Judgment  Sheet

IN THE HIGH COURT OF SINDH AT KARACHI

Suit No. 1722 of 2009

Present :

        Mr. Justice Nadeem Akhtar

Date of hearing     :  21.12.2012.                          

Plaintiff                  :   Pakistan State Oil Company Limited,

through Mr. Shamshad Ali Qureshi, advocate.

Defendants           :   The President, Sukkur Gymkhana, and

                                                the Secretary, Sukkur Gymkhana, called absent.

J U D G M E N T

NADEEM AKHTAR, J. – This judgment will dispose of the application filed by the plaintiff, which has been registered as a Suit, for making the Award dated 16.05.2008 rule of the Court, which was rendered by the Sole Arbitrator         Mr. Zafar Ahmed Khan, the General Manager of the plaintiff.

2.         The relevant facts of the case are that an area of 6920 sq. yds., equivalent to 62,280 sq. ft., bearing City Survey No.C-641, out of City Survey No.C-640, Sukkur Municipality, Sukkur, was leased out to the Honorary Secretary, European Gymkhana (Sukkur Gymkhana) from 01.08.1900. The lease period was subsequently extended for a period of 51 years as per the order dated 21.10.1973 of the Deputy Commissioner, Sukkur, and order dated 29.03.1973 of the Administrator, Municipal Sukkur. Out of the said area of 62,280 sq. ft., a portion of 6,960 sq. ft. bearing City Survey Plot No.C/641 was leased out by Sukkur Gymkhana through its President in favour of the plaintiff for a period of ten years through a registered lease deed dated 30.07.1986, which was renewed through a registered lease deed dated 05.08.1996 for a period of ten years expiring on 30.06.2004. The above details were confirmed by the Mukhtiarkar and City Survey Officer, Sukkur City, through a report dated 04.12.2013, filed by him in pursuance of the orders passed by this Court on 16.11.2012 and 07.12.2012 in the present Suit.

3.         As per the registered lease deed dated 05.08.1996, the monthly rent payable by the plaintiff for ten years was agreed at Rs.4,000.00 per month ; and, the plaintiff had the option under Clause 3(e) thereof to seek renewal of the lease for two further terms of ten years each on mutually agreed terms and conditions. When the plaintiff requested the defendants to renew the lease for a further period of ten years, the defendants demanded enhancement of rent from Rs.4,000.00 to Rs.85,000.00 per month with 10% annual increase, which was not accepted by the plaintiff. The said registered lease deed provided an arbitration clause, whereby the parties had agreed to refer any question, difference or dispute of whatsoever cause or nature to the plaintiff’s General Manager Reseller or his nominee or such other officer of the plaintiff as the plaintiff may designate. It was agreed that the decision of the Arbitrator shall be final and binding on both the parties. As the dispute with regard to fixation / enhancement of monthly rent had arisen between the parties, the plaintiff invoked the arbitration clause and appointed its aforesaid General Manager as the Sole Arbitrator to resolve the dispute.

4.         Upon his appointment, the Sole Arbitrator entered upon the reference and issued notice to the parties. As observed by him in his Award, the authorized representative of the plaintiff appeared before him on all dates of hearing and also submitted the relevant documents, but despite repeated notices and a final notice, no one appeared on any date of hearing on behalf of Sukkur Gymkhana nor were any documents filed on its behalf. However, the matter was adjourned by the Sole Arbitrator at the request of the plaintiff’s representative, who requested for twelve weeks’ time on the ground that the matter of fixation of rent was being negotiated by the parties.

5.         On 10.04.2008, the plaintiff’s representative produced before the Sole Arbitrator a letter dated 08.04.2008 issued to the plaintiff by the President Sukkur Gymkhana (defendant No.1), wherein defendant No.1 had agreed to renew the lease from 05.08.1996 to June 2014 ; to charge Rs.20,000.00 as monthly rent ; and had further agreed that Rs.20,000.00 per month will be charged as rent with effect from 01.01.2008. The plaintiff’s representative stated before the Sole Arbitrator that the above terms were acceptable to the plaintiff subject to the approval by its management. In view of the above and also in view of the plaintiff’s letter dated 04.02.2008 produced by the plaintiff’s representative, the Sole Arbitrator observed that the parties had negotiated and finalized the terms of the lease outside the arbitration proceedings ; and, in view of such settlement between the parties, the following Award was announced by the Sole Arbitrator on 16.05.2008 :

“1.       The Respondent having the leasehold rights of the demised premises situated at Plot No.C/641, New Minara Road, Sukkur, shall renew the same in the name of the Appellant, for a period commencing from 05.08.96 to 30.06.2014.

2.      The Appellant is directed to pay to Respondent through cross cheque an amount of Rs.20,000/- per month with effect from January 01, 2008 to 31^st June 2014, payable in advance on yearly basis for the aforesaid period on account of land rent.

3.      Keeping in view that the Company has already paid the land rent to the Respondent @ of Rs.8,000/- per month till June 2008, hence the appellant will pay the difference amount of @ Rs.12,000/- per month to the Respondent from January 2008 to June 2008 and thereafter the Appellant will pay to the Respondent at the rate of Rs.20000/- per month with effect from July 08 to 10^th June 2014.

4.      All the terms and conditions of the Lease Deed entered between the Parties in August 1996, shall remain unchanged, except as provided above.

5.      The Appellant shall prepare the new lease in terms of Clause (e) of Lease Deed, Registration No.1205, dated 05.08.96, Pages 147-151, registered before Sub-Registrar, Sukkur, for the purpose of registration of the same by the respondent in favour of the appellant.”

6.         The present application, which was registered as a Suit, was filed on 04.12.2009 by the plaintiff praying that the Award be made rule of the Court ; the defendants be directed to execute the lease deed in pursuance of the Award ; and, the defendants be directed to act in accordance with the terms and conditions of the lease and not to interfere with the plaintiff’s possession and not to harass the plaintiff in any manner whatsoever. As the notice issued to the defendants returned duly served, they were directed on 16.02.2010 to file their objections to the main application. Thereafter, the matter was ordered to be fixed before the Court for hearing of the main application as the defendants did not file any objections.

7.         The Award has not been opposed by the defendants ; and, there are no allegations before the Court that the Sole Arbitrator misconducted himself or the proceedings, or that the Award was procured improperly, or the same is otherwise invalid. The Award is well-reasoned and it reflects full application of mind by the Sole Arbitrator who has rendered the Award after carefully examining the material on record, especially the settlement arrived at between the parties. I have not been able to find any error, defect, infirmity or illegality in the Award, therefore, there appears to be no impediment in making the same rule of the Court.

The above are the reasons of the short order announced by me on 21.12.2012, whereby the Award was made rule of this Court.

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                                                                                                                  J U D G E