Limitation in liquidation excludes moratorium time, and unproven inter-company settlement will not defeat a liquidator's recovery claim.

Limitation in liquidation proceedings excludes the moratorium period under Section 60(6) of the Insolvency and Bankruptcy Code, with Article 137 of the Limitation Act applying to the liquidator's recovery claim; on that basis, the claim was treated as within time. A purported discharge through inter-company transfer under a tripartite arrangement was not proved by reliable records or consent of the corporate debtor, so the alleged settlement did not defeat recovery. The liquidator was permitted to pursue outstanding dues before the Adjudicating Authority to avoid multiplicity of proceedings and support liquidation value maximisation, and the recovery claim was sustained.

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Issues: (i) Whether a claim pursued by the liquidator under the Insolvency and Bankruptcy Code, 2016 was barred by limitation, including the effect of the moratorium period on computation of time. (ii) Whether the alleged dues stood discharged through an inter-company transfer under a tripartite arrangement, and whether the liquidator could seek recovery before the Adjudicating Authority.

Issue (i): Whether a claim pursued by the liquidator under the Insolvency and Bankruptcy Code, 2016 was barred by limitation, including the effect of the moratorium period on computation of time.

Analysis: The period of moratorium under the insolvency process was treated as excluded for computing limitation under Section 60(6) of the Insolvency and Bankruptcy Code, 2016. The claim was held to be governed by Article 137 of the Limitation Act, 1963, and the relevant period for the liquidator to act arose after appointment in the insolvency or liquidation process. The claim was therefore examined as a legally enforceable claim continuing within time after exclusion of the moratorium period.

Conclusion: The claim was not barred by limitation.

Issue (ii): Whether the alleged dues stood discharged through an inter-company transfer under a tripartite arrangement, and whether the liquidator could seek recovery before the Adjudicating Authority.

Analysis: The record did not establish any reliable tripartite agreement, accepted settlement, or proof that the corporate debtor had consented to discharge the liability through transfer to its sister concern. The insolvency framework was applied to permit the liquidator to recover outstanding dues before the Adjudicating Authority so as to avoid multiplicity of proceedings and to further the liquidation objective of maximisation of value. On the available material, the alleged settlement was not proved and the recovery application was maintainable.

Conclusion: The dues were held payable and the liquidator's recovery claim was sustained.

Final Conclusion: The appeal failed, and the order directing payment to the corporate debtor in liquidation was upheld.

Ratio Decidendi: In liquidation proceedings, the moratorium period is excluded for limitation purposes, and the liquidator may pursue a legally enforceable recovery claim before the Adjudicating Authority; an unproven private settlement does not defeat such recovery.

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