Limitation under IBC: voluntary withdrawal of earlier suit prevented exclusion of time and the insolvency claim remained barred.

An operational creditor's Section 9 IBC application was held time-barred because the period spent in an earlier civil suit could not be excluded under Section 14 of the Limitation Act. Section 14 applies only where the prior proceeding was pursued with due diligence and in good faith before a forum unable to entertain it for defect of jurisdiction or a similar cause; here, the suit was voluntarily withdrawn by the creditor without liberty to file afresh, so that condition was not met. Section 5 also did not assist, as sufficient cause for condonation was not shown. The insolvency application was therefore dismissed as barred by limitation.

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Issues: Whether the operational creditor's application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation, and whether the period spent in the earlier civil suit could be excluded under Section 14 of the Limitation Act, 1963 or the delay condoned under Section 5 of the Limitation Act, 1963.

Analysis: Section 14 applies only when the prior proceeding was prosecuted with due diligence and in good faith, in a forum unable to entertain it because of defect of jurisdiction or a cause of like nature. The earlier civil suit was not dismissed for such a reason; it was withdrawn by the creditor on its own application and the withdrawal was permitted without liberty to institute a fresh proceeding. The essential condition of failure due to defect of jurisdiction was therefore absent. The reliance on Section 5 also failed because the delay was not shown to constitute sufficient cause on the facts of the case. The period spent in the withdrawn suit could not be excluded, and the application filed in December 2022, on the creditor's own showing of default in April 2015 for Stage 1, was beyond limitation.

Conclusion: The application under Section 9 was rightly held to be time-barred, and the creditor was not entitled to exclusion of time under Section 14 or condonation under Section 5.

Final Conclusion: The dismissal of the insolvency application was sustained because the earlier suit did not satisfy the statutory requirements for exclusion of time, and the claim remained barred by limitation.

Ratio Decidendi: Exclusion of time under Section 14 requires prior proceedings to have failed for want of jurisdiction or a similar cause, and a voluntary withdrawal without liberty does not attract that protection; in the absence of sufficient cause, Section 5 cannot cure the delay.

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