1989 PLP 609 (CLC)

It is pertinent to refer to another decision of the Supreme Court in the case of Mirza Abdul Aziz Beg v. Mushtaque Ahmed Sheikh 1980 SCMR 834, wherein a similar plea raised or behalf of the tenant was not accepted by the Hon'ble Supreme Court against the order of the Rent Controller, ejecting the tenant for non‑payment of rent. However, Mr. M. A. Rashid after himself referring to this case tried to distinguish the same from the facts of the instant case as although in the above case, the tenant's security deposit lying with the landlord was adjustable against the rent due against him but such deposit was lying with the landlord by way of security against the tenant's liability for damage if any caused to the demised premises and since the agreement of tenancy between the landlord and the tenant was still subsisting at the time when the default had been committed by the tenant, the Supreme Court declined to interfere with the order of eviction of the tenant passed by the Rent Controller. The basic question, however, is whether the ratio of the above cases is attracted to the facts of the present case. Since, admittedly, there was a written tenancy agreement between the parties, the question would be, whether after the expiry of such agreement the same would become irrelevant for regulating the relationship between them or whether the same would still continue to govern such relationship. The position of the tenant who continues to occupy the demised premises after the expiry of the tenancy cannot be much different from that of a tenant holding over as envisaged by section 116 of the Transfer of Property Act. In the case of Mrs. Zarina Khawaja v. Agha Mahboob Shah P L D 1988 SC 190, one of the cases upon which Mr. Abdul Naeem, learned counsel for the respondent has relied Muhammad Afzal Zullah, J, who delivered the judgment, has said: ‑ "after the expiry of the agreement of tenancy the general law of holding over by the tenant has not been repealed or modified by the rent laws except to the extent that it comes in conflict with the provisions of the Rent Restriction Law. On the contrary, it was specifically provided in the definition of a 'tenant' in section 2 of the West Pakistan Urban Rent Restrictior Ordinance, 1959, that a tenant would include a tenant continuing in possession after the termination of the tenancy in his favour". The definition of tenant in the present Sind Law also provides that a tenant would include "any person who pontinues to be in possession or occupation of the premises after the termination of his tenancy". Not only this, the present Sind Law made it more clear when the provisions contained in sections 6 and 15(2)(i) of the Sind Rented Premises Ordinance, 1979, providing that no tenancy would remain valid beyond the mutually agreed period and that a tenant would be liable to be evicted. on termination of such period, were repealed. The obvious reason was that the pre‑existing law before the re‑enactment was kept intact; namely, that the previous tenancy arrangements between the parties will continue to operate notwithstanding the termination of the period and will govern the continuance of tenancy as visualised in the definition of the tenant holding over. However, notwithstanding the continued operation of the terms of the agreement after the termination of the agreement; by process of law as aforesaid, its provisions whenever they are in conflict with the rent law, shall not be operative . . . . . . The terms of the so‑called expired agreement which are not repugnant to the rent law shall continue to operate. For example, the rate of rent, the mode of payment thereof including its advance payment or deposit, provision for agreed increase in rent provided it is not after the determination of fair rent, provision for re‑entry of a tenant after he vacates the premises for re‑construction, all covenants which support the conditions in section 15 of the Sind Law and section 13 of the Law repealed by it, and similar other conditions and comments.".... In Digby v. Atkin (1815) 4 Camp.275 Lord Ellenborough opined that "where the tenant holds over after the expiration of the term, he impliedly holds subject to all covenants in the lease which are applicable to his new situation." Some of the other cases, also decided by the English Courts, which can be referred to on the point are as follows:‑ (1) Lee v. Smith (1854), 9 Exch.662. (2) Finch v. Miller (1848) 5 C.B.428. (3) Wyatt v. Cole (1877) 36 L.T. 613. (4) Thomas v. Packer (1857) I. H & N. 669. (5) Sanders v. Karnell (1858) 1 F.&F.

356. In case of Mrs. Zarina Khawaja, the appellant had sought eviction of his tenant and one of the grounds was that of default. The order passed by the Rent Controller for depositing the arrears and future rent was complied with by the tenant only in respect of the future rent. Consequently, an order was passed under section 16(2) of the Sind Rented Premises Ordinance, 1979 by striking off his defence and directing his eviction. However, an appeal filed by the tenant was allowed on the ground that the security deposit of the tenant which was lying with the landlady should have been adjusted against the outstanding amount. On a. petition being filed by the landlady, leave was granted by the Supreme Court to examine, whether the security deposit could be adjusted against the amount which was to be deposited by the tenant as rent. The following questions were framed amongst others by the Supreme Court for determination:‑ . (1) ................................................ (2) (3) ................................................ (4) Whether on termination of an agreement of tenancy when the tenant remains in occupation as of right subject to liability under the Rent Restriction Law, the terms of agreement become irrelevant for regulating the tenancy ? (5) If not whether a security amount with the landlord in pursuance of stipulation in the expired agreement, can be and should be dealt with in any manner other than that provided in the agreement ? (6) Whether the use of security amount by the High Court for absolving the tenant in this case from liability of eviction for non ompliance with the order of deposit, is permissible in law ? (7) .............. . The Supreme Court after extensively referring to the case‑law on he point answered the above questions as follows: "Thus, it can safely be said that the rent laws Dermit all. covenants in agreements, alive or expired; which, are permissible under the general law and not inconsistent with or repugnant to that special law; and enforces the same accordingly whenever it is so required under that law. In addition, they also remain operative for other purposes permitted by the general law. The fourth question is answered in the negative. The answer to the fifth question has already been rendered. A provision in the expired agreement regarding security deposit for protecting the landlord's interest, if otherwise lawful under the general law, cannot be varied under the rent law and has to be applied for the purpose provided in the agreement and not otherwise. The next question (sixth) is to be answered in the light of the foregoing discussion, in the negative. The security deposit in this case is to be applied by the landlord, according to the terms quoted earlier, to compensate himself at the time of the tenant handing over possession to him, for unpaid rent and/or damages caused by the tenant to the property at any time. Its application by the High Court for absolving the tenant respondent from liability to make a deposit under section 16(2) and old 13(6) is impermissible and unlawful. The default remained intact notwithstanding the security deposit. It is clarified that the covenant in each agreement as to security will be construed according to the agreement itself." In the case of Syed Asghar Ali Imam v. Muhammad Ali, reported in P L D 1988 SC 228, a similar question once again arose before the Supreme Court and it has been observed at page 231 of the report as follows:‑ "Although it is not mentioned in the agreement as to how and when the security deposit will be adjusted or applied, but it can easily be spelled out from the use of the word security and the positive provisions regarding payment of rent in advance at specified time as also the payment of other charges; and the provisions in the negative form that the tenant shall not cause loss or damage to the property or to the landlord. The security deposit, therefore, is to be adjusted by the landlord when the tenant vacates the premises towards unpaid rent or against other payments or loss at any time. It could not be adjusted against the current liability to pay the rent. It has to be adjusted in accordance with the terms of the agreement and not by the Rent Controller at his will. It has been so held by us in the case of Mst. Zarina Khawaja." The above decisions make it abundantly clear that even after the expiry of the tenancy agreement, the tenancy would continue to be governed by the same terms and conditions as contemplated in the agreement between the parties unless the same are in conflict with the current 'law. As clause (3) of the agreement in the instant case B clearly provided for refund of the security by the respondent only on expiration of the tenancy and delivery of the premises to him by the appellant, the respondent was under no obligation to adjust the rent in question from the security deposit The tenancy, as pointed out above, continued to be governed by the same terms. The facts of the case of Muhammad Yousaf v. Abdullah on which Mr. M. A. Rashid has relied, are clearly distinguishable as in that case the security deposit lying with the landlord which was meant to cover any default made by the tenant for a consecutive period of three months, had become adjustable after the expiry of the tenancy agreement. In any case, the ratio of the cases of Mrs. Zarina Khawaja and Syed Asghar Ali Imam is fully attracted to the facts of the instant case. Consequently, I find no person to interfere with the findings arrived at by the learned Controller on the question of default. For the aforesaid reasons, his appeal was‑ dismissed by me by a short order, dated 6‑11‑1988. 1 would, however, refrain from burdening the appellant with costs in view of the questions raised in this ‑appeal. A . A . /A‑468/ K Appeal dismissed.