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First Rent Appeal No. 539 of 1982, decided on 30th April, 1985.

---Ss. 21 & 7--Enhancement of rent--Provision of enhanced rent in tenancy agreement in case tenant failed to vacate premises after agreed period of tenancy, held, amounted to payment of fine and S. 7 of Rent Ordinance 1959 was attracted--Tenant having accepted terms and conditions of such tenancy agreement, held further, not legally bound to pay rent at enhanced rate as same was provisions of law.

P L D 1980 S C 298; 1980 S C M R 834; P L D 1983 Quetta 17 and 1983 C L C 2700 ref.

T.A. Evans v. Muhammad Ashraf P L D 1964 S C 536 rel.

---Ss. 7 & 13--Sind Rented Premises Ordinance (XVII of 1979), S.21(1)--Ejectment--Default in payment of rent--Period of tenancy expiring--Tenant paying rent to extent initially agreed but lacking to pay at enhanced rate which he agreed in tenancy agreement in case he failed to vacate premises--Clause of enhanced rate of rent amounting to fine and hit by provisions of law--Tenant, held, committed no default- Order of ejectment passed by Rent Controller on account of such default set aside.

Hassan Asghar Khan Rizvi for Appellant.

Abdul Latif A. Shakoor for Respondent.

Date of hearing: 6th March, 1985.

This appeal under section 21(1) of the Sind Rented Premises Ordinance, 1979 has arisen from an order of ejectment passed by the learned Senior Civil Judge/Rent Controller-XII, Karachi in Rent Case No-129 of 1976 on 29-4-1982.

2. Appellant Dawood is a tenant of the respondent Mst. Zubaida Bai in a Flat No.4 Plot No.18, Block 3, Maqbooi Co-operative Housing Society, Karachi. The parties entered into a tenancy agreement for a period of 11 months from 15-12-1973 to 14--11-1974. 'the agreement of tenancy was actually executed on 26-11-1973. The rent was settled for that period at Rs.325 per month. The tenure of the tenancy was extended for further period of 11 months expiring on 14-10-1975. It was stipulated in the tenancy agreement that in case the tenant would fail to vacate the rented premises on the expiry of the tenancy tenure, he would be liable to pay enhanced rent at 50 above the settled rent for the first

four months and would thereafter be liable to pay rent at Rs.650 per month for the subsequent period. 'the appellant/ tenant continued occupying the flat after the expiry of the period of tenancy having expired on 14-10-1975, but he did not pay the rent at the enhanced rent as per terms and conditions of the agreement mentioned above. He did not vacate the premises even. The respondent, therefore, filed Rent Case No.129/76 for ejectment of the appellant on the ground that he had made default in payment of rent. The appellant resisted the ejectment application. He contended that he had tendered rent at the settled rate of Rs.325 per month and that he was not liable to pay rent at the enhanced rent and no default in payment of rent was committed by him.

The learned Controller struck the following issues for determination: -

"(1) Whether the opponent has committed default in payment of rent

(2) Whether the applicant is entitled to get vacant possession of the premises in pursuance of agreement of tenancy after 11 months or after the period fixed in the tenancy agreement

(3) Whether the applicant is entitled to the rent at the rate of Rs.487.50 for 4 months and thereafter at the rate of Rs.650 P.M. as per terms of agreement of tenancy as penalty

(4) What should the order be "

4. The parties adduced evidence. The respondent/landlord's father Naji Moosa gave evidence for her, whereas the opponent gave evidence himself. The learned Controller held by the impugned order that the appellant was liable to have paid the rent at enhanced rate as stipulated in the tenancy agreement and on account of his having failed to pay the rent at the enhanced rent, he was guilty of having committed default in payment of rent and was liable to be ejected and the appellant was directed to vacate the premises within 60 days from the date of the order, which was passed on 29-4-1982.

5. The only question for determination in this appeal is: whether "the appellant was liable to have paid rent at the enhanced rent as per terms and conditions of the tenancy agreement. Clauses 1, 2, 3 and 4 of the tenancy agreement are relevant for the determination of the question. They read as under:--

"(1) That the tenant has agreed to take and the landlady has agreed to give on rent for eleven months the Flat No.4 in the aforesaid building at a monthly rent of Rs.325 per month with effect from 15-12-1973 to 14-11-1974.

(2) That the tenant has deposited a sum of Rs.5,000 (Five thousand) only, as a security deposit in this connection, which is refundable on the termination of this Agreement after adjusting dues and charges if any outstanding against the tenant, and after handing over the vacant possession of the said premises to the landlady.

(3) That the tenant shall make payment of the agreed rent of Rs.325 per month regularly in advance at the beginning of each month.

(4) That on expiry of the eleven months stipulated herein, the tenant shall vacate the premises in good and sound condition. In case he/she fails to so vacate and continues to occupy the premises, he/she agrees to pay rent thereof at enhanced rate of 50% over and above the current rent per month for the first four months of such default and thereafter at the rate of 100 enhanced rate over and above the current rent per month, so long as the tenant does not vacate the said premises and hand over its vacant possession to the landlady in good and sound condition. Such rent also shall be payable in advance and -on the first day of each month."

The main features of the terms and conditions of the tenancy agreement between the parties are that the initial tenure of tenancy was for 11 months from 15-12-1973 to 14-11-1974 and the rent for that period was settled at Rs.325 per month. It was further stipulated that in case the tenant would fail to vacate the rented premises and continue occupying it, he had agreed to pay rent for the subsequent period of occupation at the enhanced rent of 50 over and above the settled rent for the first four months and at the rate of 100 over and above the settled rent for the subsequent period and a sum of Rs.5;000 was also deposited by the tenant with the landlord as the security deposit for adjustment of dues and charges found outstanding tit the time of handing over of the vacant possession of the rented premises.

6. In the context of the aforesaid terms and conditions of the tenancy agreement, the learned counsel for the appellant contended that the appellant had not committed default in payment of rent as he had paid/tendered rent at the initial rate of Rs.325 per month and he was not liable to have paid rent at the enhanced rate. According to him, the stipulation for the payment of enhanced rent was hit by the provisions of section 7 of West Pakistan Urban Rent Restriction Ordinance, 1959, where under the ejectment application was filed. lie placed reliance on the cases reported in P L D 1981 Kar. 150 and PLD 1964 S C 536.

On the other hand, the learned counsel for the respondent urged that the payment of enhanced rent had already been settled by the parties and the provisions of section 7 of the West Pakistan Urban Rent Restriction Ordinance, 1959 were not attracted in the circumstances of the case: He relied upon the cases reported in P L D 1980 S C 298; 1980 S C M R 834; PLD 1983 Quetta 17 and 1983 C L C 2700.

7. The question for determination, therefore, falls within the narrow; compass of the provisions of section 7 of the West Pakistan Urban Rent Restriction Ordinance, 1959, which reads as under:-

"(1) No landlord shall, in consideration of the grant, renewal or continuance of a tenancy of any building or rented land, require the payment of any fine, premium or any other like sum in addition to the rent.

(2) Nothing in this section shall apply to any payment in any subsisting agreement entered into before the first day of January, 1950."

It is, accordingly, to -be determined whether the stipulation in clause 4 of the tenancy agreement reproduced above for the enhanced rent in the event of the tenant failing to vacate the rented premises after the expiry of the period of tenancy amounted to payment of any fine or premium for the grant, renewal or continuance of the tenancy. Leading, of clause (4) of the agreement bears out that the duration of the tenancy stipulated in the agreement was for the period of 11 months and the tenant had to vacate the premises in good and sound condition on the termination of that period and further stipulation for payment of enhanced rent at 50 over and above the settled rent for the first 4 months and at 100 for the subsequent period till the tenant continued occupying the rented premises was obviously in the form of fine imposed for continuance of the tenancy. Obviously, the clause for the payment of enhanced rent offended the provisions of section 7 of the Sind Urban Rent Restriction Ordinance, 1959. The contention of the learned A counsel for the respondent that the payment of enhanced rent was agreed to between the parties at the time the tenancy was established and it amounted to agreed rent and there was no question of charging of fine or premium contemplated under section 7 of the Sind Urban Rent Restriction Ordinance does not seem tenable. The provision fur the enhanced rent was stipulated in the case of the tenant failing to vacate the premises after the agreed period of tenancy. It would have been a different case if stipulation for the payment of enhanced rent were provided for at specified intervals or otherwise during the 8greed tenure of tenancy, as such a provision would not have amounted to the imposition of any fine or penalty. But in the instant case, the enhanced rent was contemplated to be charged on failing to vacate the premises on the expiry of the period of tenancy. It was held in a case of Muhammad Yousaf v. Abdullah reported in P L D 1980 S C 298, which has been relied upon by the learned counsel for the respondent, that an agreement of lease which contains stipulations has prohibited under the West Pakistan Urban Rent Restriction Ordinance, 1959 as illegal and not enforcible to that extent. The appellant having accepted the terms and conditions of the tenancy agreement referred to above did not bind him for the terms and conditions which were against the E provisions of law and authority on this proposition of law is contained in the case of T.A. Evans v. Muhammad Ashraf, reported in P L D. 1964 S C 536 relied upon by the learned counsel for the appellants.

Of course, the facts in the case reporter) it,. P L D 1981 Kar. 1501 (Amir Ali v. Mrs. Aleema Ahmad) are not identical to the facts of this case and that case is not attracted on the facts of this case. One of the cases relied upon by the learned counsel for the respondent viz PLD 1980 S C 298 (Muhammad Yousuf v. Abdullah) supports tile case of the appellants. The other cases relied upon by the learned counsel for tire respondent are not attracted on the facts of this case. No question of payment of enhanced rent in tire event of the tenant failing to vacate the premises on the expiry of the settled period of tenancy was involved therein.

9. It follows from the aforesaid appraisement of the facts of the case and the interpretation of the provisions of section 7 of the Sind Urban Rent Restriction Ordinance, 1959 that the appellant was not legally bound to have paid the rent at the enhanced rent. It is not disputed that he had not committed default in payment of rent to the C extent of the initially agreed rent. Consequently, the view adopted by the learned Controller that the appellant was liable to have paid rent at the enhanced rent is erroneous and his order is set aside. The appeal is allowed with costs.

M. Y. H.

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