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Continuing Breach: Bombay High Court Rejects Move to Dismiss Long-Standing Property Suit

In a significant ruling for civil litigation, the Bombay High Court has clarified that a failure to fulfill contractual obligations under the Maharashtra Ownership of Flats (MOFA) Act constitutes a "continuing breach," thereby preventing the dismissal of a suit on the grounds of limitation. Justice Gauri Godse rejected an application filed by the defendant seeking to strike off the plaint under Order VII Rule 11 of the Civil Procedure Code ( CPC ).

The Genesis of the Dispute

The litigation arises from a property agreement dated February 2, 2008, between the defendants and the original beneficiaries. Over the years, the property rights were transferred through various legal instruments, including a 2013 partition deed and a 2014 trust deed, culminating in the suit property being settled into the Lalwani family trust.

The plaintiff alleged that despite receiving the full consideration of Rs 5.51 crore, the defendant failed to deliver the agreed-upon units and amenities by the March 2008 deadline. The suit, filed in 2015, sought specific performance and damages. The defendant moved the court to reject the plaint, arguing that the suit was barred by the law of limitation and that the plaintiff lacked the standing to maintain the action.

Arguments on the Stand

The defendant’s legal team contended that because possession was promised by 2008 and the suit was only filed in 2015, the claim was time-barred under the Limitation Act. They further argued that the plaintiff, as a trustee, had failed to prove the vesting of rights necessary to maintain the suit and that the misjoinder of causes of action regarding damages necessitated a rejection of the plaint.

Conversely, the plaintiff argued that the defendant's prolonged failure to provide common amenities and infrastructure compliance created an ongoing cause of action. Invoking Section 22 of the Limitation Act, the plaintiff maintained that the breach was not a one-time failure but a continuing one, thereby resetting the limitation clock for each day the obligations remained unfulfilled.

Key Observations

Justice Gauri Godse, while analyzing the case, underscored that the court’s power to terminate a civil action is a drastic measure that must be exercised with caution. The Court noted:

• "In view of the execution of the documents and the creation of trust, the plaintiff would be entitled to maintain the suit as contemplated under Order XXXI Rule 1 of the ."
• "It is held that non-compliance with the obligations under Sections 3 and 6 of MOFA would amount to continuing breach, and thus, for computing the period of limitation, a fresh period of limitation begins to run at every moment of time during which the breach continues."
• "An objection to the joinder of the cause of action would raise a triable issue, and such objection is no ground to hold that the plaint does not disclose any cause of action."

A Warning Against Protracted Litigation

Referencing the Supreme Court's ruling in Samruddhi Co-operative Housing Society vs. Mumbai Mahalaxmi Construction Private Limited , the Court reinforced that statutory obligations under MOFA cannot be bypassed by merely citing limitation hurdles.

Furthermore, Justice Godse observed that the defendant's application appeared to be a tactical maneuver to delay proceedings, which runs counter to the objectives of the Commercial Courts Act and effective case management. Expressing dissatisfaction with the delay, the Court rejected the Interim Application and imposed a cost of Rs 50,000 on the defendant.

Impact on Future Cases

This judgment serves as a vital precedent for property buyers and developers alike. It underscores that where a developer fails to comply with statutory responsibilities under MOFA, technical defenses such as the limitation period may fail if the non-compliance is continuous. For the legal community, it reaffirms that Order VII Rule 11 applications should not be used as a tool to stall genuine litigation, particularly when complex triable issues exist.