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N. Venkatachari Vs. Ramalinga Tevan and anr. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported inAIR1918Mad36; 45Ind.Cas.417
AppellantN. Venkatachari
RespondentRamalinga Tevan and anr.
Cases ReferredNatesa Aiyar v. Appavu Padayachi
Excerpt:
contract act (ix of 1872), section 74 - lease--deposit--forfeiture of deposit in event of breach--interest, claim for, at 24 per cent, per annum from date of suit--penalty. - - it was clearly held by a full bench in natesa aiyar v. this is clearly in the nature of a penalty and as his vakil says he does not press the claim, we disallow it, and reduce the rate to 6 per cent......is for arrears of rent and for a declaration that the amount deposited by defendants under the rental agreement has been forfeited. it is in effect a suit for rent coupled with a claim for the damages provided in the contract, if a forfeiture of a deposit can be styled damages. both the lower courts appear to have treated the suit as one for damages alone and have allowed the defendants to set off the amount deposited by them under the rental agreement against the rent due, although no set-off was pleaded in the written statement and not only has the lower appellate court awarded nothing by way of damages for breach of contract, but has mulcted the plaintiff in the costs of the suit.2. we think they were wrong in the view that they took and in applying the ruling in vellore taluq.....
Judgment:

1. Plaintiff's suit is for arrears of rent and for a declaration that the amount deposited by defendants under the rental agreement has been forfeited. It is in effect a suit for rent coupled with a claim for the damages provided in the contract, if a forfeiture of a deposit can be styled damages. Both the lower Courts appear to have treated the suit as one for damages alone and have allowed the defendants to set off the amount deposited by them under the rental agreement against the rent due, although no set-off was pleaded in the written statement and not only has the lower Appellate Court awarded nothing by way of damages for breach of contract, but has mulcted the plaintiff in the costs of the suit.

2. We think they were wrong in the view that they took and in applying the ruling in Vellore Taluq Board v. Gopalasami Naidu 26 Ind. Cas. 226 in support of it. It was clearly held by a Full Bench in Natesa Aiyar v. Appavu Padayachi 19 Ind. Cas. 462 : 13 M.L.T. 391 : (1913) M.W.N. 341 that in the case of a sale, Section 74 of the Contract Act was not applicable and that a stipulation for forfeiture in case of breach is not a penalty. The same view was held by Seshagiri Aiyar, J, in the case of a lease Orr v. Chitha Chinna Yagapaa Chetty (1915) M.W.N. 249 and it is not contended before us that any distinction can be drawn between the case of a sale and that of a lease.

3. In determining whether the sum of Rs. 150 agreed to be forfeited was a deposit or not, we must be guided by the reasonableness or unreasonableness of the amount. The point has not been considered by the lower Courts, but, taking all the circumstances into consideration, we must certainly hold the amount to be reasonable, being, as it is, one-half year's rent in a rental agreement for 5 years. Following the Full Bench ruling in Natesa Aiyar v. Appavu Padayachi 19 Ind. Cas. 462, we think plaintiff is entitled to retain the deposit.

4. Plaintiff is also entitled to his rent, and that is not disputed.

5. Plaintiff has made a further claim, i.e., for interest at 24 per cent, from date of suit until realization. This is clearly in the nature of a penalty and as his Vakil says he does not press the claim, we disallow it, and reduce the rate to 6 per cent. The second appeal is accordingly allowed and plaintiff will have a decree as prayed for, except in regard to the penal interest claimed with costs throughout.


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