UNLAWFUL CLOSURE OF FACTORY & EMPLOYEE COMPENSATION

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Case Reference

Muhammad Ayub (Shop Manager, Bata Pakistan Ltd.) v. Muhammad Rahman
Civil Petition No. 5666 of 2024
Court: Supreme Court of Pakistan
Bench: Yahya Afridi, C.J. & Salahuddin Panhwar, J.
Decision Date: 29 September 2025
Appeal From: Judgment dated 11.10.2024 passed by the Peshawar High Court, Mingora Bench (Dar-ul-Qaza), Swat in W.P. No. 358-M of 2022

Statutes Involved

• West Pakistan Urban Rent Restriction Ordinance, 1959 – Section 13(2)(i)

• Qanun‑e‑Shahadat Order, 1984 – Articles 117 & 129(g)

• Constitution of Pakistan – Article 199

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Detailed Case Summary with Legal Headings

1. Background and Facts of the Case

The dispute arose from a tenancy relationship between Muhammad Rahman (landlord) and Muhammad Ayub, Shop Manager of Bata Pakistan Ltd., and another tenant regarding a commercial property.

• The tenancy was admitted to have expired in 2016.

• The landlord later filed ejectment and recovery of rent proceedings in 2020, alleging that the tenants continued to occupy the premises and were liable to pay arrears of rent.

• The tenants denied continued possession and contested the claim for rent.

The central issue before the courts was whether the tenants remained in possession after the expiry of tenancy and whether the landlord successfully proved arrears of rent.

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2. Burden of Proof for Recovery of Rent Lies on the Landlord

The Supreme Court reiterated a fundamental evidentiary principle derived from Articles 117 and 129 of the Qanun-e-Shahadat Order, 1984:

• The party asserting a fact bears the burden of proving it.

• Since the landlord alleged continued possession and arrears of rent, the evidentiary burden rested on him.

The Court held that:

• Mere pleadings or allegations are insufficient.

• Recovery of rent requires credible oral or documentary evidence, such as rent receipts, tenancy records, or proof of occupation.

Because the landlord failed to produce convincing evidence that the tenants remained in possession after 2016, the claim could not succeed.

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3. Findings of the Rent Controller and Appellate Authority

The case was initially decided by the Rent Controller, who dismissed the landlord’s claim after evaluating the evidence.

The Rent Controller held that:

• The landlord failed to prove continued possession of the tenants after 2016.

• No convincing proof of outstanding rent was presented.

The appellate authority affirmed these findings, concluding that:

• The landlord’s case was unsupported by reliable evidence.

• The tenants could not be held liable for rent without proof of possession.

These constituted concurrent findings of fact by two competent forums.

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4. High Court’s Interference under Article 199

The landlord subsequently filed a constitutional petition before the Peshawar High Court under Article 199 of the Constitution of Pakistan.

The High Court:

• Re-evaluated the evidence on record.

• Set aside the concurrent findings of the Rent Controller and appellate forum.

• Allowed the landlord’s claim for rent.

However, the Supreme Court held that the High Court exceeded the limits of its constitutional jurisdiction.

The Court emphasized that under Article 199, a High Court may interfere only where there is:

• Jurisdictional error

• Misreading or non-reading of evidence

• Perverse or illegal findings

Since none of these conditions existed, the High Court had no authority to reassess disputed facts.

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5. Withholding of Best Evidence and Adverse Presumption

The landlord claimed that he had refrained from taking possession earlier due to assurances from an individual referred to as “S.”

However:

• This individual was neither impleaded as a party nor examined as a witness.

• No explanation was given for this omission.

The Supreme Court applied Article 129(g) of the Qanun-e-Shahadat Order, which allows courts to draw an adverse presumption when a party withholds the best available evidence.

The Court held that failure to produce this witness weakened the landlord’s case and justified an inference that the testimony would not have supported his claim.

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6. Delay and Laches in Filing Ejectment Proceedings

Another important factor was the unexplained delay in initiating legal action.

Key timeline:

• Tenancy expired: 2016

• Ejectment application filed: 2020

The Supreme Court observed that:

• The landlord waited nearly four years before filing proceedings.

• No explanation such as acknowledgment of tenancy, fresh agreement, or revival of the tenancy was provided.

Under Section 13(2)(i) of the West Pakistan Urban Rent Restriction Ordinance, 1959, such unexplained delay can defeat claims for rent and ejectment.

The Court therefore treated the delay as fatal to the landlord’s case.

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7. Rent Cannot Be Awarded Without Proof of Possession

The Court clarified an important principle in rent law:

Liability to pay rent arises only when the tenant occupies, uses, or benefits from the premises.

The Supreme Court ruled that:

• Rent cannot be awarded merely because tenants failed to actively contest the claim.

• The landlord must first establish actual occupation or benefit derived from the property.

In the present case:

• No evidence proved that the tenants continued to use the premises after the tenancy ended.

• Therefore, recovery of rent was legally unsustainable.

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8. Limits on Interference with Concurrent Findings

The Court reaffirmed the long-standing doctrine governing appellate review:

Courts should not disturb concurrent findings of fact unless the findings are:

1. Perverse

2. Based on misreading or non-reading of evidence

3. Resulting from jurisdictional error

4. Based on extraneous considerations

Since the findings of the Rent Controller and appellate authority were well-reasoned and supported by the record, the High Court’s interference was unjustified.

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Ratio Decidendi (Key Legal Principles)

1. Burden of proof lies on the landlord to establish arrears of rent and continued possession of the tenant.

2. Absence of rebuttal does not substitute for proof; a claim must be supported by evidence.

3. Withholding material witnesses attracts an adverse presumption under Article 129(g) of the Qanun-e-Shahadat Order.

4. High Courts exercising jurisdiction under Article 199 cannot reappraise evidence like an appellate court.

5. Unexplained delay and laches may defeat claims for ejectment and recovery of rent.

6. Rent cannot be awarded without proof of occupation or benefit from the premises.

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Final Holding of the Supreme Court

The Supreme Court:

• Converted the civil petition into an appeal.

• Allowed the appeal.

• Set aside the judgment of the Peshawar High Court.

• Restored the concurrent findings of the Rent Controller and appellate authority.

The Court concluded that the landlord failed to prove both possession and arrears of rent, and the High Court had wrongly interfered with factual findings beyond its constitutional jurisdiction.

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