The Calcutta High Court has clarified that dismissal of an Insolvency and Bankruptcy Code (IBC) application under Section 9 due to a pre-existing dispute constitutes a jurisdictional bar falling within the meaning of 'other cause of like nature' under Section 14(1) of the Limitation Act, 1963. This ruling enables operational creditors to exclude the time spent in such abortive proceedings when filing a subsequent civil suit for debt recovery.
Background & Facts
The Dispute
The plaintiff, Jones Lang LaSalle Property Consultants (India) Private Limited, rendered professional property consulting services to the defendants, primarily M.A. Leasing and Construction Pvt. Ltd., and its directors (defendants nos. 2 to 4). The plaintiff claimed unpaid fees amounting to Rs. 1.8 crore for services rendered between 2017 and 2019. Despite repeated demands, the defendants failed to make payment.
Key Facts
- The cause of action arose on 29.10.2019, the date of the last unpaid invoice.
- On 29.11.2019, the plaintiff issued a demand notice under Section 8 of the IBC, 2016, demanding payment of Rs. 1.8 crore.
- On 12.12.2019, the defendant no. 1 replied to the notice, disputing the claim.
- On 29.07.2020, the plaintiff filed an application under Section 9 of the IBC before the National Company Law Tribunal (NCLT), seeking initiation of corporate insolvency resolution process.
- On 10.09.2023, the NCLT dismissed the Section 9 application, holding that a pre-existing dispute existed between the parties, thereby barring admission of the application under Section 9(5)(d) of the IBC.
- The NCLT’s order explicitly stated: "...there was a pre-existing dispute between the parties and hence the present petition shall be rejected on this ground alone."
- The plaintiff did not file any appeal against the NCLT order.
- On 15.12.2025, the plaintiff filed the present civil suit in the Calcutta High Court seeking recovery of Rs. 1.8 crore with interest.
- The plaintiff also initiated mediation proceedings between 20.09.2024 and 12.12.2024.
Procedural History
- 29.10.2019: Cause of action arose (last unpaid invoice)
- 29.11.2019: Section 8 notice issued by plaintiff
- 12.12.2019: Defendant no. 1 replied disputing claim
- 29.07.2020: Section 9 application filed before NCLT (CP(IB) No. 841/KB/2020)
- 10.09.2023: NCLT dismissed Section 9 application on ground of pre-existing dispute
- 20.09.2024: Mediation proceedings initiated by plaintiff
- 12.12.2024: Mediation concluded
- 15.12.2025: Civil suit filed in Calcutta High Court (C.S. (COM) 171/2025)
Relief Sought
The plaintiff seeks recovery of Rs. 1.8 crore with interest at 18% per annum from 29.10.2019, along with costs. The plaintiff further seeks exclusion of the period from 29.07.2020 to 10.09.2023 (1,140 days) under Section 14(1) of the Limitation Act, 1963, and an additional 84 days for mediation, to establish that the suit is within limitation.
The Legal Issue
The central question was whether the dismissal of a Section 9 IBC application on the ground of a pre-existing dispute constitutes a 'defect of jurisdiction or other cause of a like nature' under Section 14(1) of the Limitation Act, 1963, thereby enabling exclusion of the time spent in that proceeding when filing a subsequent civil suit.
Arguments Presented
For the Petitioner
Mr. Sourojit Dasgupta, Adv., argued that the NCLT’s dismissal was not on merits but on a jurisdictional threshold - the existence of a pre-existing dispute under Section 9(5)(d) of the IBC. He relied on Roshanlal Kuthalia v. R.B. Mohan Singh Oberoi, Union of India v. West Bengal Paper Mills, and M.P. Steel Corporation v. Commissioner of Central Excise to contend that 'other cause of like nature' includes any legal bar preventing adjudication on merits. He emphasized that the IBC is a special statute where pre-existing disputes act as jurisdictional gatekeepers, not mere defenses. He further cited Sesh Nath Singh v. Baidyabati Sheoraphuli and HPCL Bio-Fuels v. Shahaji Bhandudas Bhad to distinguish between 'same matter in issue' and 'same relief', asserting that the civil suit and IBC application both sought recovery of the same debt, satisfying Section 14(1). He also relied on Seitz Gmbh v. Simran Technologies for factual similarity.
For the Respondent
The respondents did not file a written submission. No oral arguments were presented on behalf of the defendants.
The Court's Analysis
The Court undertook a detailed analysis of Section 14(1) of the Limitation Act, emphasizing its remedial and liberal nature. It held that the term 'other cause of a like nature' must be interpreted expansively to include any legal impediment that prevents a court or tribunal from adjudicating the matter on its merits.
"Any circumstance, legal or factual, which inhibits entertainment or consideration by the court of the dispute on the merits comes within the scope of the section and a liberal touch must inform the interpretation of the Limitation Act which deprives the remedy of one who has a right."
The Court examined the structure of Section 9 of the IBC and found that the existence of a pre-existing dispute is not a mere defense but a statutory precondition for admission of the application. The NCLT, upon receiving notice of dispute, is statutorily obligated to reject the application without examining the merits. This is a jurisdictional bar, akin to a defect of jurisdiction.
The Court relied on M.P. Steel Corporation v. Commissioner of Central Excise, where the Supreme Court held that dismissal on grounds such as 'inappropriate remedy' still qualifies as 'other cause of like nature'. The Court further cited Sesh Nath Singh to clarify that the exclusion under Section 14(1) applies even if the prior proceeding is dismissed at the threshold, provided it was prosecuted in good faith and with due diligence.
The Court rejected the argument that Section 14(2) might apply, noting that the subsequent proceeding was a suit, not an application. It held that the 'same matter in issue' test was satisfied because both the IBC application and the civil suit sought recovery of the same debt based on the same default. The relief sought - monetary recovery - was identical in substance, even if the procedural vehicles differed.
The Court also accepted the plaintiff’s diligence, noting the suit was filed within three months of the NCLT dismissal and that mediation was pursued in good faith. The period from 29.07.2020 to 10.09.2023 (1,140 days) was excluded, reducing the delay to within the three-year limitation period.
The Verdict
The plaintiff succeeded. The Court held that the suit is within limitation under Section 14(1) of the Limitation Act, 1963. The period from 29.07.2020 to 10.09.2023 (1,140 days) is excluded in computing limitation. The suit is admitted for trial, subject to scrutiny by the department. The plaintiff’s claim for interest at 18% per annum and costs remains open for adjudication at trial.
What This Means For Similar Cases
Pre-existing Dispute Under IBC Is a Jurisdictional Bar
- Practitioners may now invoke Section 14(1) to exclude time spent in dismissed IBC Section 9 applications where dismissal was based on pre-existing dispute.
- This applies regardless of whether the dispute is bona fide or frivolous - the mere existence of a dispute at the time of filing triggers the jurisdictional bar.
Civil Suits for Debt Recovery Are Protected
- Operational creditors need not abandon civil remedies after an IBC application is dismissed on jurisdictional grounds.
- Filing a civil suit within three months of dismissal will be deemed timely if the IBC proceeding was filed in good faith.
Diligence Is Key - But Not Perfection
- Delay after dismissal must be minimal; the Court accepted a three-month gap as reasonable.
- Mediation periods may be excluded if initiated in good faith, but must be documented.
- Litigants must avoid filing frivolous appeals or repeated applications - only the bona fide proceeding qualifies for exclusion.
Statutory Interpretation of 'Like Nature' Is Broadened
- The ruling extends beyond IBC to any tribunal-based proceeding dismissed on statutory threshold grounds (e.g., service tribunals, tax authorities).
- 'Other cause of like nature' now includes any statutory condition that prevents adjudication on merits, even if not labeled 'jurisdiction'.
