Key points
- Suits for money due under a contract must be filed within three years of the date the amount became due.
- A written acknowledgment signed before expiry (including emails and balance confirmations) restarts the period under Section 18; a part payment recorded in writing does the same under Section 19.
- The IBC applies Article 137 of the Limitation Act: three years from default, extended only by acknowledgments in the same way.
When time starts
For goods sold and delivered, three years from delivery, or from the expiry of any agreed credit period. For a loan, from the date of demand or the date fixed for repayment. For a running account, Article 1 of the Schedule to the Limitation Act gives three years from the close of the year in which the last item admitted or proved is entered.
Acknowledgments
Section 18 provides that a written acknowledgment of liability, signed by the debtor or their agent, made before the limitation expires, starts a fresh three-year period. Emails, letters, balance confirmations, reconciliation statements and entries in the debtor's audited balance sheet have all been accepted. The acknowledgment must relate to the specific liability and need not promise to pay.
Part payment
Section 19 provides that a payment on account of a debt, or of interest on it, made before expiry and recorded in writing by the person making it, restarts the period. A cheque that is honoured qualifies.
Limitation under the IBC
In B.K. Educational Services v. Parag Gupta (2018) the Supreme Court held that the Limitation Act applies to IBC applications, with three years from default under Article 137. Balance sheet entries can extend the period (Asset Reconstruction Co. v. Bishal Jaiswal, 2021).
Cheque bounce and other special periods
Section 138 complaints have their own strict timelines and are not extended by acknowledgment. Consumer complaints must be filed within two years. Claims against carriers, insurers and under some statutes have shorter periods.
Practical advice
Obtain a signed balance confirmation from every debtor at each year end. It costs nothing and preserves the claim.
Frequently asked questions
Can the court extend limitation if I was unaware of the deadline?
No. Section 5 of the Limitation Act allows condonation of delay for appeals and applications, not suits. A time-barred suit will be dismissed even if the defendant does not object.
Does a WhatsApp message count as an acknowledgment?
Courts have accepted electronic messages that clearly acknowledge a specific liability, provided authorship can be proved. Keep the message with metadata and a certificate under Section 63 of the Bharatiya Sakshya Adhiniyam.
Related practice area: Debt Recovery
This article is for general information and does not constitute legal advice. Laws, rules and limitation periods change and depend on the facts; please take advice on your own situation before acting. Reading this article does not create a lawyer-client relationship with Akhtars Legalitarian.