P L D 1988 Supreme Court 228 (PLP)

MUHAMMAD AFZAL ZULLAH, J.‑‑This appeal through leave of the Court is directed against judgment of the Sind High Court, dated 25‑2‑1982; whereby respondent‑tenant's rent appeal against First Appellate Order against his eviction on ground of default in payment of rent, was allowed. According to the written agreement between the parties, the tenancy had commenced from 10‑6‑1974 though possession of the premises is said to have been delivered later, on 10‑7‑1974, and six months' advance rent at the rate of Rs.1,100 per month had been paid alongwith a security deposit of Rs.6,

600. It was one of the conditions of the agreement that the tenant would pay another Rs.6,600 as rent in advance 15 days before the commencement of another term of six months and in case of non‑compliance, the tenancy would be terminable at the option of the landlord. The tenant did not pay and rent after the expiry of the first six months. The landlord, therefore, after serving notice on the tenant on 13‑3‑1975, filed the ejectment application on 8‑4‑1975 on the ground of default. The Rent Controller and the first appellate Court found the tenant guilty of default but the High Court held that after the expiry of the first six months, and in any case after the notice, dated 13‑3‑1975, the agreement had come to an end and thereafter, the tenancy had become statutory; that the tenancy had actually commenced from 10‑7‑1974 when possession of the premises had been delivered, that the amount of security deposit was adjustable towards future rents, and that, therefore, the tenant was not in default. Leave to appeal was granted to consider the questions: "firstly whether the agreement after the efflux of the first period of six months had expired and did no longer govern the tenancy; and secondly, whether the security amount could be adjusted towards future rents" Learned counsel for the appellant has relied on our decision dated 15‑9‑1987 in Mrs. Zarina Khawaja v. Agha Mahboob Shah Civil (Appeal No. 68‑K of 1986); P L D 1988 S C

198. Learned counsel for the respondent has reiterated the points which prevailed with the High Court. He has also contended that even if the security deposit could not be adjusted towards default, the same being of one month and that too being technical, discretion exercised by the High Court in respondent's favour should not be interfered with. He has relied on Muhammad Yousaf v. Abdullah PLD 1980 S C

198. The relevant provisions of the agreement read as follows:‑‑ "(3) That the tenant has deposited in case a sum of Rs.13,200 as part advance rent and security money to'the landlord on the execution of this agreement. The tenancy has begun from 10‑6‑1974. The sum of Rs.6,60U shall be security deposit and Rs.6,600 shall be as advance rent of 6 months, whereas the possession thereof shall be given by the landlord to the tenant on or about 1st of July, 1974 on the re‑conditioning of the bungalow particularly of white washing colours and minor repairs if necessary within the due date. (4) That the tenant shall pay a sum of Rs.6,600 to the landlord towards the advance of 6 months on the 5th of ,January, 1975 after the adjustment of Rs.6,600 already paid upto December, 1974. The landlord shall .acknowledge to have received the full monthly rent of Rs.1,lOC as agreed in the above‑said manner. (5) That after the adjustment of.the entire advance rent amount of Rs.6,60Q within six months, the tenant shall 15 days before the commencement of another term of six months, deposit Rs.6,600 as advance rent to the landlord to give life to this agreement. In case of non‑compliance, the tenancy may be terminated entirely at the pleasures of the landlord and he may seek the peacefui possession back from the tenant, and' in case of default, the provisions of the West Pakistan Rent Restriction Ordinance of 1959 shall be agitated at the risk of the tenant. (6) That at the time of taking back the possession of the bungalow from the tenant the condition of the bungalow should be in A‑I condition as it is today. All wears and tears in the normal course of time and other loss and damages shall be removed and compensated at the time of return of the bungalow to the satisfaction of the landlord. (9) That the tenant shall pay the entire electric charges as per consumption and meter readings on the receipt of the bills of K.E.S. C. Karachi. The last meter reading on 10‑6‑1974 was‑‑units. The tenant shall also pay the water charges, Sui Gas charges during the occupation and use of the bungalow as tenant. The landlord shall be liable to pay the property taxes and other Government dues levied on the owner of the property according to the provisions of law." 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 other question as to whether the agreement which contains the covenants about the security having expired, the nature of this deposit will undergo a change, we have answered in the negative in the said case. Other related questions also having been examined, it is not necessary to deal with them again. The said case will also govern the first question posed in the leave granting order of this case‑‑the answer being in the negative. It is so nothwithstanding the fact that the law applicable in this case is the repealed Rent Restriction Ordinance of 1959. Our judgment in the case of Mst. Zarina Khawaja deals with and applies to the situation under both laws‑‑that of 1979 and 1959. Thus, the agreement as to the security in this case would continue to operate notwithstanding its expiry. The second question as already analysed depends upon the terms of agreement; which, in this case do not permit the utilisation of the security deposit for obviating the default committed by the respondent in payment of the rent in accordance with the terms of the agreement. Hence, the impugned judgment is liable to be set aside in this behalf. The last argument of the learned counsel for the respondent has also no force. The date of payment of rent after the expiry of the 1st period of tenancy has been fixed in para. 4 of the agreement as 5‑1‑1975. It was to be of advance rent, which as held by us in the case of Mst. Zarina Khawaja, is permissible. Taking the liberal view in tenant's favour, we would hold that the use of the word "monthly" and "Rs.1,100" in the last sentence of para. 4., would make it advance rent only for one month and not for six months. Thus, it was due on 5‑1‑1975 and would be payable upto 20‑1‑1975 i.e. within 15 days ‑ it is in case of "agreement" even if expired but continued by the law as held in the said case of Mst. Zarina Khawaja. The 60 days rule will not apply. Hence, the 1st default occurred on 21‑1‑1975. The second on 21‑2‑1975 and the third on 21‑3‑1975. Thereafter, the application for eviction was moved in April 1975. Thus it was default of three months and not one month. Nor as held regarding the nature of security, was it a technical default. If the eviction application had not been filed, it appears from the pleas taken by the respondent, he would have continued the default. His attitude was one of disregard for solemn agreement and commitment freely made by him with his landlord. The default on all scores was wilful. He is not entitled to any discretionary benefit. Accordingly, this appeal is allowed, the impugned judgment is set aside with no orders as to costs. The respondent shall hand over vacant possession to the appellant within four months without notice failing which warrant of possession shall issue without notice. Application may be made by either party to the learned Rent Controller under section 16(3) of Sind Rented Premises Ordinance, 1979, for refund of security and the payment of the rent dues. M.B.A./A‑18515 Appeal allowed.