The appeal court ruled that an earlier suit's dismissal due to jurisdictional non-compliance bars exclusion of time under the Limitation Act if the prosecution lacked good faith and due diligence.

JUDGMENT :

SATHISH NINAN, J.

1. The decree in a suit for money is under challenge by the defendants.

2. The 1^st plaintiff is a registered partnership firm. Plaintiffs 2 and 3 are its partners. The plaintiffs are engaged in trading of spices. The 1^st defendant is a company engaged in the business of bulk purchase of hill produces from traders. The 2^nd defendant is the Kerala State Head of the 1^st defendant company. There were various business transactions between the plaintiffs and the defendants. The transactions were on credit basis. Alleging that the accounts were running irregular, the suit was filed for recovery of money allegedly due to the plaintiffs.

3. The defendants in their written statement, while admitted the business dealings with the plaintiffs, denied the claim of the plaintiffs that any amounts are due. It was contended that the suit is barred by res judicata in view of the judgment in O.S.No.314 of 2013. It was also contended that the suit is barred by limitation.

4. The trial court held that the suit is not barred by res judicata and is within the period of limitation. The claim of the plaintiffs was upheld on the merits and accordingly, the suit was decreed.

5. We have heard Shri.T. Krishnanunnni, the learned Senior Counsel on behalf of the appellants- defendants and Smt.Sumathi Dandapani, the learned Senior Counsel for the respondents-plaintiffs.

6. The point that arises for determination in this appeal is;

“Was the trial court right in having held that, while computing limitation, the plaintiffs are entitled for exclusion of the period during which the earlier suit O.S.No.314 of 2013, was pending?”

7. The argument of the learned Senior Counsel for the appellants is confined to the issue of limitation. The plaintiffs had filed an earlier suit as O.S.No.314 of 2013 against the defendants for the very same relief. The suit was dismissed as barred under Section 69(2) of the Indian PARTNERSHIP ACT since the firm was unregistered. Thereafter the present suit was filed. The trial court erred in holding that the plaintiffs are entitled for exclusion of the period during which the earlier suit was pending. The benefit of Section 14 of the LIMITATION ACT would be available only if the earlier proceeding was prosecuted ‘bonafide’. The conduct of the plaintiffs in the earlier suit reveals lack of bonafides. Hence, the plaintiffs are not entitled to exclusion of the limitation under Section 14 of the LIMITATION ACT , is the argument.

8. The learned Senior Counsel for the respondents-plaintiffs would, on the other hand, submit that, it is well settled that Section 14 of the LIMITATION ACT has to be liberally construed to save the lis. The trial court has rightly done so and the decree warrants no interference, it is argued.

9. Admittedly, for the very same relief, the plaintiffs had earlier filed O.S.No.314 of 2013. At that time the plaintiff firm was unregistered. Section 69 (2) of the PARTNERSHIP ACT bars the institution of a suit on a contract with a third party by an unregistered firm. In the suit, the defendants raised the plea of bar under Section 69(2). After the trial, the court found that the firm is unregistered, and accordingly dismissed the suit as barred under Section 69(2). After the dismissal of O.S.No.314 of 2013, the firm was got registered and the present suit was filed.

10. That, if the period during which the earlier suit was pending is not excluded, the present suit will be barred by limitation, is not in dispute. It is not attempted to contend otherwise. The p