Section 14 Limitation Act Can Apply To Time Spent In Bona Fide Proceedings U/S. 9 IBC Rejected Over "Pre-Existing Dispute": Calcutta High Court
The Bench noted that it allows exclusion of time spent in NCLT proceedings when a subsequent civil suit is filed for the same debt recovery.
Justice Aniruddha Roy, Calcutta High Court
The Calcutta High Court has held that time spent bona fide prosecuting a Section 9 IBC application can be excluded under Section 14(1) of the Limitation Act, 1963, where the petition is rejected due to a “pre-existing dispute”, treating such dismissal as a jurisdictional bar and an “other cause of a like nature”.
While an IBC proceeding primarily aims at the resolution of a corporate debtor and a civil suit seeks a money decree, the Court observed that both proceedings essentially hinge on the occurrence of a default. Therefore, adopting a liberal interpretation of Section 14, the Court concluded that if the core issue, which was the liability to pay a debt, is identical, the plaintiff is entitled to a benefit of exclusion, provided the previous action was pursued with due diligence and in good faith.
Justice Aniruddha Roy observed, “On a meaningful reading of the said expression in the light of the letters and spirit of Section 14 of the Limitation Act, this Court is also of the firm and considered view that, such expression has been used not only to cover the jurisdictional defects but also any other deficiency which operates as a jurisdictional bar for the Adjudicating Authority/Court/Tribunal from entertaining or accepting the previous proceeding without going into the merit of such proceeding. Therefore, in the order of dismissal of NCLT dismissing the Section 9 proceeding filed under IBC dated September 10, 2023, when shows that the dismissal was at the threshold on the ground of pre-existing dispute, which is a jurisdictional bar under the relevant statute, IBC, to entertain the proceeding, such dismissal was not on merit and should be construed within the meaning and expression ‘other cause of like nature’ used under sub Section (1) to Section 14 of the Limitation Act…”.
Advocate Sourojit Dasgupta appeared for the plaintiff.
The facts of the case involved the plaintiff, Jones Lang LaSalle Property Consultants (India) Private Limited, claiming unpaid fees for services rendered to the defendants. Pursuant to non-payment, the plaintiff issued a demand notice under Section 8 of the IBC on November 29, 2019. The defendants replied to this notice on December 12, 2019, raising certain contentions.
Thereafter, the plaintiff instituted an application under Section 9 of the IBC before the National Company Law Tribunal (NCLT) on July 29, 2020.
On September 10, 2023, the NCLT dismissed the application, holding that there was a pre-existing dispute between the parties. The NCLT noted that the operational creditor remained free to pursue other legal remedies.
Consequently, the plaintiff filed the instant commercial suit on December 15, 2025, seeking to exclude the period spent before the NCLT to bring the suit within the three-year limitation period.
Now, the Court established that Section 14(1) requires the subsequent proceeding to be a suit between the same parties relating to the same matter in issue. It observed that the NCLT's dismissal was at the threshold and not on the merits of the fiscal claim.
Placing reliance on the Supreme Court precedents such as M. P. Steel Corporation v. Commissioner of Central Excise (2015) 7 SCC 58 and Sesh Nath Singh v. Baidyabati Sheoraphuli (2021) 7 SCC 313, the Court held that "defect of jurisdiction" should be interpreted broadly to include any legal inhibition that prevents a court from considering the merits of a dispute.
Since the NCLT is prohibited from entertaining Section 9 applications in the face of pre-existing disputes, this qualified as a "cause of like nature".
“…The explanation provided in a statute under a particular Section must be read so as to harmonise with and remove ambiguity, if any, in the main Section embodied under the statute. The explanation should not be construed or understood to widen the scope and ambit of the main Section. Neither an explanation to a Section can be understood and construed to be in contrary to the provision laid down under the main Section or as substantive provision”, the Bench noted.
“On a meaningful and conjoint reading of Section 8 and 9 of IBC, it appears to this Court that the only pre-condition for a proceeding under Section 9 of IBC is occurrence of default. On a meaningful reading of the statements made in the instant plaint, it appears to this Court that the plaintiff seeks to sue the defendants claiming a money decree on occurrence of default. Thus, the core issue in the instant suit would be whether there has been any occurrence of default on the part of the defendants in paying off the dues of the plaintiff, as claimed in the plaint. The issue in the instant suit is therefore the same matter in issue in the previously instituted proceeding under Section 9 of IBC”, the Bench further noted.
The Court issued operative directions admitting the plaint, subject to departmental scrutiny. It held that the plaintiff had demonstrated due diligence by filing the suit within three months of the NCLT’s dismissal and that the time spent between July 23, 2020, and September 10, 2023, must be excluded from the limitation period.
Cause Title: Jones Lang Lasalle Property Consultants (India) Private Limited v. M. A. Leasing and Construction Pvt. Ltd. and Ors. C.S. (COM) 171/2025
Appearances:
Plaintiff: Sourojit Dasgupta, Subhradip Roy, and Souvik Bose, Advocates.