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

Under a moratorium order made under Part III, a debtor, Sunil Traders, had a right to file a recovery suit for a debt. The moratorium lasted 180 days. How is the limitation period for that suit computed?

The period during which the moratorium is in place is excluded when computing limitation. Section 179(3) applies despite the Limitation Act, 1963, so the full 180 days of moratorium are left out, rather than counted or replaced by a fixed extension.

  1. AThe moratorium period counts toward limitation as usual under the Limitation Act, 1963
  2. BLimitation stops permanently once moratorium begins
  3. CThe period during which the moratorium is in place is excluded in computing limitationCorrect
  4. DLimitation is extended by exactly 90 days regardless of the moratorium length

Explanation

Section 179(3) states that, notwithstanding the Limitation Act, 1963, the period of moratorium is excluded when computing limitation for any suit or application in the name and on behalf of the debtor. So all 180 days are excluded, not a fixed 90 days.

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