of partnership there would clearly be grounds for a dissolution and that the same principle ought to be applied where there was in substance a partnership in the guise of a private company. The position amounted to a complete deadlock, and it was "just and equitable" that the company should be wound up."

The underlying principle is that as in the case of partnership mere loss of confidence among the partners is sufficient ground for its dissolution a private Limited Company which consists of family‑members may also be wound up if there is deadlock among the shareholders.

The dictim in Yenidje Tobacco Company is confined to cases of winding up of private limited companies consisting of family members. It was followed in the case of Ladli Parshad Jaiswal v. Karnal Distillery Company Limited (P L D 1965 S C 221), but it has no relevance to the present case. We are not dealing with a winding up application but with a case of subletting without the consent of the landlord. If a person obtains lease‑hold rights in his own name and subsequently assigns them to a firm or to a private limited company consisting of family members it cannot be said that no change has taken A place in the status of the tenant or that it is not a case of subletting or assignment of lease hold rights.

It was next argued by Mr. A. K. Brohi that the defendant No. 1 did not part with possession in favour of defendant No. 2 but we were unable to accept this contention. If defendant No. 1 had taken care to guard against subletting he would have personally paid the rent to the landlord and retained possession of the Paradise Theatre. We have seen that from the date of the registration of the defendant No. 2 as a Private Limited Company rent for Paradise Theatre was paid by it out of its income of running the cinema on its own account and not on account of defendant No. 1. The premises of the Paradise Theatre and the business carried on in the premises by the firm Capital Theatre were inseparable from each other. The taking over of the business of the Cinema by the defendant No. 2 therefore resulted in taking over of the premises by it which divested the defendant No. 1 of possession. The position would have been different if the premises and the business were separate entities and the defendant No. 2 had taken over the business part only while the physical possession had remained with the defendant No. 1. The business of running the cinema included use of the premises, the machinery, the apparatus and furniture installed in the Cinema by defendant No. 2. This operation was not possible until defendant No. 2 had entered into possession. No further discussion is necessary to conclude the discussion except to refer to para. 6 of the joint written statement in which it is categorically asserted that defendant No. 2 is the tenant of Paradise Theature. It follows that defendant No. 1 ceased to be in possession as soon as the defendant No. 2 took over the business of the Paradise Theatre. The case must therefore be decided on the premises that defendant No. 1 had parted with possession and assigned the unexpired portion of the lease to the defendant No. 2 with effect from the 9th September 1952.

In the alternative Mr. A. K. Brohi argued that even if there was subletting without the written permission and consent of the landlord, a certificate under section 10 (1) of the Karachi Rent Restriction Act, 1953 was necessary to maintain the suit for ejectment of the defendants. To appreciate the plea it will be helpful to reproduce the relevant provisions of section 10 of the Act.

"10. No order for ejectment to be made if fair rent paid‑

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 conditions 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

(6) that the tenant has sublet the premises without the permission of the landlord, or

(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 premises are held.

As one of the grounds for grant of a certificate to the landlord to sue the tenant for eviction was subletting without permission' it was argued that if the condition of the tenancy which the tenant had failed to perform was "subletting without permission in writing of the landlord" it was necessary to obtain certificate to that effect from the Controller.

We see no justification for the interpretation placed by Mr. A. K. Brohi on section 10 of Karachi Rent Restriction Act, 1953. It was conceded that if a tenant failed to pay rent or was not ready and willing to pay rent, the landlord could sue fur possession without the certificate of the Controller. Similarly if the tenant failed to perform other conditions of the tenancy the landlord could sue for possession without the certificate. There is no logic in the contention that a tenant failed to perform the condition not to sublet or assign lease hold rights without the permission of the landlord the bar imposed by section 10 was attracted and it was necessary to obtain a certificate under section 10 (2). In our opinion clause (b) of subsection (2) of section 10 became applicable only to cases in which the agreement of lease did not make provision against subletting or assignment of lease‑hold rights without the permission of the landlord in writing. The interpretation placed by the Letters Patent Bench of the High Court is therefore correct that section 10 (1) was not a bar to the competence of the suit since defendant No. 1 had failed to perform one of the conditions of the tenancy namely; not to sublet without the permission and consent of the landlord in writing.

In the alternative it was urged by Mr. A. K. Brohi that after the applica tion of the West Pakistan Rent Restriction Ordinance, 1959, the High Court was precluded from passing a decree for possession against the defendants even if it was found that defendant No. 1 had sublet the Paradise Theatre to defendant No. 2. The relevant provisions of section 13 are to the following effect:

"Section 13.‑(1) A tenant in possession of a building or rented land shall not be evicted therefrom in execution of a decree passed before or after the commencement of this Ordinance, or otherwise and whether before or after the termination of the tenancy except in accordance with the provisions of this section.

(2) A landlord who seeks to evict his tenant shall apply to the Controller for a direction in that behalf. If the Controller after giving the tenant a reasonable opportunity of showing cause against the applica tion, is satisfied that‑

(i) the tenant has not paid or tendered rent due by him in respect of the building or rented land, within fifteen days after the expiry of the time fixed in the agreement of tenancy with his landlord, or in the absence of any such agreement, (within sixty days from the period) for which the rent is payable; or

(ii) the tenant has, without written consent of the landlord‑

(a) transferred his right under the lease or sublet entire building or rented land or any portion thereof, or

(b) used the building or rented land for a purpose other than that for which it was leased."

In 1965 another clause was added to this sub‑clause

(or has infringed any condition of the tenure on which the building or rented land is held by the landlord);

As the cause of action had arisen in this case in 1952 and the suit was filed on the 15th December 1953, the newly added clause had no application to this case inasmuch as it was not made to operate retrospectively.

Section 13 has no application to this case as it speaks of a tenant in possession'. "Tenant" is defined in section 2 of the West Pakistan Urban C Rent Restriction Ordinance VI of 1959 as:

"tenant" means any person by whom or on whose account rent is pay able for a building or rented land and includes (a) a tenant continuing in possession after the termination of the tenancy in his favour and (b) the wife and children of a deceased tenant, but does not include a person placed in occupation of a building or rented land by its tenant, unless with the consent in writing of the landlord, or a person to whom the collection of rent or fees in a public market, cartstand, or slaughter‑house or, of rents for shops has been farmed out or leased by a municipal, town or notified area committee, or by the Corporation of the City of Lahore or by the Lahore Improvement Trust or any other Improvement Trust :"

On our finding that the defendant No. 1 had assigned the unexpired portion of the lease to defendant No. 2 and that defendant No. 2 was not a tenant within section 13 the bar contained in section 13(1) that a tenant in possession shall not be evicted therefrom in execution of a decree passed before or after the commencement of the Ordinance, did not apply to this case. On the same ground subsection (2i of section 13 which excludes the jurisdiction of Civil Courts to entertain suits for possession against tenants was not attracted. The safeguard contained in this section is confined to tenants who remain in possession and do not sublet or assign their lease hold rights to others except with the permission in writing of the landlord. Though prayer for possession was made both against Jehangir J. Mobed and the Paradise Theatres Limited, in the suit the first named was impleaded as a defendant because the lease was givers to him and it required determina tion whether he had lost his lease‑hold rights by subletting to the defendant No. 2. In case the issue was decided in favour of the plaintiff the decree for possession was to be passed against the defendant No. 2. The alternate, contention raised in support of the appeals therefore also fails.

Lastly it was urged by Mr. A. K. Brohi that the plaintiff was estopped by conduct from questioning the status of defendant No. 2 as a tenant in asmuch as he had accepted cheques for rent of the Paradise Cinema from defendant No. 2. It was pointed out that cheques were signed by Jehangir J. Mobed as Managing Director of the Paradise Theatres Limited and there were receipts in his hand acknowledging payment of rent.

There is no force in the contention. Neither defendant No. 1 nor defendant No. 2 served a notice on Mr. Boman Abadan Irani that the latter had entered into possession as sub‑tenant or assignee of lease‑hold rights. Formerly cheques for rent were issued by Mr. Jehangir J. Mobed under his signatures. Cheques for rent were now sent by him in his name with the description Managing Director, Paradise Theatre Limited'. This addition by itself did not constitute notice of subletting to the landlord. Moreover the relevant condition of tenancy was "without the permission and consent of the landlord in writing'. It was idle on these facts to contend that by mere receipt of cheques signed by Jehangir J. Mobed as Managing Director, Mr. Boman Abadan Irani had waived the fulfilment of the condition that the tenant will not sublet the Paradise Theatre without the permission and consent in writing of the landlord. Nor was there any change of position on the part of the defendant No. 1 or defendant No 2 by the receipt of cheques by Mr. Boman Abadan Irani drawn by Mr. Jehangir J. Mobed as Managing Director of defendant No. 2. The doctrine of estoppel had therefore no application in the facts of the case. The last plea raised by Mr. A. K. Brohi likewise fails.

As a result of the above discussion we dismiss both the appeals but with one set of costs.

K. B. A. Appeals dismissed.

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