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Second Appeal No.1 of 1984, decided on 5th March, 1987.

---S.114--Word "rent"--Definition--Lease deed executed between appellant and respondent, in respect of grant of a plot of land to appellant, stipulating inter alia that appellant would pay development charges to respondent within twenty-one days of same becoming due- Appellant having failed to pay development charges within time, respondent calling upon her to hand over vacant possession of the plot to respondent--Word "rent" used in S.114, which means a consideration payable periodically for-enjoyment of property leased out to tenant, held, could not be equated with "development charges" payable in lump sum by appellant.--[Words and phrases].

Dawood Foundation v. Director General, Excise and Taxation, Sind, Karachi and another P L D 1977 Kar. 120; The Chief Controlling Revenue Authority, Madras v. S.M. Abdul Jammal and another A I R 1970 Mad. 258; Ballentine's Law Dictionary and Oxford Dictionary ref.

---S.39--Contract Act (IX of 1872), Ss.2(i), 37, 39 & 55--Cancellation of instrument--"Voidable contract"--Definition--Conditions' to be fulfilled for grant of relief under S.39 of Specific Relief Act--Question whether time was of the essence of contract was purely a question of fact which could be determined from intention of parties to be gathered not only from written contract itself but also from the nature of subject-matter of contract and other surrounding circumstances--Lease deed, granting plot of land to appellant, showing that although it bound the appellant to pay ground rent, development charges and other charges, taxes, rates etc. to respondent, but in case of failure on part of appellant to pay any dues to respondent within 21 days of demand, respondent had an option either to charge interest at 7 % or to determine the lease and resume possession of plot--Such a provision indicated that time was not of the essence of contract because in case of non-performance of agreement, interest could be charged as an alternative to termination of contract--Lease deed being a registered document, could not have been executed by the parties if time was of the essence of the contract--Written agreement between appellant and respondent was not to be considered in isolation but together with all other surrounding circumstances and looking at the circumstances it could not be said that lease deed was void or voidable at the option of respondents--Circumstances clearly indicating 'that all conditions for grant of relief under S.39, Specific Relief Act were not satisfied--Suit filed by respondent, held, was not maintainable and same had been erroneously decreed by two Courts below--Appeal allowed findings of subordinate Courts reversed and decree passed in favour of respondent set aside.

Abdul Hashim Sahib and others v. Kader Batcha Sahib and others A I R 1919 Mad. 781 cited.

Kunwar Mukhtar Ahmad for Appellant.

Khalil-ur-Rehman for Respondent.

Date of hearing: 14th December, 1986.

This second appeal calls in question the judgment passed by the learned Ex-officio Additional District Judge Karachi, dated 22-12-1983, whereby the appeal, filed by the appellant was dismissed and the judgment of the trial Court dated 8-9-1981, was up-held.

2. The brief facts of the case are that the respondent in this case is a private limited company. A lease Deed was executed between the respondent and the appellant whereby the appellant was granted lease) in respect of a plot of land bearing No. 25 in Block 'C', admeasuring 400 Sq. Yds. situated in Alam Nagar, Karachi. The Lease Deed which was executed between the parties was duly registered by the Sub-Registrar. A dispute arose between the parties over payment of development charges as according to clause 4(a) of the Lease Deed the appellant was under obligation to pay development charges for the plot to the respondent besides other taxes, rates, assessment duties, charges etc. In case of failure on the part of the appellant to pay such charges, within twenty-one days after the same had become due it was further stipulated that the respondent could take possession of the demised land with any building etc. which might have been erected thereon by the appellant.

3. It so happened thereafter, that the appellant was found by the respondent to be liable for the payment of Rs. 4,400/- as development charges for the plot. Out of this amount, however, the appellant paid only Rs.1,300/- and failed to pay the balance amounting to Rs. 3,100/- despite repeated demands from the respondent. Thereafter, invoking the penal clause in the Lease Deed, the respondent cancelled the allotment of the plot in favour of the appellant and the appellant was called upon to handover vacant possession of the same to the respondent and on failure of the appellant to handover the possession of the plot, the respondent filed a suit for cancellation of the lease deed and possession of the plot in question.

4. In her written statement, the appellant denied the claim of the respondent. She pleaded that the development charges had been demanded by the respondent without undertaking any development work in the area where the plot was situated. In any case, according to the appellant, the respondent could not acquire the possession of the plot as its full price had been paid by the appellant to the respondent. Alternatively, her plea was that she was still willing to pay the development charges to the respondent as demanded by it.

5. On the pleadings of the parties the learned Civil Court framed as many as seven issues, the following out of which being only relevant, are re-produced as follows:-----

(1) Whether the suit as framed is maintainable

(5) Whether the defendant is not liable to pay development charges in terms of the lease deed dated 31-10-1974

(6) Whether on account of non-payment of development charges by the defendant as demanded by the plaintiff, the latter are entitled to terminate and cancel the lease deed dated 31-10-1974 and to resume possession of the plot in question

The learned Civil Judge on the basis of evidence held that the suit was maintainable. He further held that the appellant was liable to pay the development charges in respect of the plot. His findings on issue No.6 were also in the affirmative as according to him the respondents were competent under the lease agreement to terminate the lease and resume possession of the plot. Consequently, he decreed the suit in favour of the respondents. The appellant then filed appeal which was also dismissed by the impugned order, dated 2-7-12-1983, and hence this second appeal.

6. I have heard Mr. Kanwar Mukhtar Ahmad, learned counsel for the appellant and Mr. Khalilur Rehman, learned counsel for the respondent.

7. The first contention of Mr. Kanwar Mukhtar Ahmad has been that the case is governed by section 114 of the Transfer of Property Act, 1882 which provides that:----

"Where a lease of immovable property, has determined by forfeiture for non-payment of rent, and the lessor sues to eject the lessee if, at the hearing of the suit, the lessee pays or tenders to the lessor the rent in arrear, together with interest thereon and his full costs of the suit, or gives such security as the Court thinks sufficient for making such payment within fifteen days, the Court may in lieu of making a decree for ejectment, pass an order relieving the lessee against the forfeiture; and thereupon the lessee shall hold the property leased as if the forfeiture had not occurred."

The learned counsel although conceded that section 114 referred only to cases where lease of immovable property had determined for non payment of rent and in the present case, the charges demanded by the respondent were development charges, but according to him, the word "rent" used in section 114 was wide enough to include development charges and according to him, since admittedly the appellant was willing to pay the development charges to the respondent, the Courts below should have exercised their discretion in favour of the appellant as envisaged by section 114 of the Transfer of Property Act. However, the argument on the face of it appears to be fallacious as rent cannot be synonymous with development charges. Although the term "rent" has not been defined in the Transfer of Property Act, but in Dawood Foundation v. Director General, Excise and Taxation, Sind, Karachi and another (P L D 1977 Kar. 120), the term "rent" was construed to mean as "any moneys or consideration payable periodically or on stated occasions by or on behalf of the tenant to his landlord for the use-and occupation of the property comprised in his tenancy, including any facilities that necessarily go with the tenancy, whether separate charges for such facilities are made or levied or are included in the rent deed or agreement." In The Chief Controlling Revenue Authority, Madras v. S.M. Abdul Jammal and another (A.I.R. 1970 Mad. 288) it was held that the distinction between a premium and a rent lies in the fact that premium is one paid in consideration of the conveyance implied in the lease and is quantified in lump, whether it is paid outright or by instalments over a period or promised to be paid at a certain time. But a rent while it is also in consideration of a lease or in lieu of the enjoyment, which the lessee has and particularly as consideration therefore. It was further held that rent is payable, as and when it accrues unlike a premium, the liability for which arises at the time the contract is entered into. According to the Ballentine's Law Dictionary, "rent" has been defined as "a compensation in money, provisions, 3hattels or services, paid or given in exchange for the use and occupation of real estate; a sum stipulated to be paid for the use and enjoyment of land liability for which become: absolute when it accrues upon the occupation of the premises for which it is to be paid". Oxford Dictionary defines it as "tenants" periodical payment for use of land or house or room; hire for machinery, etc." Accordingly, rent means, a consideration payable periodically for enjoyment of property leased out to the tenant. The same cannot be equated with development charges which, admittedly, were payable in a lump sum by the appellant. Therefore, the contention of Mr. Kanwar Mukhtar Ahmad that section 114 of the Transfer of Property Act is attracted in the present case has no substance and the same is consequently repelled.

8. The next argument pressed by Mr. Kanwar Mukhtar Ahmad was that both the learned subordinate Courts have misread the evidence in the case, as according to him, it was wrongly assumed that the appellant had been avoiding the payment of development charges to the respondent. According to the evidence of P.W. Hafizullan. Executive Director of the respondent, development charges at the

rate of Rs.40/- per Sq. Yds. had been demanded by the respondent but the appellant after making a payment of Rs.1300/- to him had failed to deposit the balance of such charges in accordance with the notice of demand. Thereafter, according to him, the respondent served the appellant with a legal notice. A copy of the lease agreement was also produced according to which the appellant had made herself, liable to pay such charges when demanded by the respondent. In her reply, 'according to the witness, the appellant first tried to wriggle out of her responsibility to pay the charges but later showed her willingness to pay the same by easy instalments. However, despite that the appellant failed to pay the charges. According to the stand taken by the appellant, development charges, first of all, could not be recovered from her as development of the area had not taken place. However, according to her, she had made a payment of Rs.1,300/- on account of such charges but owing to her illness she could not pay the balance amounting to Rs.3,100/- to the respondent. Nevertheless she categorically stated that she was prepared to pay the balance amount demanded by the respondent. On the basis of this evidence, the trial Court came to the conclusion that the appellant was not justified in withholding the payment of development charges or, the pretext that no development had taken place. The learned appellate Court also agreed with the trial Court and held that the appellant had been avoiding to pay development charges to the respondents. Consequently, according to both the learned Courts below, the respondents were entitled to invoke the penal clause in the agreement and cancel the lease.

9. The correspondence filed by the parties indicates that the amount due on account of the development charges had not been paid by the appellant within time as stipulated by the Lease Deed. Clause (4) of this document bound the appellant to pay development charges and all other charges as the same had fallen due and in case of arrears remaining unpaid for more than twenty-one days after the due date, the respondent was authorised-to take possession of the demised land together with any building or erection thereon. Admittedly the appellant did not make the payment of development charges in accordance with the terms of the Lease Deed. However, the correspondence between the parties shows that the appellant was allowed to, make payment by instalments but subsequently she failed to pay the balance amount even by such 'instalments with the result that she was asked by the respondent to handover possession of the plot to him. In view of this evidence the two Courts below, it appears came to the conclusion that the appellant had been avoiding the payment of development charges and was liable to pay development charges to the respondent after the same had become due and in view of her failure the respondent was entitled to resume possession of the plot in question. In view of the evidence just discussed, I do not find that the findings of the two subordinate Courts are based on any mis-reading of evidence. Whether the findings are correct, is another matter, as the discussion hereafter will indicate, but the same in any case cannot be upset on this ground alone. The argument of Mr. Kanwar Mukhtar Ahmad therefore must fail on this score also.

10. Turning to the next ground urged by Mr. Kanwar Mukhtar Ahmad, his argument has been that the suit of the respondent was not maintainable. The suit which was filed for cancellation of Lease Deed and possession of the plot in question was purportedly filed under section 39 of the Specific Relief Act which says that:

"Any person against whom a written instrument is void or voidable, who has reasonable apprehension that such instrument, if left outstanding, nay cause him serious injury, may sue to have it adjudged void or voidable; and the Court may, in its discretion so adjudge it and order it to be delivered-up and cancelled. If the instruments has been .registered under the Registration Act, the Court shall also send a copy of its decree to the officer in whose , office the instrument has been so registered; and such officer shall note on the copy of the instrument, contained in his books the fact of its cancellation."

A perusal of section 39 of the Specific Relief Act indicates that three conditions must be fulfilled before relief can be granted thereunder. Firstly, it must be shown that the written instrument is either void or voidable as against the plaintiff. Secondly, plaintiff must show that there is reasonable apprehension of serious injury, if the instrument is left outstanding. Lastly, considering all tile circumstances of the case, if the Court concludes that discretion in favour of the plaintiff ought to be exercised, it may adjudge the instrument void or voidable and order it to be delivered and cancelled.

The first argument of Mr. Kanwar Mukhtar Ahmad in this respect has been that since the Lease Deed had already been executed and registered, the same could not be cancelled by the trial Court under section 39. The learned counsel further argued that the contract in any case, was neither void nor voidable at the option of the respondent, therefore, the latter was not entitled to a decree in his favour. Reliance was placed on Abdul Hashim Sahib and others v. Kader Batcha Sahib and others (A.I.R. 1919 Mad. 781). In this case the plaintiff sued for a declaration that a mortgage executed by him in favour of the defendant was not supported by consideration, therefore, the same should be cancelled. It was held: that the mortgage deed could not be cancelled, inasmuch as the matter had passed beyond the stage of contract to that of an executed conveyance and that the deed was neither void nor voidable for non-payment of consideration. It was further held that the prayer for declaration could not be granted inasmuch as there was no proof of any danger to the mortgager's title to the property. Mr. Khalilur Rehman on the other hand, has vehemently argued that according to the Lease Deed, time was of the essence of the contract and since admittedly, the appellant had failed to perform her part of the promise as stipulated in the Lease Deed or within the extended time, the contract seas voidable at the option of the respondent. According to the counsel, there was also an apprehension of injury since the document had been registered and the same had created a title in favour of the appellant.

11. The question of maintainability was raised before the learned subordinate Courts and although both the Courts have determined the question of maintainability of the suit in favour of the respondent/ plaintiff, but no cogent reasons have been given therefore.

12. However, the counsel's argument have to be considered in the light of sections 37,39, and 55 of the Contract Acct but before reference is made to there sections. I would first like to refer to the definition of "voidable contract" in section 2(i) of the Contract Act which defines the same in the following terms: ---

"An agreement which is enforceable by Law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract."

According to section 37 of the Contract Act "the parties to a contract must either perform or offer to perform 'their respective promises unless such performance is dispensed with or execused under the provisions of the Contract Act or of any other law". According, to section 39 when a party to a contract has refused to perform or disabled himself from performing, his promise in its entirety the promisee may put an end to the contract, unless he has signified, by words or conduct his acquiescence in its continuance. Section 55 of the Contract Act provides that "when a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified time, and fails to do any such thing at or before specified time, the contract or so much of it as has not been performed, becomes voidable at the option of the promises, if the intention of the parties was that time should be of the essence of the contract. However, the second paragraph of the same section provides that "if it was not the intention of the parties that time should be of the essence of the contract the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure". Reference to the facts once again, in the light of the above provision indicates that although the appellant failed to perform her promise by failing to pay the development charges within the stipulated time but such failure on her part was excused by the respondent who extended the time for performance of the contract. However, the appellant once again failed to perform her promise within the extended time. Under circumstances, the respondent could repudiate the contract and sue for cancellation of the lease deed provided time was of the essence of the contract. As to the question, whether time was of the essence of the contract, the rule applicable is that the contracts for the performance of which no time has been fixed must be performed within a reasonable time and contracts for the performance of which time has been fixed must be performed within the agreed time. The question therefore is purely a question of fact and the same can be determined from the intention of the parties to the contract. However, according to the consensus of authorities on the point, such intention has to be gathered not only from the written contract itself, but also from the nature of the subject matter of the contract and other surrounding circumstances. First of all, reference to the lease deed shows that although the same bound the appellant to pay ground rent, development charges and other charges taxes, rates, etc. to the respondent, but in case of failure on the part of the appellant to pay any dues to the respondent within 21 days of the demand, the respondent had an option either to charge interest at 7 % or to determine the lease and resume possession of the plot. Such a provision in the agreement indicates that time was not of the essence of the contract because in a case of non-performance of the agreement, interest could be charged as an alternative to termination of the contract. Apart from that there is a registered Lease Deed executed by the parties and if time was of the essence of the contract, then, I 'have no doubt in 'my mind that the same would not have been executed by the parties. That further indicates that time was not of the essence of the contract. As I have earlier indicated, the written , agreement between the appellant and the respondent is not to be considered in isolation but together with all other surrounding circumstances and looking at the circumstances, it cannot be said that the base deed was void or voidable at the option of the respondents.

13. These circumstances, therefore, clearly, indicate that all the conditions for grant of relief under section 39 'of the Specific Relief Act were not satisfied. Admittedly, the relief under section 39 was the main relief sought by the respondents and the other relief claimed by them was consequential and incidental to the main relief. Consequently in my view, the suit filed by the respondent was not maintainable and the same has been erroneously decreed by the two Courts below. The findings of the subordinate Courts on the point are, therefore, reversed.

14. The upshot of the entire discussion is that this appeal is allowed and the decree passed in favour of the respondent is set aside. There will however be no' order as to costs in view of the points raised in this appeal.

S. Q. /S-93/ K Appeal allowed.

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