S. 14 Limitation Act | Time Spent In Winding Up Proceedings Cannot Be Excluded For Filing Recovery Suit : Supreme Court

The Supreme Court on Wednesday (August 12) held that the period spent in pursuing winding up proceedings cannot be excluded under Section 14 of the Limitation Act for filing a recovery suit, as the relief sought in the two proceedings is fundamentally different

“…the initiation of a winding up proceeding, which may or may not enable recovery, will not impact the limitation for the separate remedy of suit for recovery of money.”, observed a bench of Justice JB Pardiwala and Justice K. Vinod Chandran.

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.

Earlier, the respondent had approached the Company Court for winding up in February 2009, but the court found a clear dispute raised by the appellant and relegated the respondent to civil remedy.

While the appellant admitted three invoices which were paid and agreed to provide security for two invoices dated January 2006, the respondent sought recovery under all invoices, contending that the time spent in winding up proceedings should be excluded under Section 14 of the Limitation Act.

Setting aside the Calcutta High Court's decision which had allowed the recovery suit, the judgment authored by Justice Chandran observed that the recovery suit was hit by limitation, as it was filed beyond the three-year timeline.

The Court said that the Respondent's defence under Section 14 of the Limitation Act cannot survive, as the period spent in pursuing the winding up proceedings cannot be categorised as the same matter in issue nor the same relief was claimed.

“There could be no exclusion of the time occupied by the insolvency proceedings which clearly was not for the purpose of obtaining the same relief.”, observed the Court referencing Yeswant Deorao Deshmukh v. Walchand Ramchand Kothari, 1950 SCC 766, where the Court answered in a negative against the exclusion of time period spent in pursuing an insolvency proceedings for condonation under Section 14 of the Limitation Act, while filing delayed execution petition.

“We find absolutely no reason to sustain the order of the High Court in the First Appeal and, hence, reverse the same to the extent of granting the relief of recovery, despite our finding that the suit was properly instituted by a partnership firm, whose registration has been proved in accordance with law. The claim for recovery is hit by limitation. The suit, hence, stands dismissed for that reason.”, the Court held.

The appeal was allowed.

Headnote

Limitation Act, 1963 – Section 14 – Exclusion of time of proceeding bona fide in court without jurisdiction – Winding up proceedings vs. Suit for recovery of money – Initiation of winding up / insolvency proceedings does not suspend or extend the limitation period for filing an independent civil suit for recovery of money - The remedy of winding up and the remedy of a civil suit for recovery are separate and independent - A Company Court has no competence or jurisdiction to extend the statutory period of limitation for instituting a recovery suit. [Relied on Yeswant Deorao Deshmukh v. Walchand Ramchand Kothari, 1950 SCC 766; Jignesh Shah and Anr. v. Union of India and Anr., (2019) 10 SCC 750; Distinguished from Kalpraj Dharamshi and Anr. v. Kotak Investment Advisors Limited and Anr., (2021) 10 SCC 401; J. Kumaradasan Nair v. Iric Sohan, (2009) 12 SCC 175; Paras 13 - 16]

Indian Partnership Act, 1932 – Section 69(2) – Effect of non-registration – Proof of registration of firm – Code of Civil Procedure, 1908 – Order XLI Rule 27 – Additional Evidence – A memorandum issued by the Registrar of Firms acknowledging the filing/registration of documents and allotting a specific Registration Number conclusively proves the registration of the partnership firm - Production of a certified copy of Form-VIII under Order XLI Rule 27 CPC is permissible to further the cause of justice and corroborate the registration status.

Limitation Act, 1963 – Section 18 & Section 19 – Acknowledgment of debt and effect of part payment – Invoices vs. Running Account – A suit instituted strictly on the strength of individual unpaid invoices/bills, and not on a mutual, open, and current running account, cannot claim extension of limitation merely because the debtor made payments against specific admitted invoices while disputing all other claims - Payment restricted to distinct admitted invoices does not constitute a part payment of the entire disputed liability nor does it amount to an acknowledgment of debt under Section 18/19 of the Limitation Act – Appeal allowed. [Paras 7 – 18]

Cause Title: Mageba Bridge Products Private Limited Versus M/s. Trade Centre

Citation : 2026 LiveLaw (SC) 795

Click here to download judgment

Appearance:

For Petitioner(s) :Mr. Nikhil Nayyar, Sr. Adv. Mr. Dhananjay Baijal, AOR Mr. Tilak Singh, Adv. Mr. Kshitij Maheshwari, Adv. Mr. Akshar Bhatt, Adv.

For Respondent(s) :Mr. Manish Goswami, Sr. Adv. Mr. Kaushik Chatterjee, Adv. Ms. Reena Pandey, Adv. Mr. Anurag Pandey, AOR