Section 14 limitation exclusion extends to bona fide insolvency proceedings before quasi-judicial tribunals

Section 14 of the Limitation Act, 1963 can exclude time spent in bona fide and diligent insolvency proceedings before the NCLT and NCLAT, because such proceedings are civil proceedings before quasi-judicial tribunals with the trappings of a court. The expression "court" may be read broadly for this purpose, and an abortive proceeding need not fail only for a narrow jurisdictional defect; dismissal of the insolvency application for a pre-existing dispute was sufficient. On the facts, the earlier insolvency proceedings were pursued in good faith and with due diligence, so the time spent in them was excluded in computing limitation for the suit.

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Issues: Whether the period spent by the plaintiff in prosecuting proceedings under the Insolvency and Bankruptcy Code before the NCLT and NCLAT was liable to be excluded under Section 14 of the Limitation Act, 1963 for computing limitation for the present suit.

Analysis: Section 14 requires prosecution of another civil proceeding with due diligence and good faith, relating to the same matter in issue, before a forum unable to entertain it because of defect of jurisdiction or a cause of like nature. The Court held that proceedings before the NCLT and NCLAT under Sections 9 and 61 of the Insolvency and Bankruptcy Code, 2016 are civil proceedings before quasi-judicial tribunals. It applied the settled principle that Section 14 must receive a liberal construction and that the expression "court" can include a tribunal having the trappings of a court. The Court further held that an abortive proceeding need not be rejected only on a jurisdictional defect in the narrow sense; dismissal of the insolvency application on account of a pre-existing dispute was sufficient to render the proceedings abortive for Section 14 purposes. On the facts, the insolvency proceedings were found to have been pursued bona fide and with due diligence.

Conclusion: The time spent in the proceedings under the Insolvency and Bankruptcy Code was directed to be excluded under Section 14 of the Limitation Act, 1963, and the application was allowed in favour of the plaintiff.

Ratio Decidendi: Section 14 of the Limitation Act, 1963 applies to bona fide and diligent insolvency proceedings before quasi-judicial tribunals that end abortively, and the exclusion of time is available where the earlier proceeding could not be entertained for a cause of like nature to defect of jurisdiction.

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