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The limitation period to file a cheque-bounce complaint under Section 138 of the Negotiable Instruments Act, 1881 is one month, computed from the date on which the cause of action arises under clause (c) of the proviso to Section 138. The cause of action is built up in steps: (1) the cheque must be presented to the bank within six months from its date or within its period of validity, whichever is earlier (proviso (a) to Section 138); (2) on dishonour, the payee must issue a written demand notice to the drawer within 30 days of receiving the bank's return memo; (3) the drawer then has 15 days from receipt of that notice to pay; and (4) only if the drawer fails to pay within those 15 days does the cause of action accrue. The complaint must then be filed within one month of that date, under Section 142(1)(b). This special one-month period is not governed by the Limitation Act — but the proviso to Section 142(1)(b) (inserted by the 2002 Amendment) empowers the Magistrate to take cognizance of a complaint filed after the one-month period if the complainant satisfies the court that there was sufficient cause for the delay. Missing the one-month window without obtaining condonation is fatal to the complaint.
Section 24 of the Recovery of Debts and Bankruptcy Act, 1993 provides that the Limitation Act, 1963 shall, "as far as may be", apply to an application made to a Tribunal. The Act does not itself fix a period for an Original Application: the applicable Article of the Schedule, and the date from which time runs, depend on the nature of the claim (for example, a loan repayable on demand, an instalment loan, a guarantee or a mortgage) and on the loan and security documents. Time can be extended by a written acknowledgment made before the period expires (Section 18) or a part payment (Section 19). Because the answer turns on the documents, banks should have limitation checked for each account rather than assume a single three-year period from the NPA date.
Yes, a balance confirmation letter signed by the authorised representative of the borrower before the expiry of the limitation period constitutes a valid written acknowledgment under Section 18 of the Limitation Act, 1963, and a completely fresh three-year limitation period begins to run from the date of that acknowledgment. The acknowledgment must meet three essential conditions: it must be in writing, it must be signed by the party against whom the debt is claimed (or their duly authorised agent), and it must be made before the existing limitation period has expired — an acknowledgment after limitation has run out cannot revive an already time-barred claim (Sampuran Singh v. Niranjan Kaur, 1999). Banks routinely obtain annual acknowledgments as part of their credit review process; each fresh acknowledgment resets the clock. An acknowledgment sent to the borrower's statutory auditors (audit confirmation) and not signed by the borrower does not qualify under S.18, and banks should not rely on audit confirmations alone. The acknowledgment need not admit the precise amount — even an acknowledgment of a jural relationship of debt is sufficient.
Yes, a part payment made by the borrower (or their duly authorised agent) toward a debt before the limitation period expires restarts the limitation clock under Section 19 of the Limitation Act, 1963, and a fresh three-year period begins from the date of that payment. The critical requirement added by the proviso to S.19 is that the part payment must be acknowledged in writing signed by the person making the payment — typically evidenced by a pay-in slip, NEFT confirmation screen shot signed or acknowledged by the borrower, or a covering letter accompanying the payment. A unilateral entry in the bank's own books, without any signed payment record from the borrower, is generally insufficient to trigger S.19. Part payments of interest, processing fees, and commitment charges — if signed by the borrower — also qualify. Banks must therefore maintain clean, countersigned payment records for every partial payment received from NPA accounts, as these records can be the difference between a maintainable and a time-barred DRT suit.
Section 5 of the Limitation Act explicitly applies only to appeals and applications — it does not apply to original suits. An original suit (or an Original Application before DRT, which is treated as its equivalent in many rulings) filed beyond the prescribed limitation period cannot be saved by S.5 condonation. For suits, the bar under S.3 is absolute. However, for DRT appeals before the Debt Recovery Appellate Tribunal (DRAT) and for applications (as opposed to OAs) before the DRT, S.5 has been applied by courts to condone delay on sufficient cause being shown. The distinction between an "application" (S.5 applicable) and the equivalent of a "suit" (S.5 not applicable) is a recurring litigation issue — the safest practice is to file all proceedings within the prescribed period and not rely on S.5 as a safety net.
The limitation period depends on the relief sought. A suit by a mortgagee to enforce payment of the money secured by a mortgage or charge on immovable property (a suit for sale) is governed by Article 62 of the Schedule to the Limitation Act, 1963 — twelve years from when the money secured becomes due. A suit by a mortgagor to redeem or recover possession of the mortgaged property is governed by Article 61(a) — thirty years from when the right to redeem accrues. A mortgagee's suit for foreclosure is governed by Article 63 (thirty years for foreclosure; twelve years for possession). These long periods recognise the durable nature of security interests — even after the unsecured/personal remedy on the loan becomes time-barred (three years), the mortgage itself may remain enforceable. Where SARFAESI enforcement is used instead of a suit, the bank's measures must still be initiated within the limitation applicable to the underlying debt (Article 137 for the corresponding DRT application), and delay can be challenged independently.
Section 36 of the SARFAESI Act provides that no secured creditor may take any Section 13(4) measure "unless his claim in respect of the financial asset is made within the period of limitation prescribed under the Limitation Act, 1963" — the limitation that matters is that of the underlying claim (which depends on the loan and security documents and on any acknowledgments or part payments under Sections 18 and 19), not a separate three-year period from the NPA date. For a borrower's application under S.17 SARFAESI challenging the bank's possession notice or action, the period is 45 days from the date on which the secured creditor took the measure complained of under Section 13(4) SARFAESI (Section 17(1)), which is a special period that overrides the Limitation Act for that specific application. For appeals to the DRAT under S.18 SARFAESI, the period is thirty days from receipt of the DRT order (S.18(1)); S.18(2) directs the DRAT to proceed, as far as may be, under the RDB Act, whose S.20(3) proviso permits a late appeal for sufficient cause. Banks should check, before issuing a S.13(2) notice, that the claim on the financial asset is within limitation (S.36) and should document the acknowledgments and part payments that reset it.
Article 137 is the residuary provision in the Schedule to the Limitation Act: it prescribes a three-year limitation period for "any other application" — i.e., any application for which no specific article elsewhere in the Schedule provides a limitation period. Its main significance in debt recovery is under the IBC: S.238A applies the Limitation Act to proceedings before the NCLT, and the Supreme Court in B.K. Educational Services v. Parag Gupta (decided 11 October 2018) held that Article 137 is attracted to applications under Sections 7 and 9 — the right to apply accrues when a default occurs, and the application is barred if filed more than three years later unless delay is condoned under Section 5. For DRT Original Applications, S.24 of the RDB Act applies the Limitation Act "as far as may be"; the governing Article depends on the nature of the claim, so it should be checked account by account.
Section 17 provides that where a cause of action is based on the defendant's fraud, or where knowledge of the plaintiff's right is concealed by fraud, the limitation period does not begin to run until the plaintiff discovered (or with reasonable diligence could have discovered) the fraud. In banking cases, this provision is invoked when banks discover years after disbursement that borrowers submitted forged property documents, fabricated financial statements, or inflated stock valuations to obtain loans. The bank argues that its cause of action arose not from disbursement but from the date of fraud discovery — which can significantly extend the window to file suits or DRT OAs. Section 17(1) postpones the start of limitation only "until the plaintiff or applicant has discovered the fraud ... or could with reasonable diligence have discovered it", so the bank must plead specifically the date of discovery, what prevented earlier discovery, and why reasonable diligence would not have revealed the fraud sooner. The proviso protects bona fide third-party purchasers who bought the property for value without knowledge of the fraud — limiting the bank's ability to claim title against them even if the original mortgage was fraudulent.
Both S.18 (acknowledgment in writing) and S.19 (part payment) restart the limitation period and create a fresh three-year window, but they differ in nature, evidence, and strategic utility. An acknowledgment under S.18 requires a written, signed admission of liability — it does not require any money to change hands and can be obtained through a simple letter, email (with digital signature), or balance confirmation form. A part payment under S.19 requires actual money to be paid by the borrower to the bank, accompanied by a written acknowledgment signed by the borrower. For a bank dealing with an NPA borrower who has no cash but still maintains communication, S.18 acknowledgment is more practical — a signed OTS application letter, a signed restructuring proposal, or even a signed request for more time constitutes acknowledgment. For accounts that are still partially performing, each part payment with a signed covering letter achieves both S.18 and S.19 protection. Banks should proactively obtain S.18 acknowledgments annually from all accounts — performing and NPA — as the most cost-effective form of limitation protection, and should train their relationship managers to collect acknowledgment letters as a standard operating procedure during annual reviews.
Limitation is a common defence in DRT proceedings. Whether you are computing the limitation period for a DRT Original Application or seeking condonation of delay, getting the dates right is critical. Our partner-led team advises on limitation strategy in debt recovery cases.