Find a Lawyer

First Rent Appeal No.211 of 1986, decided on 21st September, 1986.

‑‑Ss. 8 & 9‑‑Fair rent‑‑Fixation of‑‑Fair rent could be fixed by Rent Controller either on application made by tenant or landlord‑‑While determining fair rent, Rent Controller would be guided by rent of similar premises situated in similar situation in same or adjoining locality; rise in cost of construction and repair charges, imposition of new taxes after commencement of tenancy and annual value of premises on which property tax was levied.

A careful study of section 8 of Sind Rented Premises Ordinance, 1979, will show that fair rent of the premises can be fixed by the Rent Controller either on an application made by the tenant or the landlord. It is further quite clear from section 8 that while determining the fair rent of the premises the Rent Controller will be guided by the rent of similar premises situated in the similar situation in the same or adjoining locality, the rise in the cost of construction and repair charges, imposition of new taxes after commencement of tenancy and annual value of the premises on which the property tax is levied. Section 8(2) further provides that where any addition or improvement in the premises has been made or any tax or public charges has been levied, enhanced, reduced or withdrawn in respect thereof, or any fixtures such as lifts or electric or other fittings have been provided thereon, subsequent to the determination of the fair rent of such premises the fair rent shall, notwithstanding the provisions of section 9 be determined or as the case may be revised after taking such charges into consideration. It is quite clear from reading of section 8 of the Ordinance that while datermining the fair rent of the premises either on the application of the tenant or landlord it is not necessary that there should always be an increase over the existing rent. It is quite possible that the Rent Controller may after taking into consideration the factors mentioned in subsection (1) of section 8 of the Ordiance may well determine "fair rent" of a premises in an appropriate case less than the existing rent. Again, notwithstanding the provision of section 9 of the Act (which certainly also included its subsection (2), the Rent Controller may re-determine the fair rent of a premises under section 8(2) where some improvements have been made in the building or where some new taxes/ charges have been imposed or existing taxes or charges have been withdrawn, after the fixation of "fair rent" by the Controller. It is quite clear from the language of section 8(2) of the Ordinance that the determination of fair rent in the circumstances mentioned in this subsection is uncontrolled by the provision of section 9 of the Ordinance. It is, therefore, quite clear that section 9 is applicable only where fair rent of any premises has already been fixed by the Controller. It is also clear that fair rent when once fixed cannot be further increased except as provided in section 9.

Dr. Cawas C. Mehta v. Addl. Settlement Commissioner P L D 410 1963 Kar. 938; Bank of Bahawalpur v. Chief Settlement Commissioner PLD 1966 Lah. 515; Pak Tanneries v. Hidayatullah P L D 1972 Lah. 880 and Allah Ditta v. The State P L D 1976 Lah. 823 ref.

‑‑‑ Construction of proviso or subsection‑‑Ordinarily proviso or subsection, would be governed by the operative portion of section‑‑A subsection would generally embrace the field which was covered by main proviso.

‑‑‑S. 9(2)‑‑Expression "in any case"‑‑Meaning and scope‑‑Expression "in any case", used in S. 9(2) would not apply to fixation of fair rent‑‑Increase in rent referred to in S.9(2) would have reference only to cases where fair rent had already been fixed by Rent Controller and landlord had again applied for increase thereof‑‑Plea that fair rent to be fixed by Rent Controller under S.8 of Ordinance, 1979, could not in any case exceed 10%of existing rent, repelled.

‑‑‑Ss. 8, 9 & 21‑‑Appellate rent jurisdiction, exercise of‑‑Where rental values of different premises were not same, uniform increase of rent as fair rent, was modified by High Court in exercise of appellate rent jurisdiction, proportionately to value of premises.

Muhammad Sharif for Appellant.

Khurshid Anwar Shaikh for Respondent.

Dates of hearing: 27th and 28th August, 1986.

This appeal under section 21 of the Sind Rented Premises Ordinance, 1979 is filed by the appellant/ tenant against the order of the Rent Controller, dated 16‑3‑1983, whereby he fixed the fair rent of three shops occupied by the appellant at Rs.300 per month each on the application of respondent /landlord under section 8 of the Ordinance. Shops Nos. 11, 12 and 23 in the building known as Rahim Market on Plot No. SD‑16 in KDA Scheme No.2, North Nazimabad, Karachi, were let out by the respondent to the appellant in the year 1971 at the rate of Rs.75, Rs.40 and Rs.40 each per month respectively. Rent of these three shops were subsequently increased in the year 1982 or thereabout to Rs.104.31, Rs.55.64 and Rs.55.64 respectively. On 22‑2‑1984 the respondent by a notice served on the appellant called upon him to pay rent of the above‑mentioned three shops at the rate of Rs.400 per month each on the ground that the rental value of the similar shops in the locality has increased in the meantime. Upon failure of appellant to pay the enhanced rent demanded by the respondent; the latter filed application under section 8 of the Ordinance for fixation of fair rent of the above shops. The appellant denied the claim of the respondent by filing written statement. He however, neither led any evidence nor cross‑examined the witness of respondent. It is, therefore, quite clear that the only evidence available before the Rent Controller in the case was the uncontested testimony of respondent's witness. The respondent's witness in his evidence before the Controller stated that the present rate of rent of similar shops in the very building and in the adjoining building on Plot No. SD‑15 were much higher and ranged between Rs.200 to Rs.400 p.m. for one shop excluding water and conservancy charges. In support of above assertion the respondent's witness produced five photo copies of the lease agreements and a rent receipt in respect of different shops in the same building. He also produced in evidence another six photo copies of tenancy agreements of different shops in the adjoining building situated on Plot No. SD‑15. The learned Rent Controller relying on the above oral and documentary evidence produced before him fixed the rent of three shops in occupation of the appellant at Rs.300 p.m. each.

Learned counsel for the appellant has challenged the fixation of fair rent by the Rent Controller as aforesaid on the following grounds: ‑ ,

1. That there was no basis available in the order of the Rent Controller for fixing same rent for three different shops while according to evidence on record both at the time, these shops were let out by the respondent to the appellant in the year 1971 as well as when the rents were increased by him in the year 1982 the rental values of the three shops were different.

2. That according to evidence on record the rental value of similar shops both in the building where the shops of the appellant are situated as well as in the adjoining building was between Rs.200 to Rs.380, as such‑ the Rent Controller should have fixed the rent of the disputed shops at the lowest rate level of the rent disclosed by the respondent in his evidence namely Rs.200 p.m. and;

3. Lastly the fair rent of the premises could not be fixed in excess of 10 per cent of the existing rent in view of provisions of section 9(2) of the Ordinance.

I will take up the last submission of the learned counsel for the appellant first which is a legal contention. It is contended by the learned counsel that section 9(2) of the Ordinance provides for a maximum increase in rent to the extent of 10 on the existing rent which is applicable not only to cases where fair rent of the premises has already been fixed by the Controller and the landlord applies for further increase after a lapse of 3 years from such fixation of fair rent or the date of enforcement of the Ordinance but it also governed the cases where the Controller is initially fixing the fair rent under section 8 of the Ordinance. It is urged that the expression "in any case" used in subsection (2) of section 9 of the Ordinance, connotes unrestricted application to all cases and, therefore, it will be unreasonable to restrict the scope of subsection (2) of section 9. It is contended that mere fact that a particular provision is enacted as a subsection in a statute is not conclusive to hold that it is restricted in its application to that section alone. In order to support his contention that the expression "in any case" used in the above subsection carried and unrestricted an unlimited meaning and, therefore, it should be read as an independent provision applicable to whole of the Act, the learned counsel referred to the cases of Dr. Cawas C. Mehta v. Addl. Settlement Commissioner P L D 1963 ICar. 938 Bank of Bahawalpur v. Chief Settlement Commissioner P L D 1966 Lah. 515, Pak Tanneries v. Hidayatullah PLD 1972 Lah. 880 and Allah Ditta v. The State P L D 1976 Lah. 823. In the above‑noted first two cases the expression "any evacuee house" used in section 30

of the Displaced Persons (Compensation and Rehabilitation) Act, 1958, was interpreted to include an occupant of big Mansion also as the word "any" used before the words "evacuee house" was held to exclude limitation or qualification. Similarly in the 3rd noted case the expression "any allotment" in section 11 of the Displaced Persons (Land Settlement) Act, 1958 was interpreted as not restricted to only allotments made under the Act but to all or any kind of allotment. In the last cited case the word "any" used in section 7 of the Pakistan Army Act was interrreted as excluding limitation and qualification and connecting with generality. None of the above cases cited by the learned counsel for the appellant is authority for the proposition that a provision of law though enacted as a subsection is to be read as an independent and substantive provision of law applicable to the whole Act and not restricted in its application to that section only to which it Is appended as a subsection. Learned counsel for the respondent on the other hand contended that the provisions relating to maximum increase of the existing rent contained in subsection (2) of section 9 are restricted only to the classes of cases where fair rent has already been fixed by the Controller and an application is made by the landlord for further increase of the fair rent after the lapse of the period specified in subsection (1). It is contended by the learned counsel that subsection (2) of section 9 did not control or apply to section 8 of the Ordinance. In order to appreciate the respective contentions of the learned counsel for the appellant it will be advantageous to reproduce both sections 8 and 9 of the Ordinance which are as follows: ‑

(1) The Controller shall, on application by the tenant or landlord determine fair rent of the premises after taking into consideration the following factors:‑

(a) the rent of similar premises situated in the similar circumstances, in the same or adjoining locality;

(b) the rise in cost of construction and repair charges;

(c) the impression of new taxes, if any, after commencement of the tenancy; and

(d) the annual value of the premises, if any, on which property tax is levied.

(2) Where any addition to or improvement in, any premises has been made or any tax or other public charge has been levied, enhanced, reduced or withdrawn in respect thereof, or any fixtures such as lifts or electric or other fittings have been provided thereon subsequent to the determination of the fair rent of such premises, the fair rent shall, notwithstanding the provisions of section 9 determined or, as the case may be, revised after taking such changes into consideration.

(1) Where the fair rent of any premises has been fixed, no further increase thereof shall be effected unless a period of three years has elapsed from the date of such fixation or commencement of this Ordinance whichever is later.

(2) The increase in rental value shall not, in any case, exceed ten per cent per annum on the existing rent."

A careful study of section 8 of Sind Rented Premises Ordinance, 1979 will show that fair rent of the premises can be fixed by the Rent Controller either on an application made by the tenant or the landlord. It is further quite clear from section 8 that while determining the fair rent of the premises as aforesaid the Rent Controller will be guided by the rent of similar premises situated in the similar situation in the same or adjoining locality, the rise in the cost of construction and repair charges, imposition of new taxes after commencement of tenancy and annual value of the premises on which the property tax is levied. Section 8(2) further provides that where any addition or improvement in the premises has been made or any tax or public charges has been levied, enhanced, reduced or withdrawn in respect thereof, or any fixtures such as lifts or electric or other fittings have been provided thereon, subsequent to the determination of the fair rent of such premises the fair rent shall, notwithstanding the provisions of section 9 be determined or as the case may be revised after taking such charges into consideration. It is quite clear from reading of section 8 of the Ordinance that while determining the fair rent of the premises either on the application of the tenant or landlord it is not necessary that there should always be an increase over the existing rent. It is quite possible that the Rent Controller may after taking into consideration the factors mentioned in subsection (1) of section 8 of the Ordinance may well determine "fair rent" of a premises in an appropriate case less than the existing rent. Again, notwithstanding the provision of section 9 of the Act which certainly also included its subsection (2), the Rent Controller may re‑determine the fair rent of a premises under section 8(2) where some improvements have been made in the building or where some new taxes; charges have been imposed or existing taxes or charges have been withdrawn, after the fixation of "fair rent" by the Controller. The underlining is tray own to give emphasis. It is quite clear from the language of section 8(2) of the Ordinance that the determination of fair rent in the circumstances mentioned in this subsection is uncontrolled by the provision of section 9 of the Ordinance section 9 of the Ordinance which comes after section 8 of the Ordinance begins as follows:‑

"Where the fair rent of any premises has been fixed

-------------------------------------------------------

It is, therefore, quite clear that section 9 is applicable only where fair rent of any premises has already been fixed by the Controller. It is also clear that fair rent when once fixed cannot be further increased except as provided in section 9. It is settled rule of interpretation that ordinarily the proviso or subsection should be governed by the operative portion of the section. A subsection will, therefore, ordinarily embraces the field which is covered by the main provision. There is nothing in the language of subsection (2) of section 9 of the Ordinance, to suggest that it was intended to deal with the subject matter outside the scope of main enacting part. There is equally no indication in the language of this subsection to justify the inference that although it is enacted as a subsection of section 9i, but it should be read as an independent provision applicable to rest; of the Ordinance. The expression in any case" in section 9(2) in my humble opinion did not apply to fixation of fair rent under section 8 of the Ordinance. The increase in rent referred to in subsection (2) of section 9 has reference only to cases where fair rent has already been fixed by the Rent Controller and the landlord again applied for increase of such fair rent. It cannot be overlooked that the rental '‑value of many premises let out some 15 to 20 years ago have become highly disproportionate to the existing rental value of these premises. The legislature was aware of this situation while enacting Ordinance XXVII of 1979. It is, therefore, quite clear that in order to give relief against such disparities in the rental values of premises, the Rent Controllers were authorised to fix fair rent of premises in accordance with the existing rent of the premises situated in similar circumstances in the same or adjoining localities. The rise in the cost of construction, imposition of new taxes and annual values of the premises assessed by the property tax. If the argument of the learned counsel for the respondent is accepted, then in spite of the fact that on consideration of the circumstances mentioned in sub‑clauses (a) to (d) of subsection (1) of section 8 of the Ordinance, the Controller may reach the conclusion is a given case that the "fair rent" should be fixed three or four times of the existing rent but he will not be able to do so. This clearly could not be the object of legislature. I, therefore, find no substance in the submission of the learned counsel for the appellant that the fair rent to be fixed by the Rent Controller under section 8 could not in any case exceed 10 of the existing rent. Having dealt with the above legal contentions raised by the learned counsel for the appellant I will now take up the other contentions raised by the appellant on merits of the case. It is an admitted position that the only evidence led in the case is uncontroverted testimony of the attorney of the respondent who was examined in the case. From the copies of the tenancy agreements which have been brought on record the rent of shops in the building which. is occupied by the appellant in the years 1981 and 1982 was between Rs.200 to Rs.250 or thereabout excluding other charges. However rental value of similar premises in the building in the same locality adjoining the building occupied by the appellant, according to evidence on record in the year 1983 was between Rs.300 and Rs.400 p.m. The Rent Controller was, therefore, justified in taking into consideration the rent of similar shops in the adjoining building in the year 1983 in preference to the rent of the same building in the year 1981‑82. Learned counsel for the appellant however, rightly pointed out that while fixing the fair rent of the premises in the Rent Controller could not fix the same rent for all the 3 shops. It is an admitted position that all the 3 shops in occupation of the appellant were let out at the same time in the year 1971 but at that time the rent of Shop No. 11 was fixed at Rs.75 while that of Shops Nos. 12 and 23 was fixed at Rs.40 each. Similarly in the year 1982 when the rent of these 3 shops was enhanced the rent of Shop No. 11 was fixed at Rs.104.31 and that of Shops Nos. 12 and 23 was fixed at Rs.55.64 each. From these admitted facts it is clear that the rental values of the 3 shops were not the same. No basis or reason has been given by the learned Rent Controller for fixing the fair rent of all the 3 shops at Rs.300 p.m. each. The rental values of Shops Nos. 12 and 23 at all times were considered by the landlord half of the D value of Shop No. 11. I, accordingly while maintaining the fair rent‑of Shop No. 11 fixed by the Controller, reduce the fair rent of Shops Nos.12 and 23 to Rs.150 each. The order of the Rent Controller stands modified accordingly. The appeal is partly allowed as stated above. There will be no order as to costs in the circumstances of the case.

A . A . Appeal partly allowed.

Find a Lawyer Near You

Dealing with a matter like this? Connect with a verified advocate in your city — free on SJP Lawyers Directory.