1990 PLP 591 (CLC)

Appellant C)amar Jahan has challenged dismissal of her rent application ordered by the VIth Senior Civil Judge and Rent Controller, Karachi (West) on 15‑4‑1987. Said rent application was filed for eviction of respondent ‑Haji Habib from the premises in litigation.

2. Admittedly the respondent was a tenant of the appellant in the premises in litigation and there was an agreement of rent between the parties executed on 1‑4‑1982. As per the agreement a sum of Rs.40,000 was paid by the respondent to the appellant as deposit.it was stipulated in the agreement that the appellant would raise a shop over the premises in litigation and then start realizing from the respondent a rent of Rs.700 per month instead of the rent of Rs. 200 per month. Such rent was payable by the respondent to the appellant in advance. It is also as admitted position between the parties that the respondent has paid rent for the period ending June, 1985 and that rent for the month of July, 1985 and for subsequent months till November, 1985 was not paid by the respondent when the rent application was filed on 20‑11‑1985.

3. The only ground taken by the appellant in her application for ejectment of the respondent was that of default. The rent case was opposed by the respondent who in his written statement took plea that rent for July, 1985 onwards could be adjusted from the deposit of Rs.40,000 lying with the appellant.

4. Learned trial Court after recording evidence passed the impugned order dismissing the rent application on the ground that the rent not paid by the respondent could be adjusted from the deposit of Rs.40,000 Hence this appeal.

5. Mr. Bashir Ahmed, learned Counsel for the appellant argued that deposit of Rs.40,000 was returnable to the respondent at the time of his vacating the premises and that there could be no adjustment of outstanding amount of rent from the said deposit. In support learned Counsel for the appellant cited the cases of (i) Jacob Jahangir v. Mst. Naima Siddiqui (1988 C L C 278), (ii) Abdul Rahim v. S.A. Salim (1987 CLC 359), (iii) Shaikh Javid Ahmed v. Dil Afroze Gozer and another (1980 MLD 338), (iv) Mohammad Abdus Saced v. Jamaluddin (1987 M L D 2133), and (v) Jalees Ahmed v. Abida Ismail (1987 M L D 114).

6. Mr. Sajjad Hussain, learned Counsel for the respondent referred 'to the agreement dated 1‑4‑1982 and argued that Rs.40,000 paid to the appellant was fixed deposit and not a simple deposit and that idea was that if there was any default in payment of rent for any month, the same could be adjusted from the deposit. It was added that idea of paying such a huge amount to the appellant was to help her to construct the shop due to which the rent was increased from Rs.200 to Rs.700 per month. Learned Counsel for the respondent desired conduct of the parties to be seen. In support learned Counsel for the respondent cited the cases of (a) Karamat Hussain v. Kazi Ali Mohammad 1986 S C M R 441, (b) Wadha Wahan Silk Industries v. Hawa Bai and others (1986 C L C 2524), (c) Karimullah v. M. Gulzar Butt (1986 C L C 2524), (c)' Karimullah v. M. Gulzar Butt (1986 C L C 1653), and (d) M/s Mack Industries v. Haji Abdul Karim and others (1986 M L D 1595).

7. In respect of deposit of Rs.40,000, paras 2 and 5 of the agreement dated 1‑4‑1982 read as below:‑ That the party of the 2nd part has paid Rs.40,000 (Rupees Forty thousand) as deposit to the party of the 1st part vide Cheque No. CC M 630955 drawn on Habib Bank, Commercial Area Branch Nazimabad, Karachi dated 2‑4‑1982 which is hereby acknowledged by the party of the 1st part. "That the party of the 1st part shall return the sum of Deposit Rs.40,000 (Rupees forty thousand) to the party of the 2nd part when the latter gives back the peaceful possession of the said shop after deducting the dues if any." Before resolving the point whether the monthly rent due could be adjusted from the deposit, it is necessary to read the relevant paras of the agreement mentioned above and to discuss the case‑law on the point. In the case of Mahromal v. Habib Rehman (P L D 1988 Karachi 240) the security deposit was to be applied by the landlord according to the terms of the tenancy agreement to compensate himself at the time of the tenant's handing over possession to him, for unpaid rent and/or damages caused by the tenant to the property at any time. In the circumstances it was observed by a Single Judge of this Court that the amount deposited with the landlord by way of security cannot be appropriated for a purpose other than that stipulated in the agreement. Case of Jacob (1988 C L C 278) also covers the same point at issue. In the case of Abdul Rahim (1987 CLC 359) the view taken was that a fixed deposit held by the landlord as security was excepted from being adjusted towards montly rent and despite deposit, the tenant was ordered to be ejected when default in payment of rent was proved on his part. In the case of Javed Ahmed (1986 M L D 338) the amount of deposit made in terms of agreement and refundable at the time of vacating the premises was held to be not adjustable against rent due from the tenant. 1n the said case the agreement provided for refund of amount only on vacating the premises and as such the deposit could not be adjusted towards arrears of rent, as held. In the case of Mohammad Abdus Saeed (1987 M L D 2133) the view taken was that a fixed deposit amount lying with the landlm d was refundable to the tenant at the time of handing over the vacant possession of the premises to the landlord after deducting other charges if any and that plea of the tenant for adjustment of fixed deposit amount against arrears of rent could not be accepted. Ahmed (1987 M L D 114) does not cover the point at issue, but it was laid down in said case that the initial duty to prove default was on the landlord and that the onus shifted to the tenant when the landlord stated on oath that he was not paid rent. All these are decisions by the learned Single Judges of this Court. Now I proceed to deal with the cases cited by learned Counsel for the respondent and mentioned above. In (a) above it was held that when the default in payment of rent was merely of a technical nature then the discretion conferred by law should have been exercised in favour of the tenant. In cited case at the time of filing of the ejectment application it was found that a sum of Rs.140 was still lying in deposit with the landlord and there was another payment by way of a cheque which was accepted by the landlord. In cited case advance rent for one year and no deposit was paid. In (b) above the tenant under a lease agreement deposited a lump sum amount with the landlord and the agreement of tenancy was not renewed after its expiry and the view taken was that the tenant was entitled to refund of the amount deposited with the landlord. There was no stipulation in the agreement of tenancy in the cited case that the lump sum amount held by the landlord as deposit was to be returned to the tenant when he vacated the rented premises and the idea behind payment of lump sum amount was that it be adjusted towards the future rent. That was not the position in the instant case. In (c) above the landlord admitted in his cross‑examination that a specified amount of tenant was lying with him as fixed deposit and that the amount claimed as rent arrears was precisely equal to the amount lying as deposit and in the circumstances a Single Judge of this Court took view that there would be no rent arrears outstanding against the tenant if necessary adjustment was made. There was nothing in the cited case if the deposit was to be returned by the landlord to the tenant at the time of receiving back possession of the rented premises. Learned same Judge in the case of Nisar Ahmed Khan v. Muhammad Sharif (1986 C L C 866) took the view that if the amount deposited by the tenant with the landlord is intended as a security against any possible damage to the property, such amount cannot be adjusted towards rent. In (d) above a Single Judge of this Court took view that amount deposited by tenant with the landlord could be adjusted towards arrears of rent by the landlord after expiry of the rent agreement which was valid for a certain period. It was further held that during subsistence of the rent agreement the amount of deposit could not be adjusted against rent. In order to resolve the point at issue I may also refer to two cases decided by the Supreme Court of Pakistan. In case of Mirza Abdul Aziz Baig v. Mushtaq Ahmed (1980 S C M R 834) it was observed that the deposit.of Rs.825 with the landlord was by way of security against tenant's liability for damage if any to the demised premises and such deposit was not adjustable against the rent due from the appellant. In the case of Asghar Ali v. Muhammad Ali (P L D 1988 SC 228) there was no mention in the rent agreement as to how and when the security deposit will be adjusted or applied and it was held that the security deposit was to be adjusted by the landlord when the tenant vacated the premises towards unpaid rent or against other payments or loss at any time and the same could not be adjusted against the current liability to pay the rent, as the amount was to be adjusted in accordance` with the terms of the agreement and not at Nvill of the Rent Controller. In view of these authorities, I am of the view that in nount of Rs.40,000 paid at the time of the agreement dated 1‑4‑1982 as deposit or as fixed deposit or as security deposit by the respondent to the 3hY~:lklilt, was not adjustable to the monthly rent. Learned counsel for the respondent relied on admission of the appellant in his cross‑examination to the effect that if any rent A was due then it would be deducted from the advance. This admission refers to the time when the demised premises are vacated by the respondent and when he is due to have back from the appellant the amount of Rs.40,

000. There was nothing in the agreement dated 1‑4‑1982 if any amu ni of monthiv rent during subsistence of the agreement was adjustable from the deposit. Even if the amount of deposit was paid by the respondent to the appellant on humanitarian grounds to help the appellant raise construction of the shop, that would not affect the case on merits. There is no doubt that a huge amount was paid as deposit by tlic respondent for the premises, the rental value of which was Rs.700 per month. This again would not affect the case on merits. None of the authnritu:s cited by learned counsel for the respondent helps him. 8.As result of my above discussions I hold that the respondent was proved to have failed to pay rent in respect of the demised premises for July, 1985 to November, 1985 and he was defaulter within the meaning of clause (ii) of subsection (2) of section 15 of Sind Rented Premises Ordinance. Consequently, I accept this appeal, set aside the impugned order and direct ejectment of the respondent from the demised premises after a period of 6 months. Before tiling the execution application the appellant shall deposit in the execution Court an amount of Rs.40,000 minus the amount of rent due from respondent to the appellant and minus the other charges, if any, to be determined by the Execution Court. Costs on parties. H.B.T./Q‑31/K Appeal accepted.