Bashir Ahmad vs Shaheen Waheed etc.

Stereo. H C J D A 38.

JUDGMENT SHEET

IN THE LAHORE HIGH COURT

BAHAWALPUR BENCH BAHAWALPUR

JUDICIAL DEPARTMENT

FAO No.8/2021 Bashir Ahmed Versus Shaheen Waheed etc.

JUDGMENT

Date of Hearing: 14.07.2021 Appellant by: Ch. Riaz Ahmed, Advocate assisted by Ms. Noreen Atta, Advocate.

Respondents by: Mr. Shabir Ahmed Awan, Advocate.

Research Assistance: Ms. Mehwish Mahmood, Research Officer.

Mr. Muhammad Rizwan, Research Officer.

Anwaar Hussain, J. Briefly stated facts of the case are that the appellant was inducted as a tenant by the respondents in property bearing No. BII/8, Tipu Shaheed Road, Model Town-A, Bahawalpur ("the rented premises"), initially under a written rent agreement, executed on 05.01.2016, at Rs.70,000/-, per month for the period commencing from 01.01.2016 to 31.11.2016 (“the Rent Agreement”) where after the same became a statutory tenancy as no written extension is available on record though the appellant pleaded that same was finally extended in January, 2020 through an oral agreement for a period commencing from January 2020 to 31.12.2030. The appellant admittedly runs a school in the name and style of Lahore Grammar (Project) School in the rented premises. On 22.09.2020, the respondents filed an eviction petition under Section 19 of the Cantonment Rent Restriction Act 1963 (hereinafter, “the Rent Act”) on the ground that the tenancy has expired and the appellant has committed wilful default as no payment on account of rent has been paid since last five months preceding to the institution of eviction petition and also pleaded personal need for carrying out their own business in the rented premises. Application for leave to defend was filed and relationship of landlord and tenant was admitted. In defence, averments were made to the effect that

tenancy has been extended in January, 2020 through an oral agreement for a period commencing from January 2020 to 31.12.2030 and only amount due is for the month of July-August 2020 in respect of which the appellant showed willingness to deposit the same. The learned Rent Controller, vide order dated 12.10.2020, directed the appellant to deposit an amount of Rs.10,98,075/- on account of arrears of rent for period of May 2020 till date of filing of the eviction petition by 31.12.2020 and also directed to deposit monthly rent of Rs. 2,19,615/-, on 5th of every month. Following issues were framed vide order dated 15.10.2020:

“1. Whether the petitioners needs (sic) the demised premises for their personal need. O.P.A.

2.What is the rate of rent. O.P. Parties.

3.Whether the respondent has defaulted on (sic) payment of rent.

O.P.A

4.Whether the petition is not maintainable and is liable to be demissed (sic) on grounds of preliminary objections. O.P.R 5. Relief.”

Thereafter, on 17.12.2020, an application for grant of extension in time to comply with order dated 12.10.2020 for deposit of rent was filed by the appellant on the ground that as a consequence of COVID-19 lockdown and closure of school under the governmental directions, the school’s fees are not being received which is creating financial hardships for the appellant. Reply was filed by the respondents that no notification for closure of school has been appended and the school is receiving fees and conducting online classes. Subsequent thereto, an application on behalf of the respondents was filed on 25.01.2020 under Section 17(9) of Rent Act with averments that the appellant is not only defaulter but has also not complied with and adhered to order dated 12.10.2020 passed by the learned Rent Controller. As a retort to the said application, reply was filed by the appellant wherein resort was again sought to the fall-outs of COVID-19 lockdown as referred above. The learned Rent Controller, vide order dated 11.02.2021 (“Impugned Order”), dismissed the application filed by the appellant for extension of time to deposit the rent and accepted the application filed by

the respondents for closing the right of defence of the appellant under Section 17(9) of the Rent Act on account of failure on part of the appellant to comply with order dated 12.10.2020 and directed the appellant to vacate the rented premises. Hence, the present appeal has been preferred.

2.In the present appeal, averments have been made that the appellant has been running school in the rented premises and the COVID-19 and concomitant lockdown caused the closure of school for the whole year of 2020 whereby there was no income for the school. Besides, various other grounds have also been brought forward which, inter alia, include the alleged exemption from paying rent through notifications issued by both the Federal and Provincial Governments and that the Impugned Order has been passed without considering that the appellant has spent hefty amount in setting up the school and allied facilities.

3.The appeal was first listed before this Court on 04.03.2021 and the following order was passed in CM. No.1/2021:

“Subject to notice for the aforesaid date and deposit of outstanding rent of Rs.9,42,879/- within next 20 days with the learned Rent Controller/Rent Tribunal, Cantonment Board, Bahawalpur and future monthly rent, at the rate determined by the learned Rent Controller, on or before the 5th day of every month by the appellant, operation of the impugned order dated 11.02.2021 shall remain suspended till the next date of hearing. The rent so deposited by the appellant shall be handed over to the respondents after fulfilment of all the codal formalities.”

(Emphasis supplied)

4.Learned Counsel for the appellant submits that the default in payment of rent is not wilful rather COVID-19 lockdown caused complete disruption of all the business activities and the school being run by the appellant was also closed as per order of the government and therefore, the same falls under the purview of force majeure and the entire purpose for which the rented premises was taken by the appellant was frustrated. As regards the expiry of the tenancy, he submits that initially the Rent Agreement was executed for 11 months and the same was extended from time to time verbally by the parties and last extension took place in January 2020 till 31.12.2030 and now the tenancy is valid till 31.12.2030 on the basis of oral

agreement between the parties, therefore, the respondents cannot seek eviction prior to expiry of the said period of tenancy.

5.On the other hand, learned Counsel for the respondents submits that the appellant is a wilful defaulter under the Rent Agreement, which was never extended for a period of 10 years till 31.12.2030, through an oral agreement, as has been claimed by the appellant. Further submits that the default is admitted inasmuch as the appellant even has not complied with the order of the learned Rent Controller dated 12.10.2020 as well as order dated 04.03.2021 passed by this Court. Lastly, submits that force majeure does not apply as the case is governed by the Rent Act and mere temporary disruption or closure of a business cannot exempt the appellant from not making the monthly rental payments as per agreed terms, as respondent No.1 being a widow is also dependent upon the income she receives from the rented premises. Places reliance on “M.H Mussadaq v. Muhammad Zafar Iqbal and another” (2004 SCMR 1453) to contend that even delay of payment of rent for one day amounts to wilful default, which entitles the respondents to seek eviction of the appellant from the rented premises.

6.In rebuttal, learned Counsel for the appellant submits that the general law of land governing contractual obligations qua lease/tenancy matters confers a right on the appellant to invoke the principle of force majeure. Further submits that even if wilful default is established, the other grounds of eviction taken in the ejectment petition filed by the respondents like personal need have not been proved as no recording of evidence took place and without proving the other grounds of eviction, no order to that effect can be passed. Lastly submits that the COVID-19 lockdown has frustrated the object of the Rent Agreement between the parties and that aspect has been ignored by the learned Rent Controller.

7.Arguments heard. Record perused.

8.The relationship between a landlord and tenant or a lessor and a lessee are primarily governed either by the agreement, which the parties execute and/or by and under the law. Qua the agreements between the parties, their respective rights and obligations would be determined by the

terms and conditions of the agreement itself. The present matter primarily raises the issue relating to default in payment of rent by the appellant owing to the force majeure event in form of COVID-19 lockdown and the legal questions ancillary thereto. The availability of the relief on the basis of doctrine of force majeure is contingent on the availability of the relevant clause in the contract and the interpretation of applicable law on the subject. Therefore, the term force majeure as well as its applicability in the present case needs to be analysed in the light of relevant provisions of the Contract Act 1872 (“the Act 1872”) and the terms and conditions of the Rent Agreement on the basis of which the appellant was inducted as a tenant in the first place.

9.A ‘force majeure’ situation or an event, has not been defined in any enactment in vogue in Pakistan. Force majeure is defined by Black's Law Dictionary, Eleventh Edition as an event or effect that can be neither anticipated nor controlled by the parties and includes both acts of nature (e.g., floods and hurricanes) as well as acts of people (e.g., riots, strikes and wars). Effect of COVID-19 lockdown as a force majeure event and its effect on the rights and obligations of parties to a license agreement has been examined by this Court in “Abdul Waheed v. Additional District Judge and others (PLD 2021 Lahore 453) by referring to various pronouncements of superior courts in Pakistan as well as India and England. In Abdul Wahid, supra, a licensee who was awarded a contract to run a hostelry by the petitioner therein instituted a suit for permanent injunction wherein he prayed for grant of interim injunction against recovery of rent due under the contract on the basis of COVID-19 lockdown, which was allowed by the learned trial court whereas the appellate court below in the said case reversed the order of the trial court and the judgment of appellate court was upheld by this Court holding that notifications issued in the wake of COVID-19 nowhere put a restraint upon the landlords to seek eviction in accordance with law.

10.Perusal of Abdul Waheed supra and the judgments referred therein enables this Court to summaries the rules governing application of principle of force majeure as well as doctrine of frustration, on contracts in general

and tenancy agreement, like the Rent Agreement in present case, in particular, which are spelled out as under:

i. If an agreement between the parties have a force majeure clause, Section 32 of the Act 1872, comes into play. Energy Watchdog v. Central Electricity Regulatory Commission and others (2017) 14 SCC 80) is referred in this regard;

ii. The force majeure clause in the contract could also be a contingency under Section 32 of the Act 1872, which may allow the tenant to claim that the contract has become void and surrender the premises; however, if the tenant wishes to retain the premises and there is no clause giving any respite to the tenant, the rent or the monthly charges would be payable as agreed between the parties;

iii. In the absence of a force majeure clause in the agreement between the parties, a party thereto may attempt to invoke the doctrine of frustration embedded in Section 56 of the Act 1872, which deals with impossibility of performance and applies to cases where a force majeure event occurs outside the contract;

iv. There are various conditions that have to be fulfilled to satisfy the conditions of ‘impossibility’ envisaged under Section 56 of the Act 1872 and the Courts cannot travel outside the terms of that section. Case of Raja Dhruv Dev Chand v. Raja Harmohinder Singh & another (AIR 1968 SC 1024) is referred;

v. Section 56 of Act 1872 does not apply to lease agreements as there is a distinction between a ‘completed conveyance’ and an ‘executory contract’ and a lease or a tenancy created under a rent deed is a completed conveyance though it involves monthly payment and hence, Section 56 cannot be invoked to claim waiver, suspension or exemption from payment of rent. Raja Dhruv supra is referred;

vi. A contract is not discharged merely because it turns out to be difficult or onerous for one party to perform and no one can resile from a contract for the said reason. “Alopi Prashad and sons, Ltd. v. Union

of India” (1960) 2 SCR 793) and “Panna Lal and others etc. v. State of Rajasthan and others” (1975) 2 SCC 633), are referred;

vii. In the absence of contracts or the covenants relating to force majeure situation, provisions of the Transfer of Property Act, 1882 (“TPA”) would govern tenancies and leases where the doctrine of force majeure is recognised in terms of Section 108 (B) (e) while contemplating the ‘Rights and Liabilities’ of a lessee whereby it has been envisaged that if by fire, tempest or flood, or violence of an army or of a mob, or other irresistible force, any material part of the property be wholly destroyed or rendered substantially and permanently unfit for the purposes for which it was let, the lease shall, at the option of the lessee, be void;

viii. Temporary disruption in enjoyment of demise premises is not a ground to avoid and delay the payment of rent when the tenant does not chose to avoid the lease/tenancy. Sangeeta Batra v. M/s Vnd Foods & Ors., (2015) 3 DLT (Cri) 422) is referred;

ix. Even if the leased premise is rendered substantially and permanently unfit for the purpose for which it was let, the lessee has the option to avoid the lease and unless the lessee so avoids the lease, he cannot avoid his obligation contained in clause (l) of Section 108 of the Transfer of Property Act, 1882 to pay or tender the rent to the lessor.

11.In the present case, the Rent Agreement does not contain a clause providing for some sort of waiver/suspension/ delay of payment of the rent on account of force majeure, hence, the appellant cannot claim the same and plead that the default on this ground was not wilful. Doctrine of frustration, in the instant case, has not been specifically pleaded in the application for leave to defend filed before the trial court or in the present appeal and it is only during the course of arguments, learned Counsel for the appellant avers that COVID-19 lockdown frustrated the contractual obligations for the time being, however, the case of the appellant does not fall within the scope of doctrine of frustration as examined above. In present case, the appellant merely is delaying the payment due and not avoiding the tenancy rather claims to the effect that tenancy has been extended till 2030 through oral

FAO No.8/2021 8

agreement. In view of the settled legal position, temporary non-use of premises due to the lockdown, which was placed by the government, due to the COVID-19 crisis cannot be of any help to the appellant to invoke force majeure situation under the TPA as well. Even on equitable grounds, the appellant never gave a notice of force majeure to obtain any relief for non- performance or delayed performance and only pleaded the same when the eviction petition was filed by the respondents, thus the contract should be performed in strict compliance with the terms and conditions of the Rent Agreement regarding payment of rent.

12.Even otherwise, the instant matter involves the default on part of the appellant at three stages, which is recurring in nature and their respective effects and consequences require examination. The three stages of default are spelled out as under:

i. contractual default prior to filing of eviction petition by the respondent/landlord;

ii. default during the proceedings before the learned Rent Controller particularly non-adherence and non-compliance to the order dated 12-10-2020; and

iii. non-compliance of the order dated 04-03-2021 passed by this Court.

Before dealing with the three stages of default by the appellant, it dovetails well to have one’s eyes glued to the pleadings bordering on undertakings of the appellant firstly before the learned Rent Controller in para 6 of his reply to eviction petition and, later on, before this Court. In para 6 of the reply to eviction petition, the appellant undertook as under:

لمہیلع وک دا وک وک وک ہی وک ہک وک وئسمل وک ہیلع وک ویم وک رکہی وک ری وک ےس وک اموہ ر وک رک ہی وک اباقدعیگ وک ےس وک وئسم وک.6 وک ء وک اک وک رک ہی وک ذبہم وک وئسمل وک ہیلع وک و بج وک ال وک ےہ وک وج وک2020 رکات وک الچ وک ٓا وک راہ وک ےہ وک ۔ وک ہکبج وک امہ وک وجالیئ وک وک تسگ وک وئسمل وک ہیلع وک دع ت وک انوب ہل وک ںیم وک عمج وک رک ےن وک ےک وک ےئ وک رایر وک ےہ۔ وک س وک ےک وک العوہ وک لب وک یلجب وک لشیپ وک وہں وک یگ۔ وک رصحنمہ وک فل وک ےہ۔ ور وک وسیئ وک سیگ وک یھب وک اباقدعیگ وک ےس وک وک رکراہ وک ےہ۔ وک وقن وک (Emphasis supplied)

Similarly, ground iv of the instant appeal states as under:

“iv. That the respondents filed the ejectment petition by concealment of so many facts and also not issued any notice before filing of the ejectment petition, so the order passed by the learned rent controller is not in accordance with law. In-fact appellant is ready to pay the outstanding all the amount, so when the respondent refused to obtain the monthly rent as per agreement, then petitioner also approached before court of learned senior civil judge, Bahawalpur and filed an application and same was withdrawn due to lack of jurisdiction thereafter appellant also approached before the court of learned rent tribunal/rent controller cantonment board, Bahawalpur and also filed an application for restraining the respondents.”

The three stages of the default referred hereinabove are required to be placed in juxtaposition to the pleadings in the nature of undertaking/willingness/readiness by the appellant to deposit the entire outstanding amount. Similarly, the appellant, as per his own averments, also approached the learned Senior Civil Judge, Bahawalpur to deposit the outstanding amount/rent which was withdrawn due to lack of jurisdiction. Once the direction was given to the appellant by the Rent Controller and then by this Court, the appellant was duty bound to adhere to the same in letter and spirit. Undertaking to deposit rent/outstanding amount and not doing so even on the directions of Rent Controller and then by this Court brings forth the mala fide of the appellant and alludes to nothing but the lack of deference if not contumacy on part of the appellant towards the courts. Such acts/attitude cannot be countenanced and acceptance of the instant appeal would amount to putting premium upon the conduct of the appellant. Therefore, even if the default prior to initiation of eviction proceedings is ignored, the default after filing of the eviction petition and non-compliance of the orders cannot be condoned, particularly, when juxtaposed with the undertakings of the appellant contained in the pleadings. Wilful default is evident from the record inasmuch as that admittedly the rent was not paid for the month of August and September, 2020. Moreover, order dated 20.10.2020, for payment of tentative rent, has also not been complied with. In M.H Mussadaq supra it has been clearly held by the honourable Supreme Court that even delay of one day in making deposit of rent is fatal and constitutes default within the meaning of Section 17(9) of the Rent Act as the same is mandatory in nature and the

learned Rent Controller had no power to extend the time. Therefore, the learned Rent Controller rightly dismissed the application for extension of time filed by the appellant and passed the Impugned Order. Even otherwise, in present case, the appellant has not even bothered to comply with the order of this Court dated 04.03.2021 whereby he was directed to deposit the future rent on 5th of every month. Perusal of the receipts placed on record during the course of arguments by learned Counsel for the appellant shows that rent for the month of March, 2021 was paid on 05.04.2021, for April, 2021 on 06.05.2021 and June, 2021 on 07.07.2021. However, no receipt for payment of rent for the month of May, 2021 has been produced.

13.Reliance of the appellant on the notifications issued by the Governments to seek exemption from payment of rent altogether is misconceived as the said notifications do not have any such effect. Moreover, the appellant is running commercial activity whereas respondent No.1 being landlady is a widow who might have or may suffer more heavily as to the impact of non-payment of the rent by the appellant. Another aspect of the matter is common knowledge that the educational institutions such as the appellant have been receiving fees from students as online classes have been taking place, which has not been denied by learned Counsel for the appellant during the course of arguments when confronted in this regard. In short, neither the notifications issued by the government nor temporary lockdown as result of COVID-19 absolves the appellant from the payment of rent.

14.As regards the argument that in eviction proceedings under the Rent Act all the grounds of eviction taken by a landlord need to be proved in order to succeed, suffice to state that the said argument is completely misconceived. It is not necessary for the landlord to make out all the grounds, which he has taken in the ejectment petition for claiming eviction of the tenant under the Rent Act. If the landlord is able to make out only one ground out of the several grounds of the eviction, he is entitled to seek the eviction of his tenant from the rented premises on the basis of that sole ground. In other words, if one ground of eviction is held to be established against the tenant, the same is sufficient to evict the tenant from the suit

premises. Reference is made to Abdur Rehman through Legal Heirs v. Syed Tasadduq Hussain (2004 SCMR 115).

15.In view of the above discussion, this Court does not find any merit in this appeal, which is hereby dismissed.

16.Before parting with the judgment, I acknowledge the valuable assistance rendered by Ms. Mehwish Mahmood and Mr. Muhammad Rizwan, Research Officers at Research Centre, Lahore High Court, Lahore.

(ANWAAR HUSSAIN)

Judge

Approved for reporting.

Judge

Announced in Open Court on _________.

Judge Akram