Section 45-O of BRA : Section 45-O: Special Period Of Limitation

Explanation using Example

Here's a simplified example to illustrate the use of Section 45-O of The Banking Regulation Act, 1949:

Imagine a banking company, 'ABC Bank', is facing financial difficulties and a petition for its winding up is filed on January 1, 2021. Normally, the Indian Limitation Act, 1908 sets a time limit within which the bank must file a suit to recover debts. However, under Section 45-O, the period starting from January 1, 2021, until the winding-up process is completed, will not count towards the limitation period. So, if there's a 3-year limitation to recover a debt, and the winding up takes 2 years, ABC Bank will still have the full 3 years after the winding-up process to file a suit.

Additionally, if ABC Bank needs to recover unpaid calls (demands for payment) from its directors or enforce a contract claim against them, there is no limitation period if the bank is being wound up. For other claims against directors, such as for damages, the bank has either 12 years from when the claim arose or 5 years from the appointment of the liquidator, whichever is longer, to take legal action.