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Section 255: Exclusion of certain time in computing period of limitation

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Section 254 All 470 Sections of Companies Act Section 256
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Company Sec 2(20) Director Sec 2(34) Tribunal Sec 2(90)

Legal Commentary & Landmark Judgments: Section 255

Section 255 historically provided for the exclusion of time spent in revival and rehabilitation proceedings when computing the period of limitation for creditor actions; omitted by the Insolvency and Bankruptcy Code, 2016, its principle is preserved under Section 60(6) of the IBC.

  • Statutory Suspension of Limitation: Excluded the time period during which a revival application was pending before the Tribunal from the computation of limitation for any suit, arbitration, or recovery proceeding.
  • Creditor Protection During Moratorium: Prevented creditors restrained by statutory standstills from suffering dismissal of their claims on grounds of limitation upon failure of revival.
  • Modern Codification in Section 60(6) IBC: The omission of Section 255 transitioned this limitation exclusion directly into Section 60(6) of the IBC, which tolls limitation during the CIRP and liquidation moratorium periods.
Key Landmark Precedents:
  • Sesh Nath Singh v. Baidyabati Sheoraphuli Co-operative Bank Ltd., (2021) 7 SCC 313: The Supreme Court analyzed limitation exclusion principles under Section 14 of the Limitation Act and Section 60(6) of the IBC, affirming that statutory standstills prevent claims from being barred by time.
  • Laxmi Pat Surana v. Union Bank of India, (2021) 8 SCC 481: Confirmed that limitation exclusion provisions protect bona fide creditors whose remedies were legally stayed during insolvency and rehabilitation processes.
  • B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates, (2019) 11 SCC 633: Held that the Limitation Act, 1963 applies to corporate insolvency, and statutory exclusion periods must be strictly applied based on relevant statutory text.
Courtroom Practice & Strategic Litigation Guidance:

When drafting recovery suits or arbitration claims against an entity that has emerged from restructuring or where insolvency proceedings have terminated, invoke Section 60(6) IBC read with Section 15 of the Limitation Act to deduct the entire CIRP and moratorium duration from the statutory limitation period.

Section 254 All 470 Sections of Companies Act Section 256