P L D 1988 Karachi 164 (PLP)

This is an appeal filed by the appellant against State Life Insurance Corporation and M/s. Azmatullah Limited as respondents Nos.1 and 2 respectively under section 21 of Sind Rented Premises Ordinance, 1979 being aggrieved by order dated 25‑1‑1987 passed by learned VlIth Court of Senior Civil Judge and Rent Controller, (District South), Karachi in Rent Case No.474 of 1979. The facts giving rise to the above appeal, briefly stated, are that respondent No.1/applicant (State Life Insurance Corporation) on 23‑1‑1979 filed an application under Section 13.(2) of the West Pakistan Urban Rent Restriction Ordinance, 1959, against three opponents (1) Junaid Khan Advocate, carrying on his profession in the name and style of sole proprietorship concern M/s. Junaid & Company, (2) World Marine Services Ltd. (the appellant herein) and (3) M/s. Azmatullah Ltd.), 2 and 3 being companies incorporated under the Companies Act, 1913. It was alleged in the said application that respondent No. 1 is a statutory corporation constituted and. established under the Life Insurance (Nationalization) Order, 1972 and was the owner of the immovable property, inter aria, of building I‑C, State Life Square, situate at I.I. Chundrigar Road, Karachi. A tenement on the ground floor of the said building was rented out to Junaid Khan Advocate and in this connection a rent agreement dated 2‑11‑1976 was executed on a monthly rent of Rs.5,040 payable in advance on the first of each calendar omit; that by the said agreement the said Junaid Khan was prohibited from parting with possession of the said rented premises or any part thereof or sub‑letting or leasing it to another person. The said Junaid Khan defaulted in payment of rent since March, 1978 and thus became liable to be evicted on account of such default in payment of rent under clause (i) of subsection (2) of Section

13. Furthermore, the said Junaid Khan in or about May, 1978 allowed to the said two companies viz. World Marine Services and M/s. Azmatullah Ltd. To enter into the possession and use of the said rented premises without permission from Respondent No.1/ applicant and against the prohibition contained in the said rented agreement and the law. Respondent No.1 objected to the said unauthorized act of the said Junaid Khan and having received no favorable reply filed the ejectment application against Junaid Khan on the ground of default and sub‑letting the premises to the said two companies, who were also imp leaded as co‑opponents in the ejectment application.

2. The learned Rent Controller passed an order under Section 13 (6) of the Ordinance, whereby he directed the opponent ' t to go on depositing the future monthly rent from March, 1980 before 15th of each succeeding month till final decision of the case. The rent was, however, deposited up to June, 1981. Respondent No.1, therefore, filed an application under Section 16(2) of the Ordinance for striking of the defence to which the tenant (Junaid Khan) filed no objections. The only objections were filed by the appellant. The I ' earned Rent Controller by his order dated 15‑1‑1987 having found that no rent was deposited after 5th July, 1981 struck off the defence and directed the opponents to vacate the premises in question and handover the same to respondent No.1 within 60 days. As against this order the above appeal has been preferred by the appellant who is shown as opponent No.2 in the ejectment application. 3, As a preliminary objection, learned counsel for respondent No.1, Mian Mushtaq Ahmed, submitted that the appellant has no locus stand to file the appeal inasmuch as toe appellant is not a tenant. Reference was made by him to Para 6 of the written statement filed by the appellant and respondent No.2 which was adopted by the tenant Junaid Khan. The said Para reads as under: ‑ "Originally the premises were taken on rent by Mr. Junaid Khan. Mr. Junaid Khan became Director of the rest of the opponents and premises were needed by the opponents "for expansion of their business. It is not a case of sub‑letting the premises. The possession of the Opponents Nos.2 and 3 was absolutely legal because one of their Directors was a tenant in respect of these premises. Due to the shortage of accommodation, the said director had accommodated the companies where he was one of the Directors. The business being carried in the premises is a business of Opponent No.l. (underlined 4.. Mr. U. Naimat Moulvi learned counsel for the appellant submitted that the appellant has locus stand to file the appeal as original tenant is a Director of the appellant's Company. The submission is misconceived. The appellant's Company is a separate entity from its Director. The tenancy was acquired by Junaid Khan in his own personal name for carrying on his profession as an Advocate. It is pertinent to note that Junaid Khan has not filed any appeal against the impugned order. I may refer to P L D 1982 S.C.

79. The relevant. paragraph reads as under:‑

6. We would agree with the learned counsel for the petitioners that it is necessary and appropriate in certain cases to lift the veil of incorporation with a view to find out the true state of affairs and to determine the rights and liabilities of the parties. Nonetheless on doing so in this case we find that the result is not to the advantage of the petitioners. A distinct legal entity different from the firm had come into existence. It was so whether the veil of incorporation was lifted or not. Such a legal entity had an altogether different rights and liabilities with respect to third parties including the landlords. Such a change could not be unilaterally brought about by the tenants so as to transform their very legal existence in a manner to affect their liability. The landlords could object. They could make it a ground for proceedings under the Rent Laws. Such a tenant as had permitted itself to be dissolved and then effaced and substituted by a different legal entity could bop elected for this act alone, having not taken the landlord into confidence." However, I enquired if the appellant was ready to deposit the arrears of rent from July, 1981 to date in this Court. The counsel showed his inability to deposit any amount in Court as the Company has gone into liquidation and has no funds. In fact, the learned counsel submitted that the appellant's Company is indebted to huge sums of money to Karachi Port Trust and Income Tax Department. Admittedly the appellant is in possession of the premises in question. Therefore, the ejectment of Junaid Khan includes the ejectment of the appellant and respondent No.2 as per order of the learned Rent Controller. 1B The appellant wants~ to be and remain in possession of the premises by challenging the said order but is not ready and willing to deposit the rent in the Court. I am, therefore, of the view that both in equity and law he has pod basis to prefer the appeal or ask for stay,~ and the appeal is, therefore, liable to be dismissed on this ground alone.

5. However, on merits the appellant has also no case. An application for ejectment filed by Respondent No.1 was quite competent as the relationship of landlord and tenant existed between respondent No.1 and the opponent Junaid Khan by virtue of tenancy agreement dated 2‑11‑1976. The said tenant continued to pay monthly rent for a number of years to respondent No.1 under the said agreement. The submission of the learned counsel for the appellant that respondent No.1 had no authority to file the said application for ejectment as after promulgation of the Life Insurance (Nationalisation) Order, 1972,1 it was the Central Government who became owner of all the assets, and properties as such the Central Government alone as owner was competent to file such application, to say the least, is entirely misconceived. The learned counsel seems to have overlooked Articles 11 and 15 of the said Order which for the sake of convenience are referred as under:‑ "

11. Establishment of Life Insurance Corporation.‑‑(1) With effect from such date, hereinafter referred to as the appointed date, as the Central Government may, by notification in the official Gazette, appoint there shall be established one or more Corporations for the purpose of carrying on the life insurance business. (2) A Corporation shall be a body corporate to be known by a distinct name and having perpetual succession and a common seal with power, subject to the provisions of this order, to acquire, hold and dispose of property, and may by its name sue and be sued.

15. Transfer of assets and liabilities of existing insurers carrying Life Insurance business. (1) All the assets and liabilities appertaining to the Life Insurance Business in Pakistan of all insurers shall, on the appointed date, stand transferred to, and vested in:‑ (a) the Corporation if there be only one, and (b) such of the Corporations, where there are more than one, in such manner and to such extent as the Central Government may specify in this behalf. (2) The assets appertaining to the life insurance business of an insurer shall be deemed to include all rights and powers, and all property, whether movable or immovable, appertaining to his life insurance business including, a particular, cash balances, reserve funds, investments, deposits and all other interest and rights in or arising out of such property as may be in the possession of the insurer and all books of account or documents relating to the life insurance business of the insurer; and liabilities shall be deemed to include all debts, liabilities and obligations of whatever kind then existing and .appertaining to the life insurance business of the insurer." From the bare reading of the above provisions of Articles 11 and I.D' it is clear that the assets and liabilities pertaining to life insurance in Pakistan of all insurers stand transferred (underlined by me) and vested in the Life Insurance Corporation (respondent No.1) with effect from the appointed day i.e. 19‑3‑1972. Article 11 of the said order provides that the said Corporation is a body corporate having perpetual succession and common seal with power to acquire and also dispose of the property, and may by its name, sue and be sued. The Corporation being a separate entity from the Central Government and the property having been transferred to and vested in the said. Corporation by Article 15, referred to above, it was, fully competent to lease out the property and start proceedings under the Renal Ordinance for ejectment of its tenant. 6. ' The last submission of the learned counsel for the appellant, that under Section 30) of the Sind Rented Premises Ordinance, 1979 the property stands exempted is, again, misconceived, for the reason that the Central Government is not the owner, as such, of the property in question. In any case, no notification under Section 3(2) exempting the property is alleged to have been issued by the Government of Sind. Learned counsel for respondent No.1, however, invited my attention to the Notification dated 2‑7‑1973, Annexure 1131 to the E counter‑affidavit filed by him, issued by the Secretary to Government ,of Sind, Home Department, whereby, in exercise of the powers conferred by Section 3 of West Pakistan Urban Rent Restriction Ordinance, 1959 the Government of Sind was pleased to direct that the provisions of the said Ordinance would not be applied to the buildings and rented lands belonging to the State Life Insurance Corporation of Pakistan but the said Notification was revoked by another notification dated 24‑4‑1976 issued by the same department of the Government of Sind.

7. For the reasons discussed above, I find no force in this appeal and the same is dismissed. These are the reasons for my short order F dated 2‑12‑1987 passed after the conclusion of the arguments of the learned counsel for the parties, dismissing the appeal for reasons to be recorded letter on. 8, The application for stay also stands dismissed. A.A./W‑15/K Appeal dismissed.