Section 14 of the Limitation Act

Source: Supreme Court  

Why in News? 

A Bench of Justice JB Pardiwala and Justice K. Vinod Chandran, in Mageba Bridge Products Private Limited v. M/s. Trade Centre (2026), held that time spent in pursuing winding up proceedings cannot be excluded under Section 14 of the Limitation Act, 1963 for the purpose of filing a suit for recovery of money, as winding up and recovery are proceedings seeking distinct reliefs. 

What was the Background of Mageba Bridge Products Private Limited v. M/s. Trade Centre (2026) Case? 

• The respondent filed a suit for recovery of ₹24,36,105 in June 2010, based on unpaid invoices dating back to January 2006 and March 2007, i.e., beyond the three-year limitation period prescribed for such suits. 
• Prior to filing the suit, the respondent had approached the Company Court in February 2009 seeking winding up of the appellant company over the same unpaid dues. 
• The Company Court found that the appellant had raised a bona fide dispute regarding the debt and relegated the respondent to the civil remedy of a suit. 
• While the appellant admitted three invoices, which stood paid, and agreed to furnish security for two invoices dated January 2006, the respondent pressed for recovery under all the invoices. 
• The respondent contended that the time spent pursuing the winding up proceeding ought to be excluded under Section 14 of the Limitation Act while computing limitation for the recovery suit. 
• The Calcutta High Court allowed the recovery suit, prompting the appellant to approach the Supreme Court. 

What were the Court's Observations? 

• On the distinction in relief sought: The Court held that a winding up proceeding, which may or may not enable recovery of the debt, stands on a different footing from a suit for recovery of money, and the pendency of one does not affect the limitation applicable to the other. 
• On applicability of Section 14: The Court held that the respondent's defence under Section 14 of the Limitation Act could not survive, since the time spent in the winding up proceeding could not be treated as relating to the same matter in issue, nor was the same relief claimed in both proceedings. 
• On reliance on precedent: The Court relied on Yeswant Deorao Deshmukh v. Walchand Ramchand Kothari (1950), where exclusion of time spent in insolvency proceedings was similarly denied for the purpose of condoning delay in filing an execution petition, to hold that time spent in winding up proceedings could not be excluded here either. 
• On limitation and final relief: Finding the recovery suit filed beyond the three-year limitation period, the Court set aside the High Court's judgment to the extent it granted the relief of recovery, while affirming that the suit had been properly instituted by a validly registered partnership firm. The appeal was allowed and the recovery suit was dismissed as barred by limitation. 

What is Section 14 of the Limitation Act, 1963? 

Section 14 – Exclusion of Time of Proceeding Bona Fide in Court Without Jurisdiction: 

Sub-section (1) – Exclusion for suits: 

• In computing the period of limitation for any suit, the time during which the plaintiff has been prosecuting with due diligence another civil proceeding shall be excluded. 
• This applies whether the other proceeding was before a court of first instance, appeal, or revision, and whether it was against the defendant. 
• Exclusion applies only where the proceeding relates to the same matter in issue. 
• The proceeding must have been prosecuted in good faith. 
• The court in which it was prosecuted must have been unable to entertain it due to defect of jurisdiction or other cause of a like nature. 

Sub-section (2) – Exclusion for applications: 

• In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding shall be excluded. 
• This applies whether the other proceeding was before a court of first instance, appeal, or revision. 
• The other proceeding must have been against the same party and for the same relief. 
• The proceeding must have been prosecuted in good faith. 
• The court in which it was prosecuted must have been unable to entertain it due to defect of jurisdiction or other cause of a like nature. 

Sub-section (3) – Exclusion for fresh suits under Order XXIII Rule 1 CPC: 

• Notwithstanding Order XXIII, Rule 2 of the Code of Civil Procedure, 1908, sub-section (1) applies to a fresh suit instituted with the court's permission under Order XXIII, Rule 1. 
• This applies where such permission was granted on the ground that the first suit must fail by reason of a defect in the jurisdiction of the court or other cause of a like nature. 

Explanation – For the purposes of this section: 

• (a) In excluding the time during which a former civil proceeding was pending, both the day of institution and the day it ended shall be counted. 
• (b) A plaintiff or an applicant resisting an appeal shall be deemed to be prosecuting a proceeding. 
• (c) Misjoinder of parties or of causes of action shall be deemed to be a cause of a like nature with defect of jurisdiction.