This civil suit was instituted seeking damages of Rs. 10 crores for malicious prosecution and mandatory injunctions to take down allegedly defamatory online articles stemming from dismissed corporate insolvency proceedings. Defendant No. 1 appeared in advance before the issuance of summons and urged the Delhi High Court to dismiss the suit in limine under Order VII Rule 11 of the CPC and Section 3 of the Limitation Act, 1963, arguing that the suit was barred by limitation under Articles 74 and 75. The primary legal question centered on whether the one-year limitation period for a malicious prosecution suit under Article 74—which runs from when the prosecution is “otherwise terminated”—begins when the National Company Law Tribunal (NCLT) dismisses the petition or when appellate proceedings before the National Company Law Appellate Tribunal (NCLAT) conclude. The High Court held that the phrase “prosecution is otherwise terminated” must be interpreted to mean the final culmination of appellate proceedings. Since the NCLAT dismissed the appeal on December 13, 2023, and the suit was e-filed on December 12, 2024, the suit was well within the one-year limitation period, prompting the Court to reject the defendants’ objections and issue summons.
- Factual Matrix and Procedural Background:
- The plaintiffs, real estate development companies, entered into a business arrangement with Defendant No. 1, which later collapsed.
- Defendant No. 1 initiated corporate insolvency proceedings under Section 7 of the IBC against Plaintiff No. 1 before the NCLT, which were dismissed on February 14, 2023.
- An appeal filed by Defendant No. 1 before the NCLAT was subsequently dismissed on December 13, 2023.
- The plaintiffs filed the present commercial suit seeking damages for malicious prosecution and mandatory injunctions regarding online publications.
- Defendants’ Contentions on Limitation:
- Defendant No. 1 argued that the suit was barred by limitation under Article 74 of the Limitation Act, 1963, contending that the one-year limitation period began on February 14, 2023, when the NCLT dismissed the petition.
- Alternatively, the defendants argued that the claims based on libel/defamatory publications from August 2022 were barred under Article 75 of the Limitation Act, which prescribes a one-year limitation from the date of publication.
- Plaintiffs’ Counter-Arguments:
- The plaintiffs argued that the expression “prosecution is otherwise terminated” under Article 74 aligns with the final outcome of the appellate proceedings, making December 13, 2023 (the date of the NCLAT order) the true starting point for limitation.
- Supported by an e-filing acknowledgment, the plaintiffs verified that the suit was filed on December 12, 2024, perfectly within the one-year window.
- Court Observations and Legal Analysis:
- Pre-Summons Audience: Relying on precedents like Bright Enterprises and Tajunissa, the Court reaffirmed that a defendant can be given a limited audience prior to the issuance of summons to argue for the rejection of a plaint under Order VII Rule 11 CPC.
- Interpretation of Article 74: The Court ruled that interpreting “prosecution is otherwise terminated” to mean the first-stage dismissal (NCLT order) would create legal absurdity and redundancy alongside the word “acquittal”. An appeal is a continuation of original proceedings, and the cause of action fully matures only when the appellate process achieves finality. This interpretation aligns with coordinate bench decisions in Laxmi Narayan Soni and Tirlok Chand Bansal.
- Filing Date Verification: Examining the records, the Court noted that the suit was e-filed on December 12, 2024, which fell safely within one year of the NCLAT’s final dismissal order on December 13, 2023.
- Libel Claim and Evidence: Regarding the defamation/libel claim under Article 75, the Court observed that because the facts regarding the publications and malicious prosecution were closely intermingled and intertwined against the defendants, evaluating them at a pre-summoning stage without evidence would be premature.
- Final Decision:
- The Delhi High Court dismissed the preliminary objections raised by the defendants regarding limitation under Section 3 of the Limitation Act.
- The plaint was ordered to be registered as a suit, formal summons were waived for Defendant No. 1, and summons were directed to be issued to Defendant No. 2, listing the matter before the Joint Registrar for completion of pleadings.
2026 DHC 6139
Sanskar Projects and Housing Limited and Others v. Realpro Realty Solutions Private Limited and Others (D.O.J.31.07.2026)
