Suppliers chasing unpaid invoices often fire the pressure weapon first — a winding-up petition, or today an insolvency application — and sue for recovery only when that fails. A judgment of the Supreme Court dated 12 August 2026 in Mageba Bridge Products Private Limited v. M/s Trade Centre, 2026 INSC 839, is a costly reminder that the limitation clock for the money suit keeps running throughout. Time spent before the Company Court cannot be excluded under Section 14 of the Limitation Act, because winding up and recovery are not proceedings for the same relief.
The facts: invoices, a failed winding-up, a late suit
The respondent firm supplied goods against invoices raised between January 2006 and March 2007, the last bill being dated 6 March 2007. Payment did not come. In February 2009 the firm moved a winding-up petition against the buyer company; the Company Court dismissed it, the claim being disputed. Only in June 2010 — more than three years after the last invoice — did the firm institute a suit for recovery of about ₹24.36 lakh.
The trial court dismissed the suit on a different ground altogether: the plaintiff firm had not proved its registration under the Partnership Act. The first appellate court reversed, accepting the memorandum of the Registrar of Firms as proof of registration, and decreed the claim with interest. The buyer carried the matter to the Supreme Court (Civil Appeal No. 10658 of 2026).
What the Supreme Court held
A Bench of Justices J.B. Pardiwala and K. Vinod Chandran agreed with the first appellate court on registration — the certificate of the Registrar sufficed — but allowed the appeal on limitation, dismissing the suit as time-barred. Three strands of reasoning stand out:
- Different remedy, different relief. A winding-up proceeding, which may or may not result in any recovery, is a collective remedy directed at the existence of the company; a suit seeks a personal decree for money. Section 14 of the Limitation Act, which requires the earlier proceeding to relate to the same matter in issue and the same relief, therefore does not apply.
- No acknowledgment, no fresh start. The correspondence relied on did not amount to an acknowledgment of the debt of the kind that restarts limitation; offering security for some bills while disputing the claim as a whole did not save the suit.
- Bills, not a running account. The invoices were individual claims, each with its own due date — not a mutual, open and current account which would attract a different article of the Limitation Act. Limitation for the last bill of 6 March 2007 expired on 6 March 2010; the suit of 5 June 2010 was out of time.
The commercial logic
The decision is orthodox, but its practical bite is real. Creditors habitually treat winding-up (and now insolvency) filings as a recovery strategy; company courts have equally habitually reminded them that these are not debt-collection fora. This judgment completes the circle: since the winding-up petition is not a recovery proceeding, it also buys the creditor no limitation shelter. The two tracks are independent — and only one of them ends in a money decree.
| Question | Winding-up / insolvency petition | Recovery suit |
|---|---|---|
| What is sought | Collective remedy against the debtor entity | Personal decree for the debt |
| Disputed debts | Petition fails if debt bona fide disputed | Dispute is tried on evidence |
| Effect on limitation for the money claim | None — the clock keeps running | Governed by its own limitation, typically three years |
| Outcome if successful | Liquidation / resolution process | Executable decree with interest |
Protecting the claim in practice
The safe sequence for an unpaid supplier is to treat the suit (or, for MSMEs, the Facilitation Council reference, and for qualifying commercial claims, a commercial suit after pre-institution mediation) as the primary remedy, filed within limitation — with the pressure remedies running in parallel if at all. Where negotiations are live, limitation should be preserved deliberately: a written acknowledgment of the balance signed by the debtor before expiry, or part-payments recorded in writing, each of which restarts the period. What the calendar will not forgive is the assumption, now squarely rejected, that time spent before the Company Court is time saved.
Frequently Asked Questions
What is the limitation period for a suit on unpaid invoices?
Ordinarily three years, computed under the Limitation Act from when the debt falls due — for goods sold and delivered, generally from the date of each bill or the agreed credit period. A written acknowledgment of liability made before expiry, or a part-payment recorded in the manner the Act requires, can start a fresh period; mere silence does not.
What does Section 14 of the Limitation Act exclude?
Section 14 excludes time spent prosecuting, with due diligence and in good faith, an earlier civil proceeding founded on the same cause of action and for the same relief, in a court unable to entertain it for defect of jurisdiction or a like cause. All limbs matter: the earlier and later proceedings must relate to the same matter in issue and seek the same relief.
Why did winding-up time not count?
Because a winding-up petition seeks the death of the company in the interest of creditors generally, not a decree for payment to the petitioning creditor. The Supreme Court held the two remedies are different in relief and procedure, so the pursuit of one does not stop limitation for the other — the supplier could and should have sued within time.
Does the same logic apply to IBC proceedings today?
The judgment concerned winding-up under the company law regime, but its reasoning — that a collective insolvency remedy is not a suit for recovery — is structurally relevant to insolvency applications as well. A creditor weighing an insolvency filing should protect the money claim independently rather than assume the limitation clock pauses.