[Cites 10, Cited by 0]
Delhi High Court
Star Propwell Pvt Ltd vs State Bank Of India on 10 March, 2026
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 04.02.2026
Judgment pronounced on:10.03.2026
Judgment uploaded on: 10.03.2026
+ RFA(COMM) 446/2024
STAR PROPWELL PVT LTD .....Appellant
Through: Mr. Rishu Kant Sharma, Mr.
Aryan Jha, Advs.
versus
STATE BANK OF INDIA .....Respondent
Through: Mr. Jitendra Kumar, Mr. Uttam
Kumar, Advs.
CORAM:
HON'BLE MR. JUSTICE ANIL KSHETARPAL
HON'BLE MR. JUSTICE AMIT MAHAJAN
JUDGMENT
ANIL KSHETARPAL, J.
1. The present Appeal, filed by the Appellant [Plaintiff before the
Commercial Court], assails the correctness of judgment and decree
dated 13.08.2024 [hereinafter referred to as „Impugned Order‟] passed
by learned Commercial Court in CS(COMM) No. 282/2020 whereby
the Commercial Court dismissed the Plaintiff‟s application under
Section 14 of the Limitation Act, 1963 [hereinafter referred to as
„Limitation Act‟] and, consequently, dismissed the suit for recovery of
Rs. 58,73,850/- as being barred by limitation.
2. The issue which arises for consideration in the present Appeal
is whether the Commercial Court was justified in holding that the suit
was barred by limitation and in declining the benefit of Section 14 of
the Limitation Act to the Plaintiff?
FACTUAL MATRIX
3. In order to appreciate the controversy involved in the present
Appeal, it would be apposite to briefly notice the relevant facts. For
the sake of convenience and clarity, the parties shall be referred to as
they were arrayed before the learned Commercial Court.
4. The Plaintiff is a private limited company engaged, inter alia,
in real estate development. It was allotted leasehold rights in respect
of a parcel of land admeasuring 6995.16 square metres situated at Plot
No. 1C, Sector 126, Noida, Uttar Pradesh [hereinafter referred to as
the „suit property‟] by the New Okhla Industrial Development
Authority (NOIDA) for a period of 90 years. The allotment was
formalised through a registered lease deed dated 18.06.2007.
5. With the objective of constructing an Information Technology
Park on the suit property, the Plaintiff approached State Bank of
Patiala (which subsequently merged with State Bank of India, the
present Defendant) for sanction of a term loan facility to the extent of
Rs. 40 crores. After appraisal and processing of the proposal, the loan
was sanctioned by the Bank on 26.11.2015. As per the sanction terms,
the validity of the sanction was stipulated up to 13.05.2016.
6. Pursuant to the sanction, the Plaintiff deposited a sum of Rs.
30,91,500/- with the Defendant towards upfront charges and other
incidental fees as required under the sanction conditions. It is the case
of the Plaintiff that the said amount was deposited in anticipation of
timely disbursement of the sanctioned facility.
7. Thereafter, on 04.02.2016, the Plaintiff addressed a
communication to the Defendant seeking reduction in the rate of
interest and concession in the upfront fee component. The request was
considered by the Defendant and, vide communication dated
04.03.2016, certain modifications were accepted. This correspondence
is relevant as it indicates that the contractual relationship between the
parties remained subsisting and under active consideration during the
validity period of the sanction.
8. In furtherance of the loan transaction, and in order to comply
with regulatory and contractual requirements, steps were taken for
obtaining a No Objection Certificate (NOC) from NOIDA. A
communication dated 02.06.2016 was addressed in that regard, and
the NOC was eventually granted on 29.06.2016. Significantly, these
steps were undertaken even after 13.05.2016, the date up to which the
original sanction was stated to be valid.
9. Meanwhile, certain disputes arose between the parties
concerning disbursement of the sanctioned loan amount. The Plaintiff
approached this Court by filing W.P.(C) 2507/2017 under Article 226
of the Constitution of India seeking issuance of a writ of mandamus
directing the Defendant to disburse the sanctioned loan facility. The
said writ petition was disposed of by this Court on 20.03.2017 with a
direction to the Defendant to consider the Plaintiff‟s claim in
accordance with law. Liberty was granted to the Plaintiff to avail of
appropriate legal remedies in the event of an adverse decision by the
Bank.
10. During the interregnum, vide communication dated 10.01.2017,
the Defendant called upon the Plaintiff to complete certain formalities.
Subsequently, on 31.03.2017, the Plaintiff was informed that the loan
sanction had lapsed on 13.05.2016 and that for revalidation of the
sanction, upfront fee and revalidation charges were required to be
deposited, which, according to the Defendant, had not been paid.
11. Aggrieved by the stand taken by the Defendant, the Plaintiff
instituted W.P.(C) 3570/2017 before this Court seeking a direction to
the Defendant to disburse the loan amount in terms of the sanction.
During the pendency of the said writ petition, the Plaintiff filed an
application seeking amendment of the writ petition so as to
incorporate, in the alternative, a prayer for refund of the amount of Rs.
30,91,500/- deposited by it.
12. The amendment application was allowed by this Court on
30.01.2018, thereby permitting the Plaintiff to seek, in the alternative,
refund of the amount deposited with the Bank. The writ petition, as
amended, remained pending until 09.10.2019, when the Plaintiff
sought leave to withdraw the same with liberty to pursue appropriate
remedies in accordance with law. The writ petition was accordingly
dismissed as withdrawn with liberty as prayed for.
13. Thereafter, on 20.02.2020, the Plaintiff instituted the suit for
recovery before the Commercial Court seeking recovery of Rs.
58,73,850/- (which included the principal amount deposited along
with interest and other claims). Along with the suit, the Plaintiff filed
an application under Section 14 of the Limitation Act seeking
exclusion of the time spent in prosecuting W.P.(C) 3570/2017,
particularly from the date of amendment, i.e., 30.01.2018, till the date
of withdrawal on 09.10.2019.
14. The Defendant filed its written statement contesting the suit on
merits and also filed a reply opposing the application under Section 14
of the Limitation Act. Upon completion of pleadings, the learned
Commercial Court, vide order dated 18.02.2021, framed the following
issues:
"6. The court vide order dated 18.02.2021 framed following issues:-
1. Whether the upfront fees charged by the defendant is
refundable as claimed by the plaintiff or non-refundable as
claimed by the defendant? OPP & OPD
2. Whether the plaintiff is entitled for the suit amount, if so to
what extent? OPP
3. Whether the plaintiff is entitled for interest, if so at what rate
and for which period? OPP
4. Relief, if any."
15. The parties were thereafter afforded opportunity to lead
evidence. It is not in dispute that evidence was led by both sides on
the issues so framed. However, before adjudicating upon the merits of
the substantive issues, the Commercial Court proceeded to decide the
application under Section 14 of the Limitation Act. By the Impugned
Order dated 13.08.2024, the Commercial Court dismissed the
application and, as a consequence, dismissed the suit as being barred
by limitation. The said dismissal was principally founded on three
conclusions recorded by the Commercial Court, namely:
i. that the cause of action for filing the suit arose upon expiry of
the validity of the sanction on 13.05.2016 and, therefore, the
suit ought to have been filed within three years therefrom;
ii. that the Plaintiff had failed to establish due diligence and good
faith in prosecuting the writ proceedings and, therefore, was not
entitled to benefit under Section 14 of the Limitation Act; and
iii. that the reliefs claimed in the writ petition and those claimed in
the civil suit were materially different and did not relate to the
same matter in issue.
16. It is the correctness of these findings, both factual and legal,
that falls for examination in the present appeal.
CONTENTIONS OF THE PARTIES
17. Contentions of the Appellant-
17.1. Misinterpretation of Section 14 of the Limitation Act- It was
submitted that Section 14 of the Limitation Act is a beneficial
provision intended to advance the cause of substantial justice by
excluding the time spent in prosecuting with due diligence and in
good faith another civil proceeding which fails on account of defect of
jurisdiction or other cause of like nature. Reliance was placed upon
the decision of the Hon‟ble Supreme Court in Consolidated
Engineering Enterprises v. Principal Secretary, Irrigation
Department1, wherein the essential ingredients for invoking Section
14 have been authoritatively laid down.
17.2. It was submitted that both writ petitions filed by the Appellant
arose out of the same transaction, namely, the sanction of the term
loan dated 26.11.2015 and the Respondent‟s subsequent refusal to
disburse the same. It was contended that the second writ petition was
amended to incorporate, in the alternative, a specific prayer seeking
refund of the upfront fees deposited with the Respondent. Therefore,
according to the Appellant, the matter in issue in the writ proceedings
and in the present suit was substantially identical.
17.3. It was further argued that the Commercial Court erred in
holding that the writ proceedings did not relate to recovery of money.
Attention was invited to paragraph 57 of the Impugned Judgment,
wherein the Trial Court acknowledged that the amended writ petition
contained a prayer for refund of the upfront fees, yet proceeded to
hold that the proceedings were not relatable to the relief claimed in the
suit. According to the Appellant, this reasoning is internally
inconsistent and contrary to the record.
17.4. It was contended that the writ petition was ultimately
withdrawn with liberty to avail appropriate remedies in accordance
with law, which itself demonstrates that the Appellant had been bona
fide pursuing a remedy before a forum which was not suited to grant
monetary relief. It was submitted that the Appellant acted with due
diligence and good faith throughout, and therefore, the entire period
(2008) 7 SCC 169
during which the writ petition remained pending ought to have been
excluded while computing limitation.
17.5. Erroneous Calculation of Limitation- It was submitted that the
Commercial Court has erred in computing the limitation period from
13.05.2016, i.e., the date of expiry of the validity of the sanction letter,
without appreciating the subsequent conduct of the Respondent and
the pendency of the writ proceedings. It was contended that the
Commercial Court failed to properly account for the suspension of
limitation during the pendency of the writ petition and thereby arrived
at an incorrect conclusion that the suit was time-barred.
17.6. It was further argued that even if 13.05.2016 is treated as the
starting point, limitation would have run only until the amendment of
the second writ petition to include the recovery claim, after which the
period during which the writ petition remained pending ought to have
been excluded under Section 14. Upon such exclusion, the suit filed
on 22.02.2020 would fall within the prescribed period.
17.7. Alternatively, it was submitted that the cause of action could not
be said to have crystallised on 13.05.2016 in view of the Respondent‟s
continued engagement with the Appellant, including communications
post-dating the alleged expiry of the sanction. It is contended that the
Respondent‟s conduct created a legitimate impression that the loan
process remained under active consideration, and therefore, the
starting point of limitation adopted by the Trial Court is legally
unsustainable.
17.8. Forfeiture of Upfront Fees (Without Prejudice)- It was
contended that the Respondent could not have forfeited the upfront
fees without establishing any actual loss. Reliance was placed upon
the judgment of the Hon‟ble Supreme Court in Kailash Nath
Associates v. Delhi Development Authority2, wherein it was held that
forfeiture of earnest money is impermissible in the absence of proof of
loss under Section 74 of the Indian Contract Act, 1872.
17.9. It was submitted that in the present case, the Respondent has
neither pleaded nor proved any actual loss arising from the alleged
lapse of the sanction. Consequently, retention of the amount of Rs.
30,91,500/- is stated to be arbitrary and contrary to settled principles
of contract law.
17.10. Obligation of Fairness on the Respondent- It was further
submitted that the Respondent, being a public sector bank and an
instrumentality of the State within the meaning of Article 12 of the
Constitution of India, is obligated to act fairly, transparently and
reasonably. It was contended that the Respondent‟s conduct in
continuing engagement while allegedly treating the sanction as lapsed,
and thereafter refusing refund of the upfront fees, falls short of the
standards expected of a State instrumentality.
18. Contentions of the Respondent
18.1. Per contra, learned counsel for the Respondent submitted that
the Impugned Judgment passed by the Commercial Court is well-
reasoned and does not call for interference. It was contended that the
(2015) 4 SCC 136
suit was rightly dismissed as being barred by limitation and that the
Appellant has failed to make out any ground for exclusion of time
under the Limitation Act.
18.2. Applicability of Section 14 of the Limitation Act- It was
submitted that the benefit of Section 14 of the Limitation Act is not
available to the Appellant in the facts of the present case. It was
contended that Section 14 applies only where the earlier proceeding
has failed on account of defect of jurisdiction or other cause of like
nature. According to the Respondent, the writ petitions filed by the
Appellant were not dismissed for want of jurisdiction but were
voluntarily withdrawn, and therefore the essential precondition for
invoking Section 14 is absent.
18.3. It was further contended that the relief sought in the writ
petitions was primarily for issuance of directions for disbursement of
the sanctioned loan, whereas the present suit is a commercial action
for recovery of money. According to the Respondent, the nature and
scope of the two proceedings are materially distinct, and therefore the
requirement of identity of "matter in issue" under Section 14 is not
satisfied
18.4. It was submitted that the mere fact that the second writ petition
was amended to include an alternative prayer for refund of upfront
fees does not alter the character of the proceedings. It was argued that
the dominant relief in the writ proceedings was enforcement of the
sanction, whereas the present suit is founded upon alleged entitlement
to refund, and hence the two proceedings cannot be treated as
substantially the same for the purposes of limitation.
18.5. On the issue of limitation, it was submitted that the cause of
action accrued on 13.05.2016, being the date on which the validity
period of the sanction letter expired. According to the Respondent, the
sanction was expressly time-bound and conditional, and upon expiry
of the stipulated period without fulfilment of the required conditions,
the sanction automatically lapsed. It was contended that the right to
sue, if any, first accrued on that date.
18.6. It was argued that subsequent correspondence or engagement
between the parties does not extend or postpone limitation in the
absence of a clear and unequivocal acknowledgment of liability within
the meaning of Section 18 of the Limitation Act. The Respondent
submitted that no such acknowledgment exists on record, and
therefore the limitation period could not have been extended on the
basis of alleged continued discussions.
18.7. It was further submitted that the Appellant cannot rely upon its
own decision to pursue a writ remedy to suspend limitation. It was
contended that proceedings under Article 226 of the Constitution are
discretionary in nature and that the High Court is competent to
entertain monetary claims in appropriate cases. Therefore, according
to the Respondent, the writ petitions cannot be characterized as
proceedings before a forum lacking jurisdiction.
18.8. Forfeiture of Upfront Fees- It was contended that the upfront
fees were paid in terms of the sanction letter and were governed
strictly by the contractual conditions agreed between the parties.
According to the Respondent, the sanction letter clearly stipulated the
consequences of non-fulfilment of conditions within the prescribed
period, and the forfeiture of upfront fees was in accordance with such
terms.
18.9. It was submitted that the judgment relied upon by the Appellant
in Kailash Nath Associates (supra) is distinguishable on facts as the
present case concerns enforcement of contractual stipulations between
commercial entities, and that the forfeiture in question arises from
agreed contractual terms rather than imposition of a penalty
independent of contract.
18.10. Obligation of Fairness- It was further submitted that although
the Respondent is a public sector bank, the transaction in question was
a commercial transaction governed by contractual terms. It was argued
that in matters arising out of commercial contracts, the parties are
bound by the agreed conditions, and no arbitrariness can be inferred
merely because one of the parties is an instrumentality of the State
ANALYSIS & FINDINGS
19. This Court has considered the submissions advanced on behalf
of the parties at length and, with their able assistance, perused the
material on record.
20. The primary question that arises for consideration is whether
the Commercial Court was justified in dismissing the application
preferred by the Plaintiff under Section 14 of the Limitation Act and
consequently holding the suit to be barred by limitation.
21. At the outset, it must be noted that the Commercial Court
proceeded on the premise that the cause of action to seek refund of the
upfront fees arose on 13.05.2016, being the date on which the sanction
letter was to lapse by efflux of time. In the considered opinion of this
Court, such a conclusion is legally unsustainable and contrary to the
material placed on record.
22. The record reveals that even after 13.05.2016, the Respondent-
Bank continued to engage with the Plaintiff in relation to the
sanctioned loan. On 02.06.2016, the Bank itself applied for issuance
of a NOC from the Noida Authority. Subsequently, on 10.01.2017, the
State Bank of India called upon the Plaintiff to complete certain
formalities. These communications are wholly inconsistent with the
theory that the sanction stood conclusively lapsed on 13.05.2016.
23. It was only on 31.03.2017, in compliance with the directions
issued by the High Court in earlier proceedings, that the Plaintiff was
formally informed that the sanctioned loan had lapsed and that no
request for revalidation had been received. Therefore, the cause of
action to seek refund cannot be artificially truncated to 13.05.2016
when the conduct of the Respondent itself demonstrated that the loan
proposal was still under active consideration. At the very least, the
right to seek refund can be said to have crystallised only when the
Respondent unequivocally declined to proceed further, i.e., on
31.03.2017.
24. The Commercial Court, in ignoring these subsequent events,
has committed a manifest error in computation of limitation.
25. The next issue pertains to the applicability of Section 14 of the
Limitation Act. The Commercial Court has held that the Plaintiff
failed to demonstrate due diligence and good faith in prosecuting the
writ proceedings. This finding, in the view of this Court, is not borne
out from the record.
26. The Plaintiff initially instituted W.P.(C) 2507/2017, which
came to be disposed of on 20.03.2017. Thereafter, W.P.(C) 3570/2017
was filed. During the pendency of the said writ petition, the Plaintiff
moved an application seeking amendment so as to incorporate, in the
alternative, a prayer for refund of the sum of Rs. 30,91,500/-. The
amendment application was allowed on 30.01.2018. Ultimately, the
writ petition was permitted to be withdrawn on 09.10.2019 with
liberty to avail appropriate remedies in accordance with law.
27. Section 14 is a beneficial provision intended to advance
substantial justice where a litigant has, in good faith and with due
diligence, pursued a remedy before a forum which is ultimately found
to be incapable of granting effective relief. A litigant cannot be
expected to possess technical legal acumen or to perfectly assess the
jurisdictional contours of a particular forum. Parties act on legal
advice, and unless mala fides or deliberate inaction are demonstrated,
the benefit of Section 14 ought not to be denied on hyper-technical
grounds.
28. In the present case, the sequence of events unmistakably shows
that the Plaintiff was continuously prosecuting remedies before the
High Court and took steps to amend the writ petition to include the
relief of refund. The writ petition remained pending until 09.10.2019.
There is no material to indicate absence of bona fides or lack of
diligence.
29. The finding recorded by the Commercial Court in paragraph 59
of the Impugned Judgment, to the effect that the Plaintiff failed to
establish due diligence or good faith, is therefore unsustainable and is
accordingly set aside.
30. The Commercial Court has further observed that the relief
claimed in the suit was distinct from the relief sought in the writ
petition and, therefore, Section 14 was inapplicable. This reasoning
also cannot be sustained.
31. It is an admitted position that pursuant to the order dated
30.01.2018, the Plaintiff amended W.P.(C) 3570/2017 to specifically
incorporate an alternative prayer seeking refund of the upfront fees.
Thus, the relief of refund, which constitutes the substantive relief in
the present suit, was indeed one of the reliefs claimed in the writ
proceedings.
32. Section 14(2) of the Limitation Act contemplates exclusion of
time where a litigant has been prosecuting another civil proceeding
founded upon the same cause of action and for the same relief. Once
the writ petition stood amended to include the prayer for refund, the
identity of relief stood established. The Commercial Court erred in
overlooking this material aspect and in holding that the reliefs were
different in character.
33. In view of the foregoing discussion, this Court holds that the
Plaintiff is entitled to exclusion of the period during which the
amended writ petition, containing the alternate prayer for refund,
remained pending. The amendment having been allowed on
30.01.2018, and the writ petition having been withdrawn on
09.10.2019, the Plaintiff is entitled to exclusion of this period, which
is approximately 20 months.
34. In the factual matrix of the present case, the accrual of the
enforceable cause of action must be taken as 31.03.2017, when the
Respondent unequivocally communicated that the sanctioned loan had
lapsed. The suit was subsequently filed on 20.02.2020. Therefore,
even without giving effect to the exclusion of the period spent in the
writ proceedings, the suit was filed within the prescribed period of
limitation.
35. The Commercial Court, having dismissed the suit solely on the
ground of limitation, refrained from adjudicating the remaining issues,
despite the fact that evidence had already been led by the parties.
Under Order XIV Rule 2 of the Code of Civil Procedure, 1908
[„CPC‟], particularly in commercial disputes where expeditious
adjudication is the legislative mandate, the Trial Court is expected to
determine all issues arising for consideration unless the matter can be
disposed of purely on a preliminary issue of law as provided under
Order XIV Rule 2(2) of the CPC, which was not applicable in the
present case because all the issues were framed and the parties had
already led their evidence on all the issues.
36. In the present case, once the finding on limitation is found to be
unsustainable, the Impugned Judgment cannot be allowed to stand.
37. Accordingly, the Impugned Judgment passed by the
Commercial Court is set aside. The matter is remitted to the
Commercial Court for adjudication of the remaining issues on merits,
on the basis of the evidence already led by the parties and in
accordance with law.
38. The parties, through their learned counsel, are directed to
appear before the Commercial Court on 25.03.2026.
39. The Appeal is allowed in the aforesaid terms and stands
disposed of.
ANIL KSHETARPAL, J.
AMIT MAHAJAN, J.
MARCH 10, 2026
s.godara/pal
