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First Rent Appeal No-724 of 1984, decided on 13th May, 1987.

-----Ss.2(f)(j), 15(2)(ii) & Pakistan National Shipping Corporation Ordinance (XX of 1979), Ss.4, 5 & 7--Ejectment of tenant on ground of default--Relationship of landlord and tenant--Proof National Shipping Corporation /original landlord of premises in dispute and 'Pakistan Shipping Corporation' both were dissolved and by amalgamation, respondent Corporation (P.N.S.C.) was established by virtue of Ordinance (XX of 1979)--Original Corporation having ceased to-exist, entire undertakings 'of such Corporations stood transferred and vested in respondent Corporation which took over -all kinds of rights and liabilities of original Corporations--Finding of Rent Controller that there was only statutory change of management of Corporation and there was no change of ownership of property in dispute in favour of respondent Corporation, held, was based on misconceived notion of law--Relationship of landlord and tenant stood established between new Corporation and tenant by transfer of assets and liability to respondent Corporation.

---Ss.2(f)(j), 15(2)(ii), 18 & 21(1)--Ejectment of tenant--Notice for change of ownership-- Relationship of landlord and tenant--Notice for change of ownership of premises contemplated under S.18 of Ordinance (XVII of 1979) has nothing to do with creation of relationship of landlord and tenant between parties--Such notice is simply a shield against eviction of tenant on ground of default in payment of rent.

---Ss.2(f)(j), 15(2)(ii), 18 & 21(1)--Ejectment of tenant-Notice for change of ownership--Relationship of landlord and tenant--On purchase of property or change of name or amalgamation of - two companies blended with another company, relationship of landlord and tenant between purchaser of blended company and tenant, held, would stand automatically created, but landlord or blended company could not evict tenant for default unless notice under S.18 of Ordinance XVII of 1979 was served on him by new landlord.

---Ss.15, 18 & 21(1)--Ejectment of tenant--Service of notice for change of ownership of premises--Mode of--Notice of change of ownership of premises should be served through registered post--Implied notice or mere information to tenant could not be sufficient' compliance with S.18 of Ordinance XVII of 1979 which clearly contemplated express notice and not implied notice--Provisions of S.18 to be strictly observed.

Syed Ishtiaq Ali for Appellant.

Rehmat Elahi for Respondent.

Date of hearing: 23rd December, 1986.

This is tenant's appeal against the eviction order passed against them by the XIIth Senior Civil Judge/Rent Controller, Karachi and directed them to hand over the vacant possession of the premises in dispute to the respondents within sixty days from the date of this order.

The facts leading to the filing of the above appeal are that the respondents are the owners of the building known as Mohammadi House, situated at I .I. Chundrigar Road Karachi and the appellants are tenants in respect of room No.605 of the said building at monthly rent of Rs.610.08. The tenancy was according to the English calendar month. The appellants were stated to be defaulters in payment of rent and had not paid rent since 1-3-1979. It is the case of the respondents that an amount of Rs.14,641.92 was outstanding against the appellants for the period 1-3-1979 to 28-2-1981. The eviction application was contested on the ground that there was no relationship of landlord and tenant between the respondents and the appellants. It is the case of the appellants that the premises in dispute was let out by National Shipping Corporation and not by the respondents and secondly, on the ground that no notice of the change of ownership by the respondents as required under section 13(a) of the repealed Ordinance or under section 18 of the Sind Rented Premises Ordinance, 1979 (hereinafter referred to as the Ordinance) was served upon them. The learned Controller allowed the application as stated in the earlier part of this judgment. The instant appeal is against the said eviction order dated 9-7-1984.

Mr.Syed Ishtiaq Ali, the learned counsel for the appellant in support of the.-appeal has raised the following contentions:-----

(1) That the learned Controller gravely- erred in law to hold that there is no transfer of ownership but there is only transfer of management and as such no notice under section 18 is necessary.

(2) That the learned Controller has gravely erred in law to hold that mere intimation of change of ownership is sufficient to hold in case of non-payment.

On the other hand Mr.Rehmat Elahi the learned counsel for the respondents, has submitted that notice is not necessary. The learned counsel further contends that the property has only been vested and only the management has been changed.

It is an admitted position that National Shipping Corporation was the owner of Muhammadi House I.I.Chundrigar Road, Karachi and the said Corporation let out room No.605 of the said building to the appellants at the monthly rent of Rs.610.08. Pakistan National Shipping Corporation Ordinance, 1979 was promulgated on 29-3-1979. By virtue of this Ordinance the National Shipping Corporation and the Pakistan Shipping Corporation were amalgamated and now Corporation to be called the Pakistan National Shipping Corporation was established. This Ordinance was given retrospective effect from 1st of January 1979.

It is advantageous to reproduce the relevant Sections 4, 5 and 7 of the Act which are reproduced below:----

"4 . Dissolution and amalgamation of N . S . C . and P . S . C . -Notwithstanding anything contained in the National Shipping Corporation Ordinance, 1963 (IV of 1963) , or the Pakistan Shipping Corporation Act, 1976 (LIV of 1976), or in any other law for the time being in force, the two Corporations respectively established under the said Ordinance and Act, shall, as at the close of the thirty-first day of December, 1978, stand dissolved and shall be amalgamated in accordance with the provisions of this Ordinance."

5. Establishment and incorporation of Pakistan N.S.C. (1) As from the first day of January, 1979, there shall be established by virtue of this Ordinance a new Corporation, to be called Pakistan National Shipping Corporation, (2) the Corporation shall be a body corporate having perpetual succession and a common seal, with power, subject to the provisions of this Ordinance, to acquire, hold and dispose of property, both movable and immovable, and shall by the name assigned to it by subsection (1) sue and be sued."

7. Transfer and vesting of N.S..C. and P.S.C. (1) On and from the first day of January, 1979 the entire undertakings of N.S.C. and P.S.C. shall stand transferred to and vest in the Corporation.

(2) the undertakings transferred and vested by subsection (1) shall include all assets, rights, powers, authorities and privileges and all property, movable and immovable, including lands, works, workshops, ships and crafts, by whatever name called, all vehicles, cash balances reserve funds, shares and other investment and book-debts, and all other rights and interests arising out of such property as were immediately before the aforesaid day in the ownership, possession or power of N.S.C. or P. S. C. in relation to their respective undertakings, whether in or outside Pakistan and all books of account and documents relating thereto, and all borrowings, liabilities and obligations of whatever kind then subsisting of N. S. C. ox P. S. C. in relation to such undertakings.

(3) subject to the other provisions of this Ordinance all contracts and working arrangements subsisting immediately before the aforesaid day as affecting N.S.C. or P.S.C. shall, in so far as they relate to their undertakings cease as from that day to have effect or to be enforceable against them shall be enforceable and of effect against or in favour of the Corporation, as if instead of N.S.C. or P.S.C. the corporation had been named therein.

(4) subject to the other provisions of this Ordinance, any proceedings of cause of action pending or existing immediately before the aforesaid date by or against N.S.C. or P.S.C. in relation to their respective undertakings, may as from the aforesaid day, he continued by or against the corporation as it might have been continued or enforced by or against them as if this Ordinance had not been in operation.

(5) subject to the other provisions of this Ordinance and the rules and regulations of this, all officers, consultants, advisers and other employees of N.S.C. and P. S.C. shall, notwithstanding- anything contained in any law or in any agreement, deed, document or other instrument, stand transferred to the corporation, and shall be deemed to have been appointed or engaged by the Corporation in accordance with the terms and conditions of service applicable to them immediately before the aforesaid day; and no officer, consultant, adviser or other employee whose services are so transferred shall be entitled to any compensation because of transfer."

Section 5 provides that as from the first day of January 1979, there shall be established by virtue of this Ordinance a new Corporation, to be called the Pakistan National Shipping Corporation. Subsection (1) of Section 6 provides that it shall be the function of the Corporation to assume full and effective control of the entire undertakings of N . S. C . and P. S. C . as transferred in it by section 6. Subsection (1) of section 7 provides that undertakings of N.S.C. and P.S.C, shall stand transferred to and vested in the Corporation. Subsection (2) provides that the undertakings transferred and vested by subsection (1) shall include all assets, rights, powers, authorities and privileges and all property movable and immovable, including lands etc.

It will be seen that even though under subsection (1) of section 7 , the entire undertakings of N . S. C . and P . S. C , shall stand transferred to and vested in Corporation, yet subsection (2) of section 7 makes it clear that the provisions of this Ordinance and the vesting of the undertakings shall include all assets, rights, powers, authorities anal privileges and all property movable and immovable, including lands, works, workshops, ships and crafts, by whatever name called, all vehicles, cash balances, reserve funds, shares and other investments and book debts, and all other rights and interests arising out of such property as same, immediately before the aforesaid day in, the ownership, possession or power of N.S.C. or P.S.C. in relation to their respective undertakings, whether in or outside Pakistan and all books of account and documents relating thereto, and all borrowings, liabilities and obligations of whatever kind then subsisting of N.S.C. or P.S.C. in relation to such undertakings. Subsection (3) provides that all contracts and working arrangements subsisting immediately before the aforesaid day as affecting N.S. C. and P.S. C. shall in so far as they relate to their undertakings, cease as from the 1st day to have effect or to be enforceable against them, and shall be enforceable and of effect against or in favour of the Corporation, as if instead of N . S. C . or P. S. C . the Corporation had been named therein.

In the present case, the Ordinance contemplates that N.S.C. and P.S.C. that is, both the undertakings stand dissolved with effect from 1st day of January, 1979 and the entire undertakings shall stand transferred to and vested in the Corporation. Both the companies ceased to exist with effect from 1st day of January, 1979 and both the undertaking stood transferred to and vested in the new corporation.

The finding of the learned Controller is that there was no change of ownership of the property in dispute from N . S. C . to P.N,S.C. and it was merely a statutory change in the management of the Corporation and as such there was no change of the property in dispute in favour of any person. This view of the Controller is based on a misconceived notion of law. The word 'undertakings' is inserted, I think, in order to make it plain that the business will be transferred as a going concern. It seems to me that the intention of the legislature in enacting the said Ordinance was to dissolve N.S.C. and P.S.C. and amalgamate in accordance with the provisions of the Ordinance. In re South African Supply and Cold Storage Company (1904) 2 Ch.268, Bucklay, J. interpreted word 'Amalgamation':

"Now what is an amalgamation An Amalgamation involves, I think, a different idea. There you must have the rolling, somehow or other of two concerns into one. You must mould two things together and arrive at an amalgam-a blending of two undertakings. It does not necessarily follow that the whole of the two undertakings should pass--substantially they must pass--nor need all the corporators be parties, although substantially all must be parties. The difference between reconstruction and amalgamation is that in the latter is involved the blending of two concerns one with the other, but not merely the continuance of one concern. An amalgamation may take place, it seems to me, either by the transfer of undertakings A and B to a new Corporation C, or by the continuance of A and B by B upon terms that the share-holders of A shall become shareholders in B. It is not necessary that you should have a new company. You may have a continuance of one of the two companies upon the terms that the undertakings of both corporations shall substantially be merged in one corporation only."

I am, therefore, of the view that the Minding was not at all justified. I do not agree with the contention of the learned counsel for the respondent, that the respondent Corporation did not take over the rights and liabilities of the N : S. C . The case reported in 1979 C L C -913 and cited by the learned counsel is distinguishable. In the present case both the undertakings dissolved with effect from 1-1-1979 and were amalgamated in a new corporation. The new corporation took over the rights and liabilities of both the undertakings. Amalgamation is a state of things under which two companies are so joined as to form a third company or one is absorbed into or blended with another.

In my view transfer from one person or corporation to another contemplated by the section, irrespective of its mode, is between an existing tenant's landlord to a new landlord:

Reverting to the last contention of the learned counsel for the appellants that the learned Controller gravely erred in law to hold that mere intimation of change of ownership is sufficient to hold in case of non-payment. I am of the view that notice under section 13-A of the repealed Ordinance or under section 18 of the Ordinance has nothing to do with the creation of relationship of landlord and tenant between the parties. It is simply a shield against eviction of the tenant on the ground of default in payment of rent. It is well settled that on the purchase of the property or change of name or amalgamation of two companies blended with another under the occupation of a tenant from the original landlord, the relationship of landlord and tenant between the purchaser or blended company and the tenant stands automatically created but the landlord or the blended company cannot evict the tenant for default unless he gives him a valid notice under section 13-A of the repealed Ordinance or section 18 of the Ordinance. The respondent's eviction application filed by the respondents is absolutely silent about service of notice as required by the provisions of sections 13-A or 18. The respondents annexed copy of letter of attornment dated 7-6-1979 to the affidavit-in-evidence. This will not serve the purpose.

Mr. Rehmat Elahi has contended that the appellant admitted about receiving intimation of transfer of ownership. This contention has not impressed me because the mode of service of a notice under section 18 is clearly prescribed there, to be through registered post. The language of the section clearly contemplates an express notice and that implied notice or information alone cannot be sufficient compliance with the section. The provisions of the section were required to be observed very strictly and an express notice addressed to the person in possession of the premises in dispute was to be issued. Thus no notice as required by section 13-A or 18 of the Ordinance was served upon the appellants and therefore the application under section 15(2)(ii) of the Ordinance itself was not maintainable. There mere sending of reminders or bills will not serve the purpose.

In view of my finding that the notice as required by section 18 of the Ordinance was not given, I allow the appeal and set aside the impugned order and dismiss the eviction application with no order as to costs.

H. B. T./G-36/K Appeal allowed.

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