Limitation exclusion under section 14(2) failed on third-party winding up proceedings, while a settlement request needed fresh scrutiny.

Exclusion of time under section 14(2) of the Limitation Act was unavailable because the earlier winding up proceedings were initiated by a third party, not by the appellant, and did not involve prosecution of the same relief with due diligence and good faith against the same party. A one-time settlement request was treated as potentially relevant to limitation under section 25(3) of the Contract Act only if it amounted to a distinct written promise signed by the debtor or authorised agent, so that issue required fresh examination by the adjudicating authority. The limitation finding under section 14(2) was left undisturbed, but the matter was remitted on the settlement request issue.

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Issues: (i) whether the appellant could claim exclusion of time under section 14(2) of the Limitation Act, 1963 on the basis of winding up proceedings initiated by a third party and related SARFAESI steps; (ii) whether the one time settlement request dated 08.07.2021 could have bearing on limitation under section 25(3) of the Contract Act, 1872.

Issue (i): whether the appellant could claim exclusion of time under section 14(2) of the Limitation Act, 1963 on the basis of winding up proceedings initiated by a third party and related SARFAESI steps.

Analysis: Section 14(2) applies where the applicant has been prosecuting another civil proceeding with due diligence and in good faith against the same party for the same relief, and the earlier forum is unable to entertain it because of defect of jurisdiction or a like cause. The winding up petition was filed by a third party, not by the appellant, and the appellant had not obtained leave to proceed with its own recovery steps after the winding up order. The earlier proceedings therefore did not satisfy the statutory requirements for exclusion of time.

Conclusion: The appellant was not entitled to the benefit of section 14(2) of the Limitation Act, 1963 on the basis of the winding up proceedings or the SARFAESI proceedings.

Issue (ii): whether the one time settlement request dated 08.07.2021 could have bearing on limitation under section 25(3) of the Contract Act, 1872.

Analysis: A promise to pay a time-barred debt is enforceable only if it is a distinct promise in writing and signed by the debtor or authorised agent. The settlement request was part of the record only in appeal, and the corporate debtor had not been given an opportunity to respond to its effect. The question whether the document constituted a valid written promise meeting the statutory requirements required fresh examination by the adjudicating authority.

Conclusion: The issue arising from the one time settlement request had to be considered afresh by the adjudicating authority.

Final Conclusion: The dismissal of the section 7 application was set aside only to the limited extent connected with the one time settlement issue, and the matter was remitted for fresh consideration on that aspect alone while the rejection of limitation benefit under section 14(2) was left undisturbed.

Ratio Decidendi: Exclusion of time under section 14(2) of the Limitation Act requires the applicant to have prosecuted an earlier proceeding with due diligence and in good faith against the same party for the same relief; a third-party proceeding does not satisfy that test. A written promise to pay a barred debt may affect limitation only if it meets the strict requirements of section 25(3) of the Contract Act.

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