Skipper Properties Private Limited & Anr. vs. Sunrise Property Developers Private Limited & Ors.

Held

The Court held that the contention regarding limitation was not acceptable. The cause of action arose when the Appellant-lessor started raising invoices for payment of rent from May 2018, which was contrary to the terms of the lease agreement. The termination notice also indicated that the lessee's case was not restricted solely to the non-receipt of the completion certificate by December 31, 2015, but also included several acts of omission and commission by the Appellant-lessor even after that date. Therefore, the cause of action extended to 2018. Regarding the personal liability of Appellant No. 2, the Court found that Clause 33 of the lease agreement lucidly and clearly provides for the joint and several liability of the directors of the lessor company. The Court agreed with the finding of the learned Single Judge that Appellant No. 2 is personally liable towards the respondent company. The Court also noted that the appellants accepted their liability in their written statements. Consequently, the appeal was dismissed, and the appellants were held liable for the decretal amount of Rs. 46,47,394/-.

Facts

Skipper Properties Private Limited (Appellant-lessor) and its director (Appellant No. 2) filed an appeal against an order and part decree by a Single Judge of the High Court. The dispute arose from a lease agreement dated January 31, 2015, for commercial premises. The agreement stipulated a 120-day rent-free period from the date of receiving a completion certificate or completion of the lessor's scope of work, whichever was later, with a promised completion date of December 31, 2015. The lessee paid a security deposit of Rs. 37,44,000/- and advance rent of Rs. 74,88,000/-. The lessee alleged breach of the lease agreement due to incomplete construction and delayed possession. The lessor commenced raising invoices for rent from May 2018, which the lessee contended was contrary to the lease terms. The Single Judge held the appellants liable for payment of decretal interest amounting to Rs. 46,47,394/-.

Key Issues

1. Whether the appeal is barred by limitation, considering the cause of action arose on December 31, 2015, or later when the lessor started raising invoices for rent from May 2018. 2. Whether Appellant No. 2, a director of the lessor company, is personally liable for the decretal interest amount. Contentions of the Appellants: - The cause of action arose on December 31, 2015, and the suit was filed beyond the limitation period. - The Single Judge erred in holding Appellant No. 2 personally liable. Contentions of the Respondents: - The cause of action arose when the Appellant-lessor began raising invoices for rent from May 2018, which was contrary to the lease agreement, thus the suit is not barred by limitation. - Clause 33 of the lease agreement clearly provides for the joint and several personal liability of the directors of the lessor company in case of default in financial obligations.