PLJ 2012 SC 279
[Appellate Jurisdiction]
[Appellate Jurisdiction]
Present:
Iftikhar Muhammad Chaudhry, C.J., Muhammad Sair Ali and Ghulam Rabbani, JJ
HYDER ALI
BHIMJI--Appellant versus VITH ADDITIONAL
DISTRICT JUDGE, KARACHI
(SOUTH) and another--Respondents
Civil Appeal No.
1009 of 2009, decided on 23.2. 2011.
(On appeal from
the judgment dated 19-5-2009
in C.P. No. S-08 of 2009 passed by the High Court of Sindh at
Karachi).
Constitution of Pakistan,
1973--
----Art.
185(3)--Sindh Rented Premises Ordinance, (XVII of 1979), S. 15(2)(iii)(a)--Leave
to appeal was granted by Supreme Court to consider whether High Court did not
interpret the law in its true perspective because S. 15(2)(iii)(a) of Sindh
Rented Premises Ordinance, 1979, did not talk of subletting but it visualized
handing over of the possession of premises to some other person, which
possession had never been handed over and was still with the tenant. [P. 281] A
Sindh Rented
Premises Ordinance, 1979 (XVII of 1979)--
----5.
15(2)(iii)(a)--Ejectment of tenant--Sub-letting of premises--Scope--Without
written consent of landlord possession was handed over--Handing over of the
possession of rented premises to some other person exposes a tenant to
eviction, under S. 15(2)(iii)(a) of Sindh Rented Premises Ordinance,
1979--Ground of "sub-letting" does not find mention in S.15 of
Ordinance, 1979--Grounds for eviction of tenant have been changed in Ordinance,
1979, and "subletting" has been omitted from the prescribed grounds
thereof. [P. 283] B
Sindh Rented
Premises Ordinance, 1979 (XVII of 1979)--
----S.
15(2)(iii)(a)--Ejectment of tenant--New plea, raising of--Landlord sought
ejectment of tenant on the ground that he formed two independent business
entities and sublet the rented premises to those business entities, without his
permission--Rent Controller dismissed the ejectment application but Lower
Appellate Court and High Court concurrently passed eviction order against the
tenant--Validity-Tenant did not plead or depose before Rent Controller that
company or firm were his licencees and were so inducted in demised premises to
do business of tenant or their own--Tenant also failed to raise such plea
before Lower Appellate Court, similarly neither in Constitutional petition nor
during arguments before High Court the tenant premise his case on the licencee
status of the company/firm--Plea of tenant having never been raised before any
forum or the Courts by tenant, could not be considered for the first time by
Supreme Court, particularly when no evidence on record existed to substantiate such
a plea--Tenant without written consent of landlord, had handed over legal and
physical possession of demised premises to the firm/company and other sharers
(herein by allowing the entities to operate/do business therefrom--Supreme
Court declined to interfere in eviction order passed by two Courts
below--Appeal was dismissed. [P. 286,
287 & 289] C, D, F & G
PLD 1974 SC 351
rel. 1994 SCMR 1507; 1998 SCMR 2656 and 2009 SCMR 893 dist. 1994 SCMR 791; PLD
1974 SC 351; 1994 SCMR 1507 and PLD 1982 SC 79 ref.
Pleadings--
----Binding
effect--Scope--Party was legally bound by case set up in his pleadings and did
not have freedom to depart therefrom and raise a different case--In absence of
specific pleadings, Court could not allow any party to grope around and draw
remote inferences in his favour from his vague expressions. [P. 287] E
Syed
Sharifuddin Pirzada, Sr. ASC and Abdul Qadir, ASC for Appellant.
Mr. Rashid A.
Rizvi, Sr. ASC for Respondents.
Date of hearing:
23.2.2011.
Judgment
Muhammad Sair
Ali, J.--In September, 2004, Respondent No. 2 i.e. Standard Insurance Co.
Limited as landlord filed eviction petition against the appellant for his
eviction from the rented premises at the first and second floor of `Standard
Insurance House' at I.I. Chundrigar Road, Karachi. Parting with possession of
the rented premises and subletting it to two independent entities i.e. Bhimji
Gardezi Associate (Pvt.) Limited and Gardezi and Co. without the consent of the
landlord, were pleaded as the grounds for the eviction of the appellant.
Appellant in
reply admitting to be a tenant under the Respondent No. 2,
denied the allegations. The appellant also admitted to have, incorporated
Bhimji Gardezi Associate (Pvt.) Limited (a private company limited by shares)
wherein he was a Shareholder/Director and to have established Gardezi and Co.,
Chartered Accountants as a firm with himself as one of the partner. Denying
subletting or transfer of possession he stated that "the limited company
as well as the partnership firm both are not carrying on any
profession/practice from the rented premises nor the appellant is charging any rent from the two companies nor the premises
have been sublet to them". The appellant claimed to be a
Director/Shareholder of the company and Partner of the firm "in his
independent personal capacity" having "full right to carry on his
profession and or business in any name he deems fit".
2. The learned Rent Controller after issues and evidence, dismissed the petition through order dated 24-11-2006. On appeal, the
Appellate Court of VI-Additional District Judge, Karachi (South) through judgment dated 4-11-2008 set aside the
trial Court's order and allowed Respondent No. 2's appeal as well as the
eviction petition. The appellant was directed to vacate the demised premises in
four months. Constitutional Petition No. 8 of 2009 filed by the appellant to
challenge the appellate judgment was dismissed by a learned Judge in chambers
of the High Court of Sindh at Karachi
through the impugned judgment dated 29-5-2009.
3. On Civil Petition No. 586-K of 2009 before
this Court, leave to appeal was granted to the appellant vide order dated 24-7-2009 to inter alia
consider as to whether--
"the learned High Court has not interpreted the law in its
true perspective because Section 15(2)(iii)(a) does not talk of subletting, but
it visualizes handing over of the possession of premises to some other person,
which possession has never been handed over and is still with the
petitioner/tenant".
4. Accordingly Appeal No. 1009 of 2009 was heard
by us on 23.2.2011 and was dismissed by order dated 23-2-2011 which read as under:
"For
reasons to be recorded later, instant appeal is dismissed leaving the parties
to bear their own costs. However, four months time is allowed to the appellant
to handover peaceful vacant possession of the premises subject matter of this
appeal to the landlord."
OUR REASONS
THERETO FOLLOW HEREINAFTER.
5. Syed Sharifuddin Pirzada, learned Senior
Advocate Supreme Court submitted that Section 15(2)(iii)
(a) of the Sindh Rented Premises Ordinance, 1979 visualized ejectment of a
tenant inter alia if "the tenant has, without the written consent of the
landlord, handed over the possession of the premises to some other
person". As such it was not the subletting but handing over of physical
possession of the premises to some other person that exposed a tenant to
ejectment. And that the appellant; though a partner in the firm and a
Shareholder/Director in the company, continued to hold in his personal capacity
the legal and physical possession of the premises and throughout paid the rent.
Also that the firm and the company were merely licencees of
the appellant and were not his sub-tenants. And there was no proof of
receipt of rent by the appellant from the firm or the company.
Syed Sharifuddin
Pirzada, learned Senior Advocate Supreme Court stated
that the factum of formation of the firm and incorporation of the company with
their registered and business offices at the demised premises was not denied.
And that these entities carried on business at the premises but only as
appellant's licencees. Further that inducting a licencee did not constitute
`handing over of the possession' of the rented premises which continued to be
with the appellant. Reference was made to the cases of "Manek J. Mobed and
another v. Shah Behram and others" (PLD 1974 Supreme Court 351),
"Saeeda Begum v. Shameem Ahmad" (1994 SCMR 791), "Muhammad
Subhan and another v. Bilquis Begum through Legal Heirs, etc" (1994 SCMR
1507 (1)), "Habibullah v. Rent Controller, Peshawar and 11 others"
(1998 SCMR 2656), "Muhammad Shafi v. State Life Insurance
Corporation" (2009 SCMR 893), "Arm Group Enterprises Ltd., v. Waldorf
Restaurant and others" (AIR 2003 Supreme Court 4106), "Messrs
Shalimar Tar Products Ltd. v. H.C. Sharma and others" (AIR 1988 Supreme
Court 145).
6. Mr. Rashid A. Rizvi,
learned Senior Advocate Supreme Court for the respondent submitted that the
pleas of licence or licencee and induction of firm/company in the rented
premises as licencees, were never raised by the appellant in his reply, appeal
or the Constitutional petition before any of the Court. And that
such pleas had been raised for the first time before this Court. And
that no evidence thereto was brought on record. And that the applicable section
drew no distinction between handing over the possession to a sub-tenant,
licencee or anyone else. He also contended that the partnership deed and the
incorporation documents of the company show that the petitioner was a small
shareholder in the firm and the company. And that he delivered possession to
the firm or company to carry on business in the demised premises. The firm and
the company had personalities different from the tenant. It was a clear case of
handing over the possession to the firm and the company by the tenant. Reliance
was placed upon the cases of "Manek J. Mobed and another v. Shah Behram
and others" (PLD 1974 Supreme Court 351), "Muhammad Subhan and
another v. Mst. Bilquis Begum through legal heirs etc." (1994
SCMR 1507(2)) and "Messrs Premier Mercantile Service and another v. S.M.
Younus and 2 others" (PLD 1982 Supreme Court 79).
7. We have considered the contentions of the
learned Senior Advocate Supreme Courts of the parties. As per the record and
the submissions made before us, a number of facts throughout remained
undisputed or were admitted by the parties i.e. (i) the relationship of the
tenant and the landlord, (2) formation of Bhimji Gardezi Associates (Pvt.)
Limited and Gardezi and Company, Chartered Accountants with appellant as one
shareholder therein with others, (3) the nature of business of the company and
firm and (4) location of their registered and business offices' at the rented
premises.
8. The factual areas of dispute were that the
appellant claimed never to have sublet the demised premises or to have `handed
over' the possession of the premises to the company or the firm. He asserted to
have continued in physical and legal possession of the property himself
throughout paying the rent to the landlord. On the legal plane Syed Sharifuddin
Pirzada, learned Senior Advocate Supreme Court though admitting possession of
the company and the firm in the rented premises, claimed the company and the
firm to be the appellant's licencees and thus not in independent possession,
wherefor it was not a case of delivery of the possession in terms of Section
15(2)(iii)(a) of the Sindh Rented Premises Ordinance,
1979 for an order of eviction.
9. The statutory provision is clear. The law by
now is also well settled. Section 15(2)(iii)(a) of the
Sindh Rented Premises Ordinance 1979 visualizes ejectment of a tenant from the
rented premises on the ground that "the tenant has, without the written
consent of the landlord, handed over the possession of the premises to some
other persons". It is handing over of the possession of the rented
premises to some other person that exposes a tenant to eviction. The ground of
`subletting' does not find mention in Section 15 ibid. The Sindh Rented
Premises Ordinance, 1979 changed the grounds for eviction of a tenant and omitted
"subletting" from the prescribed grounds thereof. The previous Sindh
Laws on the subject and the Statutes in Provinces other than Sindh did
prescribe `subletting' without the consent of the landlord as one of the
grounds for ejectment of a tenant. It is probably because of the conditioning
so caused that "subletting" and "handing over the
possession" continue to be used interchangeably in the field of legal
practice and also in some Courts. This change in the laws was duly noted and
discussed by this Court in the case of "Saeeda Begum v. Shameem
Ahmad" (1994 SCMR 791) that:
"It may be
noticed that the above-quoted clause prohibits handing over possession by a
tenant to some other person without written permission of the landlord. It does
not speak of creation of sub-tenancy or factum of subletting. In our view, the
above clause is wider in its import inasmuch as it will be attracted to if a
landlord proves that factually his tenant has handed over possession to another
person without his written consent and that the tenant is no longer in
possession. The above initial burden is on the landlord and once he discharges
it, the burden will shift to that tenant to prove that he has not handed over
possession of the premises and that he is still in physical possession.
.............................................. In order to discharge the above
burden of proof, the tenant may produce, partnership deed, certificate of
registration of the firm, account books, income tax assessment orders etc.
Since in the present case the account books were maintained as per terms of the
partnership deed, it was incumbent on the respondent to have produced the same
to show that the above partnership was not bogus and was not entered into in
order to circumvent above provision of the Ordinance. It was also incumbent on
him to show that factually he had not handed over physical possession of the
premises to Ali Muhammad".
In the case of
"Muhammad Subhan and another v. Mst. Bilquis Begum through Legal Heirs and
3 others" (1994 SCMR 1507 (2)), a bench of three Hon'ble Judges of this
Court held that:
"Handing
over possession is of a wider implication than mere subletting. In case a
partnership firm is a tenant, then all the partners can claim the tenancy as of
right in proportion of their share. Each partner is deemed to be in possession
of the demised property. Once a proprietary firm is changed into a partnership
firm, then all the partners have right, title and interest in the tenancy,
goodwill, business and assets according to their share unless otherwise
provided in the partnership deed".
10. The case of "Habibullah v. Rent
Controller, Peshawar and 11 others" (1998 SCMR 2656) decided by a Bench of
three Hon'ble Judges of this Court was a case of eviction under Section
13(2)(ii)(a) etc. of the West Pakistan Urban Rent Restriction Ordinance (VI of
1959) on the ground of subletting and assignment of tenancy. The case was
largely decided in the context and import of `subletting' and the effect of a
partnership or a company inducted as a licensee. It was not a case decided
under Section 15(2)(iii)(a) of the Sindh Rented
Premises Ordinance, 1979. A distinction was however drawn between the two
Statutes in the words that:--
"Herein,
amongst other things, lies the distinction between the provisions of Section
13(2)(ii)(a) of the Urban Rent Restriction Ordinance,
1959 and Section 15(2)(iii)(a) in the Sindh Rented Premises Ordinance, 1979,
the former penalizing even subletting of a portion but the latter visualizing
parting with the whole of the possession. .............................
"The
difference in these provisions lies in the circumstance that whereas it is
handing over of the possession of the premises, which constitutes a ground for
eviction under the 1979 enactment, something which implies divestation of legal
possession by the tenant, as noticeably distinguished from mere permission, use
or shared occupancy .......................... As to making such an assessment,
the phraseology in the deed, attending circumstances, including the conduct of
the parties and the intention or object behind the arrangement is to come up
for examination".
In the case of
"Muhammad Shafi v. State Life Insurance Corporation" (2009 SCMR 893)
decided by a Bench of two Hon'ble Judges of this Court, judgments of
"Muhammad Subhan and another" (1994 SCMR 1507(2)) and
"Habibullah v. Rent Controller, Peshawar and 11 others" (1998 SCMR
2656) were referred to for dealing with the issues of `assignment and transfer
of a tenancy rights' viz the induction of a `licensee', in the factual
perspective of the case.
11. In our view of the matter, the facts, record
and evidence of the present case attracts the principles recorded in the case
of "Monek J. Mobed and another v. Shah Behram and others" (PLD 1974
SC 351) decided by a Bench of four Hon'ble Judges of the Supreme Court. In this
case grounds of subletting and also of transfer of possession by the tenant
were involved. The original lessee converted his business into a private
limited company with himself and three of his family members as the share
holders. The lessee became the Managing Director. Eviction petition was filed
by the landlord on the ground of subletting. The matter ultimately came for
consideration of this Court on the findings of the Letters Patent Bench that
there was transfer, of lease hold rights by the original tenant to the company
which act amounted to subletting whereupon the original tenant had ceased to be
in possession. Original tenant however maintained that tenancy rights were not
transferred and he was in possession. To determine the issue, this Court
examined the evidence and observed that:--
"There was
even no suggestion in the statement of Jehangir J. Mobed that the premises were
taken over by the Defendant No. 2 as a licensee under him.
".............
If a person obtains lease-hold rights in his own name and subsequently assigns
them to a firm or to a private limited company consisting of family members it
cannot be said that no change has taken place in the status of the tenant or
that it is not a case of subletting or assignment of lease hold rights.
"............
The business of running the cinema included use of the premises, the machinery,
the apparatus and furniture installed in the Cinema by Defendant No. 2. This
operation was not possible until Defendant No. 2 had entered into possession.
................ It follows that Defendant No. 1 ceased to be in possession as
soon as the Defendant No. 2 took over the business of the Paradise Theatre. The
case must therefore be decided on the premises that Defendant No. 1 had parted
with possession ...............
12. In the case "Messrs Premier Mercantile
Service and another v. S.M, Younus and 2 others" (PLD 1982 Supreme Court
79), decided by a Bench of three Hon'ble Judges, it was held that:--
"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
be ejected for this act alone, having not taken the landlord into
confidence".
It was also
importantly observed that:--
"...........
As Petitioner No. 2 wanted to. establish
a relationship with the landlords it was its responsibility to show its locus
standi, to supply the landlords with the documents asked for notwithstanding
the fact that these were public documents and their copies could be obtained in
the normal course. The very fact the landlords continued to issue receipts in
the name of the dissolved partnership, the actual tenant of the property, would
show that there was a manifest refusal on their part to recognize anyone else
as tenant of the property".
13. Assessing the present case in the context of
above analyzed legal principles, we note that the appellant had not pleaded or
deposed before the trial
Court that the
company or the firm were his licencees and were so inducted in the
demised premises to do business of the appellant or their own. The judgment
dated 4th November, 2008
of the learned VI-Additional District Judge, Karachi
East shows that the appellant also failed to raise such a plea before the
learned First Appellate Court. Similarly neither in his Constitutional Petition
nor in the arguments before the High Court did the appellant premise his case
on the licencee status of the company/firm. We thus agree with Mr. Rasheed A.
Rizvi, learned Senior Advocate Supreme Court for Respondent No. 2 that this
plea having never been raised before any of the Courts by the appellant, cannot
be considered for the first time by this Court particularly when no evidence on
record exists to substantiate such a plea. Arguments of Syed Sharif-ud-Din
Pirzada and the cases referred to by him on the factum of company/firm being
appellant's licencee, can thus be of no benefit to the
case of the appellant.
14. The appellant instead specifically and
categorically denied the operation of the business at the rented premises by
the company/firm. The intriguing case pleaded by the appellant in para 4 of his
reply is reproduced hereunder;
"The
opponent (Hyder Ali Bhimji son of Akbar Ali Bhimji) is one of the Shareholder
in the Limited Company and a Partner in the Partnership firm. but the Limited
Company as well as the Partnership firm, both are not carrying on any
profession/ practice from the Rented Premises .................. and he is the
Director/Shareholder of the Limited Company since 1985 and Partner of the
Partnership firm since 1987 in his independent personal capacity as such
.................. has full right to carry on his profession and or business in
any name he deems fit".
The appellant
was legally bound by the case set up in his pleadings. He did not have freedom
to depart therefrom and raise a different case. Also that in absence of
specific pleadings, the Court could not allow the appellant to grope around and
draw remote inferences in his favour from his vague expressions.
15. By his own admission, the appellant was a
Director/Shareholder of the company and Partner of the Firm but "in his
independent personal capacity" purportedly having "full right to
carry on his profession and or business in any name he deems fit" and that
the company and the firm were not carrying on any business or profession from
the rented premises. The appellant did not explain the meaning of his
assertions. To our mind he had been deliberately evasive, self defeative and
contradictory. Being a company's Director or a firm's Partner, he was obliged
by law carry on, as such, the business of the company and/or the firm with
non-compete limitations; the absence of which has neither been argued nor
proved. Appellant's stand of `no business' is belied by his learned Senior
Advocate Supreme Courts submissions that the company/firm was doing business at
the rented premises i.e. their registered and business office [but allegedly as
licencees]. The appellant was also opaque and inexplicit in pleading and
deposing to be a Director in the company and Partner in the firm "in his
independent personal capacity". Being a Director in a company or a Partner
in a firm, the appellant held distinct corporate offices entailing statutory
rights, powers, duties and limitations which were prescribed and regulated
under the Companies Ordinance, 1984 and the Partnership Act, 1932. The alleged
personal capacity of the appellant could not have smoke screened his capacities
as Director in the company or Partner in the firm. Incorporating the limited
company and registering the firm were structural changes from the sole
proprietorship. These were legally independent entities. Their
shareholders/Directors or Partners enjoyed capacities separate from their
personal capacities. It was not a mere change in name.
16. The appellant admitted in his
cross-examination that the head office of the company was situated at the
demised premises. And that he never intimated the landlord of the incorporation
of the company. The company's Annual Returns in Form A were filed with CLA by
the appellant as the Chief Executive of the Company acknowledging the company
and its registered/principal/head office at the rented premises. Ex. A2 and A3
also proved that Bhimji Gardezi Associate (Pvt.) Limited, had its business
address and registered office at the rented premises. Also that the appellant
was a minor shareholder of 7.5% in the firm and had one share in the company
representing only 20% or 25% value in the share capital of the incorporated
company.
Memo. dated 31-7-2004
of the Institute of Chartered Accountants of Pakistan, produced by the landlord
in evidence confirmed the firm to be a member of the Institute doing business
at the demised premises having four partners.
Through
CM.A.
No. 389 of 2011 certain documents were filed by the
appellant on Court orders. These documents included Certificate of
Incorporation of Bhimji Gardezi Associates (Pvt.) Ltd., Memorandum and
Articles, Balance Sheet, Profit and Loss Account and Notes to the Accounts as
of 30-6-2008 wherein it was admitted that, "Bhimji Gardezi Associates
(Pvt.) Ltd. was incorporated as a private limited company on 24th October, 1985
in Pakistan and is engaged in corporate and tax advisory and compliance
services. Its Registered Office is situated at 2nd Floor, Standard Insurance
House, I.I.
Chundrigar Road, Karachi".
These Notes also proved/employment/presence of a large staff at the rented premises and payment
of salaries to the staff and the Directors and the business expenses
undertaken by the company from this office. Profit and Loss Accounts also
showed substantial income of the company as well as the administrative and
general expenses.
17. We thus find that the evidence on record and
the documents produced before this Court duly support the concurrent findings
of the first appellate Court and the High Court.
The company was
engaged in the corporate, tax advising and compliance services from the rented
premises. Its business generated substantial income and it undertook large
administrative and general expenses. Separate Accounts of the partners or share
holders were withheld by the appellant, though the appellant as the Chief
Executive or the managing partner was obliged to produce all such documents in
his possession to show reimbursements and refunds. Appellant wrongly pleaded in
the written statement that the firm/Company were not doing any business in the
demised premises.
The appellant
had without the written consent of the landlord handed over legal and physical
possession of the demised premises to the firm/company and other sharers
therein by allowing these entities to operate/do business therefrom.
18. For the above
discussed reasons, the appeal stands dismissed as per the short order dated 23-2-2011 hereinabove
reproduced.
(R.A.) Appeal dismissed
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