Case Note & Summary
The dispute arose from a leave and licence agreement dated 21.10.2019 between Sure Waves Media Tech Private Limited (lessee) and Mr. Fathiraj (lessor, later represented by his legal heir) for commercial premises in Bengaluru. The lessee ceased rent payments from March 2020, citing COVID-19 lockdown and financial difficulties, and sought rent waiver or reduction. The lessors offered a partial reduction, but no agreement was reached. The lessee alleged electricity disconnection by the lessors, claimed termination of the lease on 24.02.2021, and filed a suit for declaration of termination, refund of security deposit, and damages. The lessors filed a counter-claim for arrears of rent and other charges. The Commercial Court rejected the lessee's suit, held the lease terminated only on 15.11.2021 when possession was handed over, and partly allowed the counter-claim, awarding arrears and charges with interest. The lessee appealed to the High Court. The core legal issues included the validity of the lease termination, entitlement to rent waiver during the pandemic, and liability for electricity disconnection. The lessee argued termination was valid due to breaches, while the lessors contended the lessee remained liable for rent. The High Court analyzed the lease terms, communications, and evidence, finding no valid termination by the lessee and no binding rent waiver agreement. It upheld the Commercial Court's decision, dismissing the appeal and affirming the decree for arrears and charges, as the lessee failed to prove breaches and remained obligated under the lease.
Headnote
A) Contract Law - Lease Agreement Termination - Validity of Termination - Leave and Licence Agreement - The appellant-lessee claimed termination of the lease agreement due to alleged breaches by the lessors, including electricity disconnection. The Commercial Court held the termination invalid and that the agreement stood terminated only upon vacation on 15.11.2021. The High Court upheld this finding, noting the lessee's failure to establish valid termination under the agreement clauses. (Paras 2, 5, 16, 18) B) Contract Law - Rent Obligation - Waiver During COVID-19 - Leave and Licence Agreement - The lessee sought waiver or reduction of rent for the lockdown period citing financial difficulties. The lessors offered a 30% reduction for April-May 2020, but the lessee demanded full waiver and 50% reduction, which was not accepted. The Court found no binding agreement on rent waiver, thus the lessee remained liable for full rent as per the lease terms. (Paras 10-12, 15) C) Civil Procedure - Counter-Claim - Arrears of Rent and Charges - Commercial Courts Act, 2015 - The respondents-lessors filed a counter-claim for arrears of rent, electricity charges, and maintenance costs. The Commercial Court partly allowed the counter-claim, awarding ₹81,27,111/- as arrears after deducting security deposit, plus ₹6,15,001/- for electricity and maintenance charges, with interest. The High Court upheld this decree. (Paras 4-5, 12) D) Evidence Law - Burden of Proof - Breach of Contract - The lessee alleged that the lessors disconnected electricity, breaching Clause 40 of the lease agreement. The lessors contended that BESCOM disconnected power due to non-payment by the lessee. The Court found the lessee failed to prove the lessors' breach, thus the claim for damages was rejected. (Paras 13, 15-16)
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Issue of Consideration: Whether the lease agreement was validly terminated by the lessee and whether the lessee is entitled to refund of security deposit and damages, or whether the lessors are entitled to arrears of rent and other charges.
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Final Decision
High Court dismissed the commercial appeal, upholding the Commercial Court's judgment and decree dated 17.02.2025, which rejected the appellant's suit and partly allowed the counter-claim for arrears and charges.
