RFA(COMM) 446/2024 Page 1 of 17

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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

J U D G M E N T

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

RFA(COMM) 446/2024 Page 2 of 17

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

RFA(COMM) 446/2024 Page 3 of 17

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

RFA(COMM) 446/2024 Page 4 of 17

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

RFA(COMM) 446/2024 Page 5 of 17

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:

RFA(COMM) 446/2024 Page 6 of 17

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

RFA(COMM) 446/2024 Page 7 of 17

Department

1

, 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

1

(2008) 7 SCC 169

RFA(COMM) 446/2024 Page 8 of 17

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.

RFA(COMM) 446/2024 Page 9 of 17

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 Authority

2

, 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

2

(2015) 4 SCC 136

RFA(COMM) 446/2024 Page 10 of 17

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

RFA(COMM) 446/2024 Page 11 of 17

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

RFA(COMM) 446/2024 Page 12 of 17

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

RFA(COMM) 446/2024 Page 13 of 17

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.

RFA(COMM) 446/2024 Page 14 of 17

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.

RFA(COMM) 446/2024 Page 15 of 17

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

RFA(COMM) 446/2024 Page 16 of 17

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

RFA(COMM) 446/2024 Page 17 of 17

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