P L D 1969 Karachi 176 (PLP)

This second appeal under the West Pakistan Urban Rent Restriction Ordinance, 1959, raises an interesting question, namely, whether tender of rent by cheque is a valid tender. The question has arisen in the following circumstances

2. Godown Nos. 2 and 6, in premises bearing No. L. R. ,8‑31/4 situated in Olive Street, Lawrence Road, Karachi were transferred to the respondent under the Displaced Persons (Compensation and Rehabilitation) Act, 1958, and were let out by him to the appellant on 9‑11‑1961 at the monthly rent of Rs. 400 and Rs. 300 respectively for each godown. On 22nd February 1964, the respondent made an application to the Controller for the appellant's eviction from these godowns on the ground of default in payment of rent by the latter for the period from 1st September 1963, to February 1964. On 3‑8‑1964, the Controller made an order under section 13(6) of the said Ordinance, .directing the appellant to deposit Rs. 2,800 on account of arrears of rent up to 31st July 1964, before the 25th August 1964, and to continue to deposit accruing monthly rent before the 5th of each following month. The appellant sent a cheque for Rs. 2,800, under his covering letter dated 25th August, 1964, to the District Court at Karachi, and followed this by sending another cheque on 4th September 1964 for Rs. 700 on account of rent for the month of August 1964. On 7th September 1964, the first cheque was returned by the Chief Ministerial Officer of the District Court with the direction that the payment should be made in the office of the Controller. The cheque for Rs. 700 was returned on 12‑9‑1964 with the same direction. Accordingly, the appellant deposited the arrears and the rent for August 1964, again by cheques, in the office of the Controller on 8‑9‑1964 and 12‑9‑1964 respectively. The respondent treated this delay as default in the payment of rent and arrears in compliance with the order of the Controller under section 13(6) of the said Ordinance, and therefore made an application for striking o$' the defence of the appellant. This application was granted by the Controller under order dated 18‑3‑1965, in which order it wag held, firstly, that tender of rent by cheque was not a valid tender and, secondly, that the arrears had to be deposited before the 25th August 1964, and the rent for August 1964 before the 5th of the following month, but in that as the appellant tendered the cheque for arrears to the District Court on 25th August 1964, he~ should be treated to be in default. A further reason for holding the appellant to be in default was that the deposits were made in the office of the Controller only on 8‑9‑1964, and 12‑9‑64 that is, after the expiry of the due dates prescribed in the Controller's order. The decision of the Controller was maintained in appeal by the Additional District Judge, Karachi, whose order in the case was announced on 25th May 1966.

2. The appellant has challenged both these orders in the present second appeal which, therefore, raises the following. questions (i) Whether tender of rent by cheque is a valid tender‑? (ii) Whether tender of cheque for arrears of Rs. 2,800 to the District Court on 25th August 1964 was in conformity with the order of the Controller made under section 13(6) of the. aforesaid Ordinance? (iii) Whether the tender of cheques to a wrong tribunal,, namely, to the District Court, instead of to the Office of the Controller, and delays caused by this tender, constitute default on the appellant's part in complying wit$ the order of the Controller under section 13(6) of the said Ordinance?

3. With regard to the first question, the rule which has generally been accepted by the Courts in the United Kingdom and in India is that tender of money by cheque is not a valid tender,, though in several cases, to which I would shortly refer, exception s have been grafted on this rule. The first case to which I would call attention in this connection is Polglass v. Oliver (149 E R 7) in which tender by a debtor was made in country bank notes to which the: only objection taken by the plaintiff was that the sum being tendered was less than the amount due to him. Lord Lyndhurst, C. B., held that this was a valid tender because the plaintiff did not object to the mode of tender but relied on a different objection, that is, that a larger sum was due to him than was, tendered by the defendant. The next case is Jones v. Arthur ((1840) 8 Dowl 442=59 R R 833) in which it was again held that if tender is made by cheque, which the plaintiff sends back without objecting to the nature of the. tender but demanding a larger sum, then it is a good and valid tender. Later, the Chancery Division held in Blumberg v. Life Interests and Reversionary Securities Corporation ((1897) 1 Ch. 171), that tender of mortgage‑money by cheque is not a legal tender. This decision was armed in appeal by the Court of Appeal, whose decision appears in (1898) 1 Ch.

27. In Johnston v. Boyes ((1899) 2 Ch. D 73) Hardy, J. held that though tender by debtor by cheque was usual, there was no established custom by which a vender was obliged to accept payment by cheque of a deposit offered by a purchaser at an auction sale. In Cubitt v. Gamble ((1918‑1919) 35 T L R 223) it was held that though it was the legal right of the creditor to demand notes or cash in gold or silver, the creditor might waive this legal right, in which case tender by cheque would be a valid tender.

4. Before examining the cases decided in this Sub‑Continent, I should prefer to two statutes on the question at issue. The first is the Pakistan Coinage Act (I1I of 1906), section 13 of which provides that coins issued under the authority of section 6 of the Act shall be legal tender in payment or on account. The second statute is the State Bank of Pakistan Act (XXXIII of 1956). Under section 24 of this Act, the State Bank of Pakistan has the sole right to issue bank notes made payable to bearer on demand in Pakistan. Section 25 of the Act provides that every such bank note shall be legal tender at any place in Pakistan for the amount expressed therein. These provisions have been interpreted to mean that the only legal tender of money in this country is either by tender of coins issued under the Coinage Act, or by tender of currency notes issued under the State Bank of Pakistan Act, 1956 though I do not see anything in these Statutes requiring that these are the only modes of legal tender of money. But this rule has been departed from in several cases decided by the Courts in this sub‑continent, who have laid down important exceptions to this rule on the lines which have been recognised by the Courts in England. Thus the High Court of Fort William held in Jagat Tarini Dasi v. Naba Gopal Chaki ((1907) I L R 34 Cal. 305) that when tender is made by cheque, the objection to the form of tender may be expressly or impliedly waived by the creditor, who will be deemed to have waived the objection if he rejects the tender on some ground or other, without making any objection to the legality of the tender in point of quality.

5. I would next refer to the decision of the Madras High Court in V. R. Venkatarama Layer v. T. Gopalakrishna Pillay and others (A I R 1929 Mad. 230) in which it was held that the contention that tender by a cheque was not a valid tender was not correct as a universal proposition, and that such tender should be valid tender if the person to whom it is tendered is willing to receive payment by cheque. In this case, the purchaser of the equity of redemption offered to pay the mortgage‑debt by cheque to the mortgagee who, however, refused to receive the money altogether in any form or shape. The decision proceeded on the reasoning that since no specific objection was raised to tender by cheque, such tender should be deemed to be a valid tender. Beaumont, C. J. held in a Bombay case, reported as. Ismail Essak Chand Nagori v. Abdullah Haji Cassum and others (A I R 1931 Bom. 118) that payment by cheque was a good tender by a tenant if the only objection of the lessor to this tender is that more amount was due to him than was offered by the cheque. The same High Court held in a later case, Kashav Mills Co. Ltd. v. Commissioner of Income‑tax (A I R 1950 Bom. 166) that payment by cheque is not an unconditional discharge of liability, unless there is an arrangement between the creditor and the debtor that the receipt of a cheque by the creditor may result in an unconditional discharge of the debt. In Hira Lal and others v. Khizar Hayat Khan (A I R 1936 Lah. 168) the view was taken that a tender must be made in the current coins of the realm and a tender by cheque is not sufficient, but that the objection to the form of the tender may be expressly or impliedly waived by the creditor, and he will be deemed to have waived the objection if he rejects the tender on grounds other than its form. The Calcutta High Court again considered this question in Brojendra Coomar Banerjee v. Sirish Chandra Chatterjee (A I R 1954 Cal. 459). This case arose under the West Bengal Premises Rent Control (Temporary Provisions) Amendment Act, 1953. The Court held that payment of rent by cheque to the Rent Controller could not be treated as valid tender of rent until the cheque bad resulted in cash payment, which payment is on the date on which the cheque has been converted into cash which then is put into the landlord's account. In Mohan Lal v. Kanwar Sen (A I R 1954 All. 480) it was held that payment of rent by bank draft was not a valid tender. The decision in this case, however, turned on the fact that the bank draft sent by the tenant had been lost in transit by post and the tenant had refused to make payment of rent afresh to the landlord for the period for which the bank draft was sent.

6. The review of the decisions cited in the preceding paragraphs shows that the following rules have been followed by the Courts in England as well as in this sub‑continent with regard to the form of tender of money:‑ (1) that the legal tender is tender of money in the current coins of the realm or in the currency notes issued under the authority of a statute ; (2) that the condition that tender should be in current coins or in currency notes may be waived by the creditor expressly or impliedly ; (3) that the creditor should be deemed to have waived his objection to tender by cheque if he refuses the cheque on some ground other than the form of the tender, for example, if he refuses to accept the cheque on the ground that a larger sum of money is due to him than is offered by the cheque. The rule that tender should be in current coins or in currency notes rests on the old English decisions which were given at the time when tender of cheques was not the popular or universally recognised mode for discharge of liabilities. It will be noted, however, that with the passage of time, the Courts, both in England as well as in this sub‑continent, evolved important exceptions to this rule. The question is, whether there is no scope to evolve any further exception to the rule now when it has become an established and universally recognised practice to discharge liabilities by tender of cheques. In my opinion, in the context of the modern conditions, it will be reasonable to hold that tender of cheque is a valid tender, unless the creditor expressly objects to such tender, or unless there is an express provision in the arrangement between the creditor and the debtor that the latter should discharge his liability only by tender of money in current coins or currency notes issued under the authority of some statute. In adopting this rule, I would venture to say that I am not departing from the rules which have been laid down from time to time by the Courts in England and in this sub‑continent on the point under considera tion. I feel that I am only extending the scope of the exceptions, which have been established by judicial consensus, to the present day conditions. If this view is taken of the question, then tender by the appellant of the arrears of rent and of the rent for August 1964, by cheque cannot be rejected as invalid tender, because it has not been shown that the landlord, in his dealings with the appellant, ever raised any express objection to payment of rent by cheque, not has it been shown that the agreement between the parties required that tender of rent should be only in current coins or currency notes.

7. In the instant case, the question which really arises for decision is not whether the appellant made a legal tender of the arrears of rent due from, but whether the appellant made default in complying with the order of the Controller made under section 13(6) of the West Pakistan Urban Rent Restriction ordinance, 1959. In my view, if deposit is made in the Controller's office by cheque and payment en this cheque is received by the Controller, then the tenant cannot be deemed to be in default, unless the deposit of the cheque itself was made B after the expiry of the date prescribed in the Controller's order. This, I would venture to say, would be a correct and sensible approach to the question of valid or invalid payments of rent and arrears to the landlord or to the Controller under section 13(6) of the aforesaid Ordinance.

8. The points which then fall for determination are whether the appellant should be deemed to be in default as he tendered the cheque for arrears only on 25th August 1964, and that also to a wrong tribunal and, further, that tender was not made to the office of the Controller until the 8th and 12th of September 1964. Even on these questions I am of the view that no default can be attributed to the appellant. It is correct that arrears had to be deposited before the 25th August 1964, but generally tenants have treated such a direction as direction to make payment by the stipulated date, that is, the word "before" in the Controller's C order has been treated to mean "by". It appears to my mind that in the present case, the tenant made a bona fide mistake in interpreting the order of the Controller to mean that he should deposit the arrears "by" 25th August 1964, and not "before" the 25th August 1964. This kind of mistake has been quite usual amongst the tenants and quite often this mistake has occurred due to incorrect advice of counsel. Even the tender of rent to the District Court, which has been held by the two tribunals below as a wrong tribunal for tender of rent and arrears, cannot be made a ground for holding the tenant to be in default in complying with the Controller's order. The cheques for arrears and for the rent for August, 1964 were sent by the tenant to the District Court under the advice of his counsel, and this advice was contained in the counsel's letter which was produced before the Controller. Therefore, the delay caused by this tender should be attributed to an unavoidable cause, because layman like the tenant before me cannot be expected to ignore the advice of his counsel. Moreover, in my opinion, the Chief Ministerial Officer of the District Court was in error in returning the cheques received by him from the appellant. At the relevant times the functions of the Controller under the West Pakistan Urban Rent Restriction Ordinance, 1959, were exercised, as these functions are still exercised, by the Civil Judges in the District Courts at Karachi. The District Court has one common office to receive payments in cases pending before the various judicial officers and this office is that of the Nazir of the District Court. In fact, payments under section 13(6) of the aforesaid Ordinance are made in the office of the Nazir. The Chief Ministerial Officer of the District Court had only to send the cheques to the Nazir's office, rather than return the same to the appellant for direct presentation to the Nizarat. I am, therefore, of the opinion that the tenant should be deemed to have tendered arrears on 25th August 1964, and the rent for August 1964, on 4th September 1964, on which dates the cheques were received by the Chief Ministerial Officer. As I have already held, the tender of cheque for arrears on 25th August 1964, instead of before this date, was due to a bona fide mistake and this cannot, therefore, be made a ground to hold that the appellant should be deemed to be in default in complying with the Controller's order under section 13(6) of the aforesaid Ordinance.

9. Though I have held that there was no default on the appellant's part in complying with the order of the Controller made under section 13 (6) of the West Pakistan Urban Rent Restriction Ordinance, 1959, this finding does not put an end to the controversy between the parties. While admitting this appeal on 1‑7‑1966, I had granted interim stay of the order of eviction on conditions that the appellant should continue to deposit monthly rent in the office of the Controller. The appellant, however, has disobeyed this order. It is admitted that the appellant is in default in payment of rent since the month of November 1967. The only explanation given by the appellant for this conduct is that his funds have been frozen by the Central Government. In my opinion, however, it is not a sufficient explanation, because it does not show that the appellant's financial position, due to the freezing of these funds, was such that it was not possible for him to conduct his day‑to day business affairs. The appellant has not shown that this default was due to unavoidable cause and this failure on the appellant's part make him liable to an order for striking off his defence by this Court. While holding that the appellant was not in default as far as the Controller's order for deposit is concerned, I have to come to the conclusion that the appellant ‑has wilfully disregarded the order of this Court for deposit of rent and has also failed to show that this default can be attributed to any unavoidable cause. Accordingly, I strike off the defence of the appellant and direct him to quit and deliver vacant possession of the disputed godowns to the respondent within one month. I make no orders as to costs in the circumstances of the case. Appeal dismissed.