Section 14 Limitation Act exclusion applies to prior insolvency proceedings barred by pre-existing dispute, preserving suit limitation.

Time spent in a prior Section 9 IBC proceeding dismissed at the threshold for a pre-existing dispute can be excluded under Section 14(1) of the Limitation Act when the earlier proceeding was prosecuted with due diligence and in good faith. The Court treated the pre-existing dispute bar as a jurisdictional or analogous bar preventing adjudication on merits, and applied a liberal construction of Section 14 because the prior insolvency proceeding and the later civil suit arose from the same underlying claim and matter in issue. The plaint was therefore within limitation after exclusion of that period, and the suit was admitted.

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Issues: Whether the time spent in prosecuting a prior proceeding under Section 9 of the Insolvency and Bankruptcy Code, 2016, which was rejected for pre-existing dispute, is excludable under Section 14(1) of the Limitation Act, 1963 for the purpose of computing limitation for the subsequent civil suit.

Analysis: Section 14(1) permits exclusion of time spent in prosecuting another civil proceeding with due diligence and in good faith, where the earlier forum was unable to entertain it because of defect of jurisdiction or another cause of like nature. The earlier Section 9 proceeding was dismissed at the threshold on the ground of pre-existing dispute, which operated as a jurisdictional bar under the insolvency framework and did not involve adjudication on merits. The subsequent suit and the earlier insolvency proceeding arose from the same underlying claim and the same matter in issue, namely the alleged default and liability to pay. The Court applied a liberal construction of Section 14 and held that the proviso is not confined to cases of strict want of jurisdiction, but extends to analogous bars that prevent consideration on merits. It also found that the plaintiff had acted with due diligence and without negligence, and that the prompt institution of the suit after dismissal of the insolvency proceeding supported bona fide prosecution.

Conclusion: The benefit of Section 14(1) was available, and the period spent in the Section 9 proceeding was excluded while computing limitation for the civil suit.

Final Conclusion: The plaint was held to be within limitation after exclusion of the prior proceeding, and the suit was admitted.

Ratio Decidendi: Time spent in a prior proceeding that failed at the threshold because a statutory bar prevented its entertainment, and which was prosecuted with due diligence and in good faith, is excludable under Section 14(1) if the subsequent suit concerns the same matter in issue.

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