IN THE HIGH COURT OF SINDH AT KARACHI
BEFORE:
Mr. Justice Muhammad Shafi Siddiqui
C.P. No.S-1182 OF 2016
Habib Bank Limited
Versus
Muhammad Yameen & others
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Date of Hearing: |
19.02.2018 |
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Petitioner: |
Through Mr. Khalid Mahmood Siddiqui Advocate. |
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Respondents No.1 to 12: |
Through Mian Mushtaq Ahmed along with Mr. Naveed Mushtaq Advocates. |
Muhammad Shafi Siddiqui, J.- Petitioner being aggrieved and dissatisfied with the judgments of two Courts below passed in Rent Case No.929 of 2001 and FRA No.220 of 2009 pertaining to determination of fair rent, has filed this petition. In pursuance of an earlier eviction application bearing Rent Case No.588 of 1998 the premises was handed over by the petitioner to the respondents on 07.07.2009. During pendency of the rent case the subject application under section 8 of Sindh Rented Premises Ordinance, 1979 was filed as Rent Case No.929 of 2001 for the fair rent of the demised premises.
2. In the first round of litigation after service of notice written statement was filed and parties filed their affidavits-in-evidence. Petitioner produced witnesses namely Sikandar Vohra, General Secretary of Eidgah Cloth Market and respondent also filed affidavit-in-evidence and after hearing the parties the Rent Controller enhanced the rent from Rs.1500/- to Rs.10,000/- per month w.e.f. 28.01.2003. The respondent being dissatisfied filed FRA No.35 of 2003 which was disposed of vide judgment dated 26.10.2004 fixing the fair rent at Rs.70 per sq. foot w.e.f. date of filing of the application. Both the parties being dissatisfied filed C.P. bearing No.30 and 33 of 2005 which were disposed of with direction to the parties to produce additional evidence regarding prevailing rental value of the demised premises, in comparison to similarly situated premises in the same area or adjoining locality. The Hon’ble Supreme Court also maintained the order of this Court in the aforesaid CPs in its order dated 24.09.2008 apart from deleting such observation which were causing prejudice to the parties.
3. The parties did not lead evidence in second round of litigation, as claimed, and the Rent Controller on the basis of measurement of the premises and hearing the parties afresh proceeded to pass an order fixing fair rent of the premises at Rs.70, Rs.50 and Rs.10 per sq. foot per month for the covered area 4170 sq. feet ground floor, 2374 sq. feet mezzanine floor and open space of 1645 sq. feet respectively w.e.f. institution of the application. Being aggrieved of such order of Rent Controller FRA No.220 of 2009 was filed by petitioner, which was disposed vide impugned judgment dated 24.05.2016 modifying the order of the Rent Controller by maintaining fair rent of the premises at Rs.70 and 50 per sq. foot for ground and mezzanine floor respectively whereas for the open space the order was recalled.
4. Learned counsel for the petitioner has mainly argued that all the four ingredients of Section 8 of Sindh Rented Premises Ordinance, 1979 were not satisfied. It is argued that the applicant No.1/witness himself admitted to a suggestion that they (applicants/respondents) have not made any repair, maintenance or whitewash of the premises since 1988. He argued that the cumulative effect of all four limbs of Section 8 of Sindh Rented Premises Ordinance, 1979 was not applied, besides the fact that none of the limbs was established.
5. I have heard the learned counsel for parties and perused the material available on record.
6. The affidavit-in-evidence on behalf of applicants/respondents was filed by applicant No.1 Muhammad Yameen who was subjected to cross-examination. He has produced a number of documents including the lease agreements for reference in respect of other premises of the similar nature in the adjacent/adjoining locality. The Rent Controller while relying on the lease agreements, claimed to be of similar nature and of same locality, had fixed the rate of rent at Rs.70 and 50 per sq. foot of the ground and mezzanine floors respectively however for the parking area the charges were refused by the appellate Court and the order as to the ground floor and mezzanine floor was maintained. Appellate Court however at the time of refusing rent of the open space (which formed part of premises) had not provided any justified reasoning to such refusal.
7. Apart from lease references it has also been highlighted in the affidavit-in-evidence of the applicant/respondent No.1 that on account of inflation and devaluation of Pak currency, the cost of construction, repair and maintenance charges had increased manifold and property tax has also been increased along with water and conservancy charges. One of the properties, of which lease agreements were produced for references, were stated to be at a distance of ½ KM. The petitioner’s witness however during cross-examination revealed that in the year 1965 there was exemption in payment of property taxes for two years and the government of Sindh revised the assessment for the payment of taxes and in the year 1975 government of Sindh had imposed new tax in the name of betterment tax and in the year 1993 there was property surcharge tax and additional surcharge over the properties which came up to a ratio of 40% in the year 2000. He (petitioner’s witness) claimed that after filing of the case government of Sindh re-assessed the rental value of the demised premises to the tune of Rs.32,90,825/- including entire Eid Gah Cloth Market.
8. The Rent Controller minutely examined the pleadings and on a cumulative effect of the pleadings and evidence, the Rent Controller reached to the conclusion that the rate of rent was not fair and it is required to be adjudged afresh on the basis of evidence, which he did through impugned order, as stated above.
9. Hon’ble Supreme Court while maintaining the order of this Court, as referred above, maintained that the observation as reproduced therein were required to be ignored and the Rent Controller was directed to strictly confine himself to the provisions of Section 8 of Sindh Rented Premises Ordinance, 1979. The Rent Controller was further directed to ascertain and determine the area in possession of the petitioner. The architect submitted his report which shows the covered area as 4170 sq. feet of the ground floor and 2374 sq. feet of the mezzanine floor with an open space of 1645 sq. feet as open space.
10. The respondents have relied upon the lease agreements Ex. A/6 to A/8 of the same building, the tenants of whom have been paying rent at the rate of Rs.125 and 70 per sq. foot respectively.
11. The record reveals that perhaps monthly rent was increased for the first time in 1998 to Rs.1500/-. Initially it was Rs.220 per month since 1968. The Rent Controller was of the view that the lease agreements as Ex. A/6 to A/8, referred above, were newly/recently executed, which may not be the requirement of any of the four ingredients, yet he went on to determine the fair rent at the rate of Rs.70 and 50 and 10 per sq. foot for ground, mezzanine floors and open space respectively. Learned counsel for petitioner while relying on such finding of the Rent Controller argued that it should not have been settled at such rate when the rates have not satisfied the Rent Controller, as being on the basis of recently executed lease agreements, yet the determination of fair rent at such rate is beyond imagination.
12. I do not agree with the contention of learned counsel for petitioner insofar as the observations/findings of the Rent Controller on the recently executed lease agreements are concerned. Why can’t a landlord claim fair rent on the basis of recently executed lease agreements if it pertains to similar premises and of adjoining locality? It is the current market value of the rent, which has to be determined as fair rent. Furthermore, why would a landlord rely on a previously executed rent agreement, which has lost its efficacy and value? In all fairness it is the recently executed rent agreements, which should have been prevailed and taken into consideration rather than old one. Another lease agreements produced as Ex. A/9 is of a premises situated at a distance of ½ or 1 K.M. i.e. State Life Building No.5-A where on the ground floor Siza Foods (Pvt.) Limited was housed at the rate of Rs.188,650/- which was also calculated at Rs.70 per sq. foot per month.
13. Fair rent is not always dependent upon facilities provided in a building to fetch a higher rental value. At times it is dependent upon the locality, market, the business opportunities prevailing in the area, which may be considered as a business hub, which is so crucial for the businessmen to operate from, and that may be a factor responsible for higher rental value irrespective of modern facilities equipped. I would score of this contention that the reference of A/9 was immaterial, though it may not be required in the presence of three additional lease agreements of the same area of the same locality which was also fetching the same or may be more than the landlord of Ex. A/9.
14. The appellate Court however reached to the conclusion as reached by the Rent Controller except that the rent of the open space, where vehicles of the petitioner were being parked, was recalled. Perhaps the appellate Court was of the view that from open space or area, the petitioner does not operate and hence the fair rent of the said area was recalled. My disagreement with Rent Controller to this conclusion as far as fair rent of the open space is concerned would lead to nowhere since the landlord has not challenged it and this is not a first appeal where all questions could be reopened including determination of fair rent of the open space.
15. Exh. A/6, A/7 and A/8 no doubt were executed by the same landlords/respondents and the petitioner may have some reservations but they (petitioner) have done nothing to disprove the contents of lease agreements and their genuineness.
16. The mater, as is here, was also discussed in an unreported case of M/s Kodvavi & Co. v. Mian S.M. Yousuf Baghpatee in FRA No.610 of 1998 Mr. Justice Sabihuddin Ahmed, as he then was. For the convenience some of the relevant paragraphs of the judgment are reproduced as under:-
“12. …This, however, does not mean that evidence must be ignored the moment any dis-similarity of circumstances is shown because in that event in many cases it may be impossible to establish that two premises are exactly similar to each other. Perhaps a more pragmatic approach would be to make adequate allowance for a lesser or greater decree (degree) of facilities available in the comparable premises while determining the quantum of fair rent.
13. …It would therefore, follow that fair rent would be the rent which Rent Controller finds to be appropriate according to his judicial conscience in the circumstances of a particular case after cumulatively taking the factors outlined in Section 8(1) into consideration.
14. ….Nevertheless in my humble opinion if Section 8(1)(a) to be so narrowly constituted as suggested by learned counsel it would lose its efficacy. Indeed when the law protects a tenant against ejectment upon payment of rent agreed upon several decades ago and several tenants in an old building are enjoying such protection the application of any landlord for determination of fair rent might fail on the ground that other tenants of the building are paying much less than the amount claimed. I am, therefore, inclined to take the view that the expression “rent of similar premises” appearing in Section 8(1)(a) is relatable to recently transacted tenancies and the evidence adduced by the appellants though required to be considered had little probative value.
15. …There being no statutory fetters on the quantum of increasing rent in my humble opinion the question has to be determined from the facts and circumstances of each case. In a particular case a Rent Controller may find increase of rent from Rs.20/- to Rs.400/- (20 times) to be entirely fair and in another two times increase from Rs.15000/- to Rs.30,000/- may be unconscionable.”
17. I am also concerned of the fact that the issue of determination of fair rent in the instant matter is pending since 2001 and it is almost 17 years that the landlord of the premises is still searching, for the time being, only for determination of fair rent. The recovery proceeding is another factor which may perhaps consume time.
18. Section 9 triggers when fair rent is determined, having its maximum limit as 10% per annum having its impact after three years. For the facts and reasons hereinabove I also in consideration of Section 9 would apply its effect but to the extent of 20% as periodic/statutory increase on the determined/fair rent. It is a factor which is applicable and perhaps has an automatic applicability.
19 The periodical enhancement in terms of Section 9 was also considered in the case of Volkart (Pakistan) Limited v. Interavia Pakistan Limited reported in 2001 SCMR 671, the relevant part of which is reproduced as under:-
“In order to bring the rent of the premises at par to the prevailing rental value of the premises in the locality and keeping in view inflationary condition in the country, recourse to section 9 of the Ordinance has to be made whereby increase in rent can be made after a period of three years from the fixation of fair rent and such increase cannot be more than 10% per annum of the existing rent. The fair rent of Rs.2.00 per square foot would remain operative for three years from April, 1981 and keeping in view the changed circumstances, after three years it shall be increased by 25% and after, every three years up to April 1999 existing rent shall be increased by 25%. This appeal is accordingly allowed in the above terms and the impugned orders of the High Court and that of the Rent Controller are modified to the extent given above. No order as to costs.”
20. The instant case appears to be a fit case since parties are litigating for the last 17 years and the fair rent, as determined by the Rent Controller pertaining to a period when the evidence was recorded in the year 2001, when affidavit-in-evidence was filed by the landlord.
21. In view of the above I do not see any reason to disagree with the conclusions of the two Courts below as far as determination of fair rent is concerned. This is second round of litigation and respondents are searching only for determination of fair rent as they have still an uphill task for recovery of the amount as the premises has already been vacated. The petition is accordingly dismissed along with listed application and keeping in view the period of litigation, in terms of Section 9(2) of Sindh Rented Premises Ordinance, 1979 enhancement of fair rent shall also be subjected to the applicability of Section 9 of Sindh Rented Premises Ordinance, 1979 but with its limit to 20% after every three years countable from the date of first enhancement.
Dated: 30.04.2018 Judge