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CS Professional · Insolvency and Bankruptcy - Law and Practice · Insolvency Resolution of Individuals and Partnership Firms

A moratorium order has been made under Part III against debtor Anil Sethi. He had a right to file a recovery suit that would expire under limitation in 2 months. The moratorium lasted 5 months. How is the limitation period computed for that suit?

The moratorium period is excluded. Under section 179(3), notwithstanding the Limitation Act, when computing limitation for a suit or application in the debtor's name for which a moratorium has been ordered under Part III, the time the moratorium is in place is not counted.

  1. AThe 5 months of moratorium are excluded from the computationCorrect
  2. BThe limitation continues to run during the moratorium
  3. CThe limitation lapses automatically when moratorium starts
  4. DThe moratorium period is counted, but extended by 30 days

Explanation

Section 179(3) provides that, notwithstanding the Limitation Act, 1963, in computing limitation for a suit or application in the name and on behalf of a debtor for which a moratorium order has been made under this Part, the moratorium period is excluded. Hence the 5 months are left out.

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