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

Anita, an individual debtor, has a moratorium order made in her case under Part III. During the moratorium she holds a right to file a recovery suit in her own name against a customer, and the ordinary limitation period would have ended during the moratorium. How is limitation computed for that suit?

The period during which the moratorium is in place is excluded when computing limitation for any suit or application filed in the debtor's name and on her behalf. This applies notwithstanding the Limitation Act, 1963 or any other law, so the suit is not time-barred merely because of the moratorium.

  1. AThe limitation period continues to run and the suit becomes barred
  2. BThe period during which the moratorium is in place is excluded in computing limitation, despite the Limitation Act, 1963Correct
  3. CLimitation is extended by a fixed period of one year irrespective of the moratorium
  4. DLimitation is excluded only if the Adjudicating Authority passes a separate order for each suit

Explanation

Section 179(3) says that, notwithstanding the Limitation Act, 1963 or any other law, in computing limitation for a suit or application in the name and on behalf of a debtor for which a moratorium has been made under this Part, the moratorium period is excluded. A fixed one-year extension is not provided.

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