Section 14 of the Limitation Act does not apply to arbitration proceedings, and the time taken up in such proceedings can only be excluded from the limitation period under the specific criteria set out in Section 37(5) of the Arbitration Act.

Headnote:
LIMITATION ACT - ARBITRATION PROCEEDINGS - SECTION 14 - SECTION 37(1) AND 37(5) ARBITRATION ACT - APPLICATION OF LIMITATION ACT TO ARBITRATION PROCEEDINGS - EXCLUSION OF TIME TAKEN UP IN ARBITRATION PROCEEDINGS.
Fact of the Case:

Plaintiff filed a suit claiming damages for breach of warranty by the defendant, alleging that he had to pay a higher customs duty on textile goods due to a misrepresentation of their origin. The dispute arose after the plaintiff cleared the goods from the port of Bombay and paid the duty based on their non-British origin, while the contract specified British origin, which would have attracted a lower duty. The plaintiff argued that the time taken up in infructuous arbitration proceedings should be excluded from the limitation period under Section 14 of the Limitation Act.
Finding of the Court:

The court held that Section 14 of the Limitation Act, which allows for the exclusion of time spent in prosecuting a civil proceeding in a court, does not apply to arbitration proceedings. The court reasoned that the plain meaning of the section refers to judicial courts and not domestic forums like arbitration.
Issues: 1. Whether Section 14 of the Limitation Act applies to arbitration proceedings. 2. Whether the time taken up in infructuous arbitration proceedings can be excluded from the limitation period.
Ratio Decidendi: 1. The court interpreted Section 14 of the Limitation Act strictly, holding that the expression "civil proceeding in a Court" refers only to judicial courts and not to arbitration proceedings. 2. The court distinguished the Privy Council decision in Ramdutt Ramkissen v. E.D. Sasson & Co., which applied Section 14 to arbitration proceedings by analogy, noting that the facts in that case were different and that the decision should be limited to its specific context. 3. The court emphasized that the Arbitration Act of 1940, enacted after the Privy Council decision, now governs the exclusion of time taken up in arbitration proceedings. Section 37(5) of the Arbitration Act provides specific criteria for excluding such time, namely, when an award is set aside or when the arbitration agreement ceases to have effect due to a court order.
Final Decision: The court dismissed the plaintiff's appeal, holding that the suit was barred by limitation since the time taken up in arbitration proceedings could not be excluded under Section 14 of the Limitation Act or Section 37(5) of the Arbitration Act.

JUDGMENT - Chagla, C.J.

1. This appeal arises out of a suit filed by the plaintiff claiming a sum of Rs. 2,008-14-0 being the difference between the preferential custom duty on textile goods of British manufacture and similar goods of non-British manufacture which he alleges he had to pay in clearing the contract goods after their arrival in the Port of Bombay, This amount he claimed as damages on the footing of a breach of warranty by the defendants.

2. The question that arises in limine is whether the suit is barred by limitation. . The contract of sale is dated 21 September, 1948, and the seller is the defendant and the purchaser is the plaintiff and the goods that were sold were printed cotton haircord which were described as of U. K. origin. The shipment was October/November 1948 and the contract was a C. I. P. contract. The payment was to be made by a confirmed and unequivocal letter of credit to be opened by the purchaser in favour of the British suppliers Messrs. Michael Settons Sons and Hallwood Ltd., London.

It appears that the plaintiff opened the letter of credit, the goods arrived in Bombay, and the suppliers were paid the price out of the letter of credit opened by the plaintiff. Dispute then arose between the plaintiff and the Customs authorities as to the duty that he had to pay. If these goods were of U. K. origin, the duty he would have to pay would be 18 per cent, and if they were of non-U. K. origin, then the duty he would have to pay would be 60 per cent. He was asked to pay and in fact he did pay at the rate of 60 per cent, the Customs authorities taking the view that the goods were of non-U. K. origin.

The documents which constitute really the delivery under a O. I. P. contract was tendered to the plaintiff between 11 January, 1949, and January 17, 1949, and the plaintiff filed the present suit on 22 February, 1952, claiming the difference between the amount that he would have to pay on the basis of 18 per cent, duty and the 60 per cent, duty which in fact he paid.

It is not disputed by the plaintiff that the article that governs this case is Article 115, Limitation Act, and if no other factor was to be taken into consideration, the suit was filed beyond three years and the suit would be out of time. But what is relied upon by the plaintiff for the purpose of saving limitation is the fact that there were certain infructuous arbitration proceedings, and the plaintiff wishes to exclude the time taken up by these arbitration proceedings. The section of the Limitation Act on which the plaintiff relies is Section 14. That section provides: "In computing the period of limitation prescribed for any suit, the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a Court of first instance or in a Court of appeal, against the defendant, shall be excluded, where the proceeding is founded upon the same cause of action and is prosecuted in good faith in a Court which, from defect of jurisdiction, or other cause of a like nature, is unable to entertain it." There is no doubt that the arbitration proceeding was founded upon the same cause of action as the present suit and it is not in dispute that those proceedings were prosecuted in good faith. The trial court has held that assuming Section 14 applies, those proceedings were not prosecuted with due diligence. For the purpose of this argument we will assume that they were prosecuted with due diligence, and the question which still remains to be determined is whether Section 14 has any application to the facts of this case.

Looking at Section 14 and giving to it its plain natural construction, it is clear that the Legislature never intended that proceedings before an arbitrator should come within the ambit of this section. Undoubtedly, proceedings before an arbitrator may be civil proceedings, but what is emphasised by S. 14 is that they must be civil proceedings in a Court of first instance or in a Court of appeal.

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