The claim for refund of a security deposit is not barred by limitation under Section 544 of the Kerala Municipalities Act if the refusal to refund is not an action done in pursuance of the Act.

JUDGMENT :

T.R. RAVI, J.

1. The second appeal is filed by the plaintiff against the judgment of the First Appellate Court whereby a decree in a suit for realisation of ₹2,06,287/- was reversed. The parties are referred to as per their status in the suit.

2. Plaintiff's case - The defendant constructed a market complex near the old bus stand in Kannur and resolved on 19.04.2000 to license the rooms based on the best offer. The plaintiff made the highest offer for room No.47 and on deposit of the amount (₹2,00,999/-), he was put in possession of the room on 14.06.2001. On 25.10.2002, the defendant reduced the amount of security to ₹1,20,000/-, and the plaintiff was entitled to get a refund of the balance amount. On the plaintiff’s request he was allotted Room No.46, and the security deposit of Rs.1,20,000/- was made up by payment of Rs.39,001/- and adjustment of the excess amount paid as security for Room No.47. The plaintiff was thus put in possession of room Nos.46 & 47 on security deposits of ₹1,20,000/- each. On 13.07.2004, the plaintiff surrendered room No.46, but the security deposit was not refunded. The plaintiff filed O.S.No.214/2005 before the Subordinate Court, Thalassery, for the realisation of the amount. The suit was dismissed, but the judgment of the trial court was reversed by the Appellate Court in A.S.No.178/2008. The appellate court decreed the suit and directed the return of the security deposit amount after deducting the license fee arrears. The plaintiff states that the execution proceedings for realising the decree debt was pending at the time of initiation of the present suit which is seeking the refund of the security deposit relating to Room No. 47. In December 2008, the plaintiff surrendered Room No.47 and claimed refund of security deposit of ₹1,20,000/-. It is stated that he has paid the entire licence fee except for two months, which would be around ₹9,888/-. It is alleged that though the room was allotted in April 2000, electricity connection for the room was provided only on 12.11.2003. It is stated that on request of the licensees of the rooms, the Municipal Council had decided to reduce the rent of the room by 50% up to the date of providing the electricity connection and hence the plaintiff is entitled to ₹69,000/- being the 50% of the licence fee paid during the period when there was no electricity connection. The plaintiff claims that a sum of ₹1,79,112/- is due from January 2009 and that despite repeated requests, the amount is not paid. It is further stated that a notice under Section 544 of the KERALA MUNICIPALITIES ACT was issued on 12.04.2001 through the plaintiff's lawyer, demanding payment within two months and that the notice was delivered to the defendant on 18.04.2011, but no payment was made. Hence the suit.

3. Defendant's case - The defendant filed a written statement admitting the allotment of rooms numbered 46 & 47 to the plaintiff. The defendant admits that the plaintiff surrendered room No.47 in December 2008. However, the liability to refund the amounts is denied. It is stated that the plaintiff had renewed the licence and was permitted to occupy room No.47 from 15.11.2006 and that the licence period was from 12.11.2006 to 11.11.2009 on a fee of ₹4,400/- per month. It is stated that as per paragraph 26 of the bye-law framed for licencing of rooms, if the licensee vacates the room before the period of the licence is over, he will be liable to pay the loss caused to the defendant due to the vacating of the room. It is submitted that the room was lying vacant from January 2009 to November 2009 and the plaintiff is liable to pay the licence fee for the said period and