THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO A.S.NO.348 OF 2001 JUDGMENT: The defendant in O.S.No.78 of 1999 on the file of the court of Senior Civil Judge, Madanapalle is the appellant herein. The suit was for recovery of a sum of Rs.1,64,778/- being the principal and interest said to be due towards the rent of the shop room leased out to the defendant. According to the case of the plaintiff, the municipality has conducted leasehold rights of the shop rooms at Bangalore Bus stand on 27-03-1995 for a period of three (3) years and for shop No.16 the defendant became highest bidder for a monthly rent @ Rs.3,875/- and the bid was accepted and confirmed by the council. The defendant took possession of the said shop and has been carrying the business. The defendant also deposited a sum of Rs.23,250/- and from 01-10-1997 to 31-03-1998 the said amount was adjusted. Later, the defendant has not paid the amount for 20 months from 01-02-1996 to 01-09-1997 to a tune of Rs.77,500/- besides an amount of Rs.2,309/- towards agreement charges and Rs.2,577/- towards electricity consumption charges and interest @ 30% p.a. is to be paid as per the conditions of lease. Hence the suit. The defendant filed a written statement admitting the auction held by the plaintiff and also his participation in the auction and deposit of Rs.23,250/- and also the non-payment of the rent. According to the case of the defendant, the defendant could not run the business for some time due to floods and the neighbouring shops were given at a lesser lease of Rs.1000/- per month and therefore, he requested the council of the plaintiff to reduce the rent and they promised to consider it but it was not considered. However, the keys of the shop were handed over to the defendant and he is in occupation of the property. There was no written agreement or the contract as contemplated under the terms of the auction and therefore the defendant is not liable to pay the amount claimed. The defendant offered to pay the rent @ Rs.1000/- per month and excess amount if any is to be returned. The suit is barred by time. On the basis of above pleadings, the following issues were settled for trial:- 1. Whether the defendant is not liable to pay the suit amount? 2. Whether the suit is barred by limitation? 3. To what relief? On behalf of the plaintiff PW.1 was examined and marked Exs.A-1 to A-3 and on behalf of the defendant DW.1 and DW.2 were examined and marked Exs.B-1 to B-3. After considering the evidence on record, the learned Senior Civil Judge decreed the suit of the plaintiff and aggrieved by the said judgment, the present appeal is filed. Now the points that arise for consideration are:- 1. Whether the defendant is not liable to pay the amount? 2. Whether the suit is barred by time? 3. Whether the judgment and decree passed by the learned Senior Civil Judge is legal and sustainable? 4. To what relief? POINTS 1 to 4: Evidently, the appellant is not disputing about the participation in the auction and the fact that the auction was knocked down in his favour for a sum of Rs.3,875/-, being the monthly rent payable by him. It is also not in dispute accepting the terms of the auction a deposit was made by the defendant. The contention of the defendant is that as contemplated under the conditions of auction, no formal agreement has been entered into and therefore, there is no valid lease. If such a contention is to be accepted, even if it is not as rent, the defendant being in occupation of the property and enjoying the same has to pay the amount as “damages” for use and occupation. If that is the liability, then the amount offered by him as rent can be considered as a reasonable amount. The claim of the appellant is that due to floods, he suffered loss and that neighbouring shops were given for a lesser rent is of no ground to repudiate the liability to pay the rent. If at all, the appellant felt that it is not convenient or profitable for him to run the shop at a higher rent, he could have as well surrendered the possession of the shop to the plaintiff-municipality. Evidently, when a competitive auction was held, the person, who quotes the highest amount, will be given the shop. Therefore, the claim of the appellant for reduction of the rent or damages cannot be considered. However, it is always in the discretion of the municipality to give any remission or reduce the rent. But however, it is admitted by the counsel for the appellant that such a request was rejected by the municipality. In view of the above circumstances, in this case the contention of the appellant that he is not liable to pay the agreed rent since the neighbours are paying lesser rent is not legal and tenable. Therefore, the appellant cannot escape the liability to pay the rent which he has accepted to pay and there are no grounds under which the rent can be varied or reduced by the court. The learned counsel for the appellant contends that the interest claimed at 30% p.a. which is highly penal and causes hardship to the appellant who was already suffered loss in the business and due to floods. Evidently, the appellant has been in enjoyment of the property without paying a rent for a long time. He has withheld the rent with him but however the penalty clause of interest @ 30% when the appellant claims that the rent itself is a higher rate and appears to be so when compared to neighbouring shops, the relief can be granted to the appellant sofar as the interest is concerned. Therefore, I feel the ends of justice would be met if the appellant is directed to pay the interest @ 12% p.a. from the date of amount is due till the date of decree and subsequent interest @ 6% from the date of decree to till date of realisation. The suit was filed in the year 1999 and the amount was found to be due from 01-02-1996 to 31-03-1998 and in the meantime the amounts which were already deposited have been adjusted for the earlier period. The suit was filed on 11-10-1999. Evidently, the suit claim relates to the contract period from 01-11-1995 to 31-03-1998. The period of limitation is three (3) years. Hence the claim from 01-10-1996 is only in time. The defendant is therefore liable to pay the rent from 01-10-1996 to 31-03-1998 which comes to Rs.69,750/-. The defendant is therefore liable to pay the said amount. Since the other claims beyond the period of three years from the date of suit, they are rejected. Therefore, with the above modification the judgment and decree of the lower court is confirmed and the appellant is directed to pay a sum of Rs.69,750/- with interest @ 12% p.a. from 01-04-1998 to till date of decree with subsequent interest @ 6% till date of realisation. Accordingly, the appeal suit is allowed in part while confirming the liability of the appellant to pay a sum of Rs.69,750/-. The appellant/defendant is directed to pay interest @ 12% p.a. from 01-04- 1998 to till date of decree with subsequent interest @ 6% from the date of decree to till date of realisation. The plaintiff will be entitled for proportionate costs in the lower court as well as in appeal. The defendant shall bear his own costs. _______________________ N.R.L.NAGESWARA RAO,J 08-02-2011 TSNR