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First Rent Appeal No.585 of 1984, decided on 21st January, 1987.

--Ss.15(2)(ii) & 21(1)--Wilful default--Proof--Tenancy agreement executed between landlord and tenant for period of 11 months neither extended nor renewed after expiry of stipulated period of 11 months- Amount deposited by tenant with landlord as security deposit admittedly exceeding arrears of rent, held, could be adjusted towards arrears of rent.

P L D 1980 S C 298, P L D 1984 S C 17, 1980 S C M R 834, P L D 1985 Kar. 43(46) 1985 C L C 1032 (Karachi) ref.

Rasheeduddin Ahmed Khan for Appellant.

Kamaluddin for Respondent.

Date of hearing: 18th January, 1987.

The appellant has felt aggrieved against the order of IXth Senior Civil Judge/Rent Controller, Karachi, dated 16-4-1984 by which the appellant's application for ejectment against the respondent was dismissed.

2. The relationship of tenancy is admitted. The rent at the time of filing of the application was also agreed to be Rs.200 per month. The rent agreement between the parties had been entered into on 12th July, 1975 for a period of 11 months at Rs.200 per month and it was stipulated in para. 2 of the said agreement that Rs.2,000 will remain as fixed deposit till the end of this tenancy, this amount will be refunded when the tenant will give the possession back to the owner.

3. The appellant filed ejectment application under section 15 of Sind Rented Premises Ordinance, 1979 on the ground of default in payment of rent from July, 1980 to November, 1980, amounting to Rs.1,750 and also for damage to the floor of the shop.

4. In the written statement, the respondent took up the position that the appellant had unilaterally enhanced the rent to Rs.250 and the respondent had surrendered to the same. It was also submitted that Rs.2,000 had been paid by the respondent to the appellant, which are lying with the appellant. It was also stated that Rs.250 was paid as taxes by the respondent and the appellant had failed to adjust the same. It was also averred that the appellant had avoided to collect the same and, therefore, rent was sent through money order, but it was refused and thereafter it was deposited in Court. The damage to the floor was denied.

5. The Rent Controller dismissed the application on the ground that the respondent was not a wilful defaulter as he had sent the rent of 4 months by money order, which was refused by the appellant and, therefore, he deposited the rent in Court.

6. The appellant's counsel has contended that the Rent Controller was not justified in taking into consideration the money order, which gas sent on 15th of December, 1980 and also the deposit of rent which was made thereafter as the rent of July, 1980 should have peen paid or deposited within 60 days' of time when the rent of the game had become due on 31st July, 1980 i.e. that rent should have been deposited on 29th of September, 1980 and, therefore, the rent sent by money order in December, 1980 was beyond time. The contention of the appellant's counsel is obviously correct and Mr. Kamaluddin has no answer to the same except that he wants that the deposit of Rs.2,000 should be adjusted towards the arrears. He further contended that the deposit of Rs.250 made by the respondent towards the taxes should be taken into consideration. However, I have no hesitation in repelling the second contention. The respondent has not proved by any evidence that he deposited the sum of Rs.250 towards the taxes of the premises and, therefore, adjustment for the same cannot be allowed to him.

In respect of the first contention raised by Mr. Kamaluddin, I rind that there is a judgment of the Supreme Court, reported in PLD 1980 S C 298, where it has been held that if the landlord fails to return the security deposit despite expiry of the lease agreement then the amount lying with the landlord, if it exceeded the rent due, could be adjusted towards the rent and, therefore, the tenant could not be said to be a defaulter. In that case the tenancy agreement had expired a long time before the ejectment application and a deposit of Rs.1,000 which had been made by the tenant with the landlord, was in the terms that it will be confiscated by the lessor in case the lessee does not pay rent for consecutive three months. The Supreme Court considered the said agreement to be in breach of section 74 of the Contract Act and, therefore, came to the conclusion that the amount could not be treated for having been confiscated and was, therefore, lying with the landlord. It was also observed by the Supreme Court that in that case it was a technical default committed by the tenant and, therefore, the discretion provided under section 13(2) of West Pakistan Urban Rent Restriction Ordinance, 1959 should have been exercised in favour of the tenant.

7. Mr. Rashiduddin Ahmed Khan, Advocate, on the other hand, relied on P L D 1984 S C 17, where the Supreme Court had refused to treat a sum of Rs.25,000 deposited by a tenant with the landlord as the fine or premium under section 7 of the West Pakistan Urban Rent Restriction Ordinance, 1959, as no such contention has been raised before the lower Courts. This was a case decided on its own facts.

Mr. Rashiduddin, therefore, submitted that since the respondent had not raised such a plea in respect of Rs.2,000, therefore, he is not entitled to any adjustment. He further submitted that although the agreement of 12-7-1975 between the parties had expired 11 months thereafter, but it had been continued by consent of the parties and, therefore, Rs.2,000 had continued to remain in deposit with the landlord and it was to be refunded only when the possession was to be given back to the owner. He argued that the respondent had not taken the Position anywhere in the written statement that the tenancy had been terminated or that the deposit of Rs.2,000 should be adjusted towards the arrear. He relied upon 1980 S C M R 834, where the same Hon'ble Judge of the Supreme Court, who had delivered the judgment in P L D 1980 S C 298, has taken the view that a security deposit of Rs.825 being a security against the tenant's liability for damages, if any to the demised premises, was not adjustable against the rent due. He also relied upon P L D 1985, Karachi 43 (46), where it was held that the security deposit was liable to be refunded on vacation of the premises and, therefore, it could not be adjusted towards the arrears of rent. Reliance was also placed on 1985 C L C 1032 (Karachi where it was held that in case a tenant had not alleged that the agreement of tenancy had come to an end, the deposit held by the landlord cannot be adjusted towards the arrears of rent.

8. I find that term No.2 of the agreement provides for the fixed deposit till the end of the tenancy, which came to an end on 12th of June, 1976. It further provides for refund of the amount when the tenant will give the possession back to the owner. Therefore, the position is that the agreement of tenancy had come to an end in June, 1976, but the statutory tenancy had continued thereafter and the amount of Rs.2,000 continued to remain with the appellant in deposit. There is no term in the said agreement as to whether it can be adjusted towards the arrears of rent or as to whether it can be utilised to compensate the damaged property and as to whether it can be forfeited in any manner, therefore,. it remained as a fixed deposit only.

9. Nowhere it had been pleaded in the application that the same tenancy agreement had been extended by consent of the parties. It is contended in the written statement that the rent was increased first to Rs.215 per month and then to Rs.225 per month and thereafter to Rs.250 per month and that the respondent had always surrendered in respect of enhancement of rent. Therefore, it is obvious that the same agreement of tenancy was neither extended nor renewed. However, the tenancy continued on the basis of different enhanced rents, and it is, therefore, obvious that the deposit of Rs.2,000 was available to the appellant and, therefore, it could have been adjusted towards the arrears, if they were not beyond the said amount of Rs,2,000 and in this case they were not beyond the said sum. I am inclined to follow the dictum of their Lordships of the Supreme Court in P L D 1980 S C 298, as in this case it appears to be more appropriate in the circumstances of this case.

I, therefore, reject this appeal.

H.B.T./M-69/K. Appeal rejected.

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