RUKHSANA BEGUM VS EXPRESS WORLDWIDE PAKISTAN (PVT.) LTD., 2005 PTD-SUPREME-COURT 2154 (2005)

(On appeal from, the judgment, dated 12-1-2001 of the High Court of Sindh, Karachi passed in F.R.As. Nos. 250 to 252 of 1998).

(a) Income Tax Ordinance (XXXI of 1979)---

----S.50(7-B)---Sindh Rented Premises Ordinance (XVII of 1979), S; 15(2)(ii) --Default in payment of rent---Deduction of withholding tax from rent as per demand raised by Income Tax Authorities warning tenant-company of penal consequences on its failure---Payment of rent by tenant after deducting amount of tax and depositing same in Government treasury in relevant account---Tenant-company was fully' justified to make such deductions.

Messrs Meridian Corporation (Pvt.) Ltd. v. Mrs. Yasmeen Riaz 1999 SCMR 832 distinguished.

(b) Income Tax Ordinance (XXXI of 1979)---

-----S. 50(7-B)---Sindh Rented Premises Ordinance (XVII of 1979)--S.15(2)(ii)---Default in payment of rent---Deduction of withholding tax from rent by tenant---Refusal of landlord to receive balance amount of rent---Deposit in Court on 19-1-1993 balance amount of rent for months of October, November, December, 1992---Plea of tenant was that rent for October, 1992 was once again remitted through letter, dated 3-1-1993, which was refused by landlord---Validity---Rent as per lease agreement was payable in advance before 10th of each month-After extending benefit of fifteen days as prescribed in S.15(2)(ii) of Sindh Rented Premises Ordinance, 1979, monthly rent would be payable in advance by 25th of each month---Tenant had deposited rent for disputed period for the first time on 19-1-1993 without showing any legal justification---Nothing was- on record to show that tenant had been prevented by superior force in not depositing. rent for such period soon after refusal of rent for October, 1992---Period prescribed for payment of rent could not be extended at the whims of tenant, particularly when tenant had admitted in such letter that cheques on account of rent for months of November, December, 1992 were not prepared due to refusal of landlord to receive rent for October, 1992---Tenant had committed wilful default in payment of rent---Ejectment petition was accepted in circumstances.

Syed Haider Ali Pirzada, Advocate Supreme Court and Abdul Qadir Khan, Advocate Supreme Court for Appellants.

Abdul Sattar Pingar, Advocate Supreme Court and M.S. Ghaury, Advocate-on-Record for Respondents.

Date of hearing: 20^th April, 2005.

JUDGMENT

RANA BHAGWANDAS, J.---These appeals with the leave of the Court are directed against consolidated judgment of the High Court of Sindh, dated 12-1-2001 passed in F.R.As. Nos.250, 251 and 252 of 1998.

2. Two questions of law, firstly whether the respondent-tenant company was legally justified in, deducting the amount of withholding tax in terms of section 50(7B) of the Income Tax Ordinance, 1979 (hereinafter referred to as "the Ordinance) and secondly whether the respondent-Company committed a wilful default in payment of rent irrespective of aforesaid deduction for the months of October, 1992 to January, 1993 require decision in these appeals.

3. Through three different agreements of lease executed between the parties, three different office/commercial premises were let out to the respondent-Company at monthly rent of Rs.18,000, Rs.2500 and Rs.2000 respectively. As per para. 4 of the agreement, rent was payable in advance before the 10th of each month in addition to proportionate share towards payment of water and conservancy charges. Appellant through three separate eviction applications sought the eviction of the respondent-Company from the demised premises on the ground of default in payment of rent from October, 1992 to January", 1993.

4. The eviction plea was contested on the ground that the tenant was called upon by Income Tax Officer Circle-II to face the consequences for non-deduction of advance tax as contemplated by section 50(7B) of the Ordinance, therefore, the amount of advance tax was deducted from the rent for the month of October, 1992 and a cheque in the sum of Rs.5500 instead of Rs.18000 along with rent for two other premises was sent to the appellant vide company's letter, dated 17-10-1992 but she refused to accept the same. Consequently, respondent filed a miscellaneous rent case in the office of Rent Controller and deposited the amount of rent for the above four months along with the amount of water and conservancy charges on 19-1-1993 for the first time.

5. Upon consideration of the evidence adduced by the parties, learned Rent Controller held that there was a wilful default in payment of rent and directed eviction of the respondent. In statutory appeals, a learned Judge in Chamber of the Sindh High Court reversed the findings upon taking into consideration the legal implications of section 50(7B) of the Ordinance but without adverting to the date of deposit of rent in the office of Rent Controller and held that there was no default on the part of the respondent in payment of rent.

6. At the hearing, when Syed Haider Ali Pirzada, Advocate Supreme Court was confronted with the provisions of Ordinance, dilated upon above, he had heavily relied upon Messrs Meridian Corporation (Pvt.) Ltd. v. Mrs. Yasmeen Riaz (1999 SCMR 832). Reported case is completely distinguishable on facts as in the said case, tenant did not deposit full rent due for a period of three years in compliance with tentative rent order passed by Rent Controller but deducted certain amounts claimed to have been paid on account of advance/withholding tax and KMC taxes. It was in this backdrop that a Bench of this Court while refusing to grant leave against the eviction order observed that deduction of such taxes would not absolve the tenant of the penal consequences under section 17(9) of the Cantonments Rent Restriction Act, 1963. In the present case, there was a clear and definite demand raised by the Income "Tax Authorities against the respondent/tenant company warning it of penal consequences on account of non-deduction of advance tax. Thus the respondent was fully justified in deducting the amount of tax and depositing the same in the Government treasury in the relevant account.

7. Learned counsel then contended that even with regard to the balance amount of rent for the month of October as well as for the months of November and December, 1992, there was a clear and wilful default in that rent for such months was neither tendered nor offered to the appellant by the respondent. A reference to the original challan for payment of rent and water and conservancy charges as well as copy of the ledger maintained by the Nazir of the office of the ,Rent Controller fully substantiate that in fact, the amount of rent and other charges was deposited for the first time on 19-1-1993. In view of clear stipulation in the agreements of lease, monthly rent was payable before 10th of each month in advance. Even if the benefit of fifteen days period as prescribed in section 15(2) clause (ii) of the Sindh Rented Premises Ordinance, 1979 is extended to the respondent, monthly rent would be payable by 25th of each month in advance. In. the instant case, however, rent for October, 1992 to January, 1993, was deposited for the first time on 19-1-1993 without any lawful justification. There is no material on record tending to show that the respondent was prevented by superior force in not depositing the rent for the above period soon after the refusal of the rent for the month of October, 1992. Learned counsel further attempted to argue that rent for the month of October, 1992 was once again remitted to the appellant through Company's letter, dated 3rd January, 1993 but the appellant remained adamant in declining to accept the same. We do not find any merit and substance in this contention as the period prescribed for payment of rent could not be extended at the whims of the respondent-tenant more particularly when it is admitted in their above letter that cheques on account of rent for the months of November and December, 1992 were not prepared simply because the appellant had refused to accept the rent for the month of October, 1992. In view of this admitted position, we are of the considered opinion and in no manner of doubt that there was a wilful default on the part of the respondent which appears to have escaped the notice of the learned High Court.

8. For the foregoing facts, reasons and circumstances, these appeals are allowed, judgment of the High Court is set aside and that of the Rent Controller is restored. Since the respondent has established C business in the commercial premises for more than a decade, we allow a period of eighteen months for vacating the premises subject to payment of monthly rent as agreed in addition to other charges. In case of default in payment of monthly rent, writ of ejectment will be issued without notice to the respondent.

S.A.K./R-36/SCAppeal accepted.