Exclusion of Time in Limitation: Section 358
The exclusion of time in limitation for a company in liquidation is a short section with a precise window. Section 358 of the Companies Act, 2013 stops the limitation clock for suits and applications brought in the company's own name while it is being wound up by the Tribunal, and it keeps the clock stopped for a full year after the winding up order. This page reads section 358 as printed, together with the section that fixes when the excluded period begins.
Definition
Exclusion of time in limitation
is the rule in section 358 of the Companies Act, 2013 that, for a suit or application in the name of a company being wound up by the Tribunal, the period from the commencement of the winding up to one year after the winding up order is excluded from the limitation period. Source: Companies Act, 2013, section 358.
What does exclusion of time in limitation actually exclude?
One continuous window, defined by two different events. The section reads: Notwithstanding anything in the Limitation Act, 1963 (36 of 1963), or in any other law for the time being in force, in computing the period of limitation specified for any suit or application in the name and on behalf of a company which is being wound up by the Tribunal, the period from the date of commencement of the winding up of the company to a period of one year immediately following the date of the winding up order shall be excluded.
The window opens at the date of commencement of the winding up and closes one year after the date of the winding up order. Those are not the same event, and the gap between them is inside the exclusion. Everything in between is taken out of the limitation computation.
| Marker | What fixes it |
|---|---|
| Start of the excluded window | The date of commencement of the winding up |
| End of the excluded window | One year immediately following the date of the winding up order |
| What is excluded | The whole period between those two points |
When does the winding up commence for this purpose?
Earlier than most readers expect, and a different section says so. Section 357, as substituted with effect from 15 November 2016, provides that the winding up of a company by the Tribunal under this Act shall be deemed to commence at the time of the presentation of the petition for the winding up.
That pushes the start of the excluded window back to the filing of the petition, not to the order. Since a petition can sit before the Tribunal for a long time before it is decided, and a petition can be dismissed, the two dates can be far apart. Who may present that petition, and on what grounds, is covered in who can file a winding up petition and the grounds for winding up by tribunal.
One year
The period immediately following the date of the winding up order that section 358 of the Companies Act, 2013 adds to the exclusion, on top of the whole period from the commencement of the winding up
Source: Companies Act, 2013, section 358
Who benefits from the exclusion?
The company, and only in claims it brings. The section is limited to a suit or application in the name and on behalf of a company which is being wound up by the Tribunal. A creditor suing the company does not get the benefit of section 358 on its words, and a claim against the company in the liquidation itself runs on a different track: what may be proved against the estate is governed by debts provable in winding up.
The practical reason for the rule is the gap in control. Between the petition and the order, and for a period after it, the company's affairs pass from its board to a company liquidator, whose first task is to find out what the company owns and is owed. Section 358 buys that officeholder the time to bring claims that would otherwise have gone stale while nobody was in a position to bring them.
How strong is the override?
It is the widest form the Act uses. The section opens notwithstanding anything in the Limitation Act, 1963 (36 of 1963), or in any other law for the time being in force, naming the statute it displaces and then covering every other one.
Two limits remain even so. The exclusion is about computing the period of limitation, so it suspends the running of time rather than creating a fresh cause of action or reviving a claim that was already time barred when the winding up commenced. And it is tied to the Tribunal route: section 358 does not mention any other mode of winding up.
Section 358 sits at the end of Part III of the winding up Chapter, the part headed provisions applicable to every mode of winding up, immediately before the Part IV provisions on Official Liquidators described in the powers of an official liquidator. Its own words are narrower than the Part heading above it, which is why the exclusion of time in limitation should be read off the section rather than off its position.
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Frequently asked questions
What is exclusion of time in limitation under section 358?
It is a carve-out from the Limitation Act, 1963 for a company being wound up by the Tribunal. In computing the period of limitation for any suit or application in the name and on behalf of that company, the period from the commencement of the winding up to one year after the winding up order is excluded. Source: Companies Act, 2013, section 358.
Which suits does section 358 cover?
Only those brought by the company itself. The section applies to any suit or application in the name and on behalf of a company which is being wound up by the Tribunal. A claim brought against the company is not within its words. Source: Companies Act, 2013, section 358.
When does the excluded period start?
At the commencement of the winding up, which section 357 fixes: the winding up of a company by the Tribunal shall be deemed to commence at the time of the presentation of the petition for the winding up. That is earlier than the winding up order itself. Source: Companies Act, 2013, sections 357 and 358.
Does section 358 apply to a voluntary winding up?
Not on its own words. Section 358 is limited to a company which is being wound up by the Tribunal, so the exclusion attaches to the Tribunal route rather than to every mode of winding up. Source: Companies Act, 2013, section 358.
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