2010 PLP 99 (CLC)

FAISAL ARAB, J.-- The respondent No.1 is owner of Shops Nos.3 and 3-A, each admeasuring 238 per square feet on Plot No.298-C, Tariq Road, P. E. C. H. S. , Karachi and the petitioners are tenants of these two shops. Both the petitioners pay for the respective shops monthly rent at the rate of Rs.1,613 that was fixed under the tenancy agreement executed by the petitioners on 23-7-1995 with the previous owner of the shops. After purchasing the shops in question the respondent No.1 in the year, 2006 filed rent cases against the petitioners under section 8 of the Sindh Rented Premises Ordinance, 1979 seeking determination of fair rent. Enhancement was sought to the extent of Rs.2,70,000 per month. In other words, enhancement was sought upto Rs.1,136 per square feet. The petitioners contested the proceedings and claimed that as the premises were obtained by them on rent on payment of huge Pugri, the enhancement in rent is not justified. They also claimed that not only petitioners paid huge Pugri but the respondent No.1 became owner on payment of meagre amount of Rs.19,00,000, therefore; the respondent No.1 is not entitled for enhancement in the rent for such reason as well. To justify enhancement of rent, respondent No.1 on his part has also produced in evidence three rent agreements of the neighbouring areas. In the first agreement the shop having an area of 318 square feet was rented out in the year, 2005 at Rs.60,000 per month and the rate of rent per square feet comes to Rs.188. In the second rent agreement the premises having an area of. 1400 square feet was rented, out at Rs.1,75,000 per month the rate of which comes to Rs.125 per square feet. In the third rent agreement an area of 2100 square feet with mezzanine area of 1300 square feet was rented out at Rs.95,000 per month and its rate of rent comes to Rs.45 per square feet. The Rent Controller enhanced the rent to Rs.50,000 per month for each shop. The petitioners then filed appeal and while dismissing the appeal, the Additional District Judge further enhanced the rent of each shop from Rs.50,000 to Rs.1,00,

000. The petitioners being aggrieved have filed these petitions. The payment of Pugri to the landlord or the value on which the landlord becomes owner of a premises is no consideration in law for determining the fair rent under section 8 of the Sindh Rented Premises Ordinance, 1979. This section is very clear. It narrates the factors which are only to be considered while fixing fair rent. Acknowledging this legal position, learned counsel for the petitioners very candidly conceded that the Rent Controller while deciding application under section 8 of the Sindh Rented Premises Ordinance, 1979 does not have to take into consideration the question whether the premises was obtained by the tenant on Pugri or whether the landlord became its owner after purchasing the same at a price which is much less than the market value. He, however, vehemently opposed the exorbitant increase in rent from Rs.1,600 to Rs.1,00,000 per month. He submitted that the Rent Controller had increased the rent of each shop to Rs.50,000 which was further enhanced in appeal to Rs.1,00,000 per month though no appeal was filed by the respondent No.1 nor any cross-objections submitted. He next contended that even if the three rent agreements that were produced with regard to tenancies of the locality, the rate of rent of the third agreement comes to Rs.45 per square feet and at best the rent should have been increased to the extent of Rs.45 per square feet and no more. In reply learned counsel for the respondent No.1 while defending the increase made by the Additional District Judge relied upon the case reported in PLD 1994 SC 725 and stated that even where no appeal is preferred or cross-objections filed, relief can be granted by the appellate Court. He, however, failed to show from any part of the evidence the justification for fixing the rent to the extent of Rs.1,00,000 per month for each shop. He also stated that in the agreements that were produced in evidence the maximum rate of rent of the nearest premises, having an area of 318 square feet is Rs.188 per square feet. Learned counsel for the petitioners has contended that neither the original agreements were produced nor its attesting witnesses were examined and therefore no reliance could be placed on such agreements. This agreement is misconceived. The authenticity of these documents was not challenged before the Rent Controller. , Even otherwise these are one of those documents which cannot be obtained in original. If a tenant doubts their authenticity, an order could be obtained from Court to get it verified from the parties of such documents. When these three rent agreements that were produced in evidence are examined the position which emerges is as follows:

(1) The premises having an area of 318 square feet, the rate of rent is Rs.188 per square feet. (2) The premises having an area of 400 square feet, the rate of rent is Rs.145 per square feet. (3) The premises having an area of 2100 square feet, the rate of rent is Rs.45 per square feet. Upon examination the three agreements and generally what is prevailing in the commercial market is that where the area of the premises is smaller, per square feet rate is always higher. Apart from this reasoning in the difference of rate per square feet in the above-referred three rent agreements, the nearest shop to the premises in question is only 300 meter away which fetches rent @ Rs.188 per square feet. Furthermore, the shops in question are also on the corner of Tariq Road Crossing which is prime area of Tariq Road. The area of each of the shops in question is only 238 square feet and the area of the nearest shop for which the rent is payable @ of Rs.188 per square feet is 318 square feet, hence, taking into consideration the area of the said shop and the shops in question the rate of rent of the shops in question should be fixed slightly more than the nearest shop which pay rent @ of Rs.188 per square feet. Keeping in view that the shops in question are situated in the prime area of Tariq Road and located on ground floor of the building and comparing its area with the area of Shop No.G-5 rent. which fetches rent @ Rs.188 per square feet, the rent should have been enhanced to Rs.200 per square feet. The Additional District Judge enhanced the rate of rent to Rs.1,00,000 per shop without taking into consideration the evidence that has come on record, thus, the fixation of rent at the rate of Rs.1,00,000 per shop was not justified. I consider Rs.200 per square feet to be reasonable rent. The enhanced rent @ Rs.200 per square feet shall be effective from 24-5-2006 which is the date of the filing of the rent case. As more than three years have already elapsed, the landlord has also become entitled to the benefit under section 9 of the Sindh Rented Premises Ordinance, 1979. Section 9 entitles a landlord to get an enhancement in rent after three years to the extent of 10% per annum. Therefore, the rent after the expiry of three years from its fixation under section 8 of the Sindh Rented Premises Ordinance i.e. from 24-5-2006 when the rent case was filed shall be enhanced @ 10% per annum or 30% after an interval of 3 years. The rent therefore, from 24-5-2009 onwards shall stand increased to Rs.260 per square feet. These petitions were disposed of by the following short order dated 13-8-2009 and these are the reasons for the same:

"For reasons to be recorded later on, the impugned judgment is modified to the extent that the fair rent stands fixed at the rate of Rs.200 per square feet payable from 24-5-2006 and shall further be enhanced at the rate provided in section 9 Sindh Rented Premises Ordinance, 1979 w.e.f. 24-5-2009. Both the parties shall file statement of Account in terms of this order before the Nazir of this Court, who shall then release the differential amount to the respondent accordingly. S.A.K./A-143/K Order accordingly.