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.

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