In short. For most unpaid business dues in India, you get three years to go to court. That's the Limitation Act, 1963. The clock usually starts the day payment fell due. Not the day you sent a reminder, and not the day of your legal notice. If the debtor admits the debt in writing, or pays something, before those three years end, a fresh three years begins. Suppliers, service firms and lenders sitting on old dues should check the oldest unpaid invoice this week. Once a claim is time-barred, no court can revive it.
Is this your situation?
- A customer has owed you for over a year. Every month it's "next week, pakka".
- You opened the ledger last night and saw unpaid invoices from more than two years ago.
- You lent money to a friend's company on trust, with no repayment date written anywhere.
- Along the way the debtor paid a little here and there, or signed a balance confirmation your accountant sent.
- You sent a legal notice months ago and assumed that froze the clock.
- There's a claim from three or four years back, and you want to know if it can still be filed.
- You've been sued over an old debt yourself, and it smells time-barred.
Three years from the due date: the short answer
Three years. That's the limitation period for most business money claims, and it comes from the Schedule to the Limitation Act, 1963. The Schedule gives three years for the price of goods sold, the price of work done, money lent and breach of contract, and the residuary Article 113 catches most other money claims at three years too. What changes from claim to claim is the starting point. Usually it's the date the money became payable.
File a day after the three years end and the court has to dismiss the suit. Section 3 of the Limitation Act is blunt about it, and it bites even in a case where the defendant never once raises the point in its written statement or at the hearing. And you can't rescue a late suit by explaining the delay, the way you sometimes can with an appeal. Section 5, the condonation provision, doesn't apply to suits.
There's good news. The clock can restart. If the debtor gives a written acknowledgment of the debt, or makes a part payment, before the three years expire, you get a fresh three years from that date. Frankly, that's why most old dues that we can still recover are recoverable at all.
When the three years start for common business claims
| What you're claiming | Article in the Limitation Act Schedule | Period | Clock starts |
|---|---|---|---|
| Price of goods sold and delivered, with no fixed credit period | Article 14 | 3 years | On the date of delivery |
| Price of goods sold on a fixed credit period (60 days, say) | Article 15 | 3 years | When the credit period runs out |
| Price of work done or services, with no time fixed for payment | Article 18 | 3 years | When the work is done |
| Money lent, with no agreement that it's payable on demand | Article 19 | 3 years | When the loan is made |
| Money lent under an agreement that it's payable on demand | Article 21 | 3 years | When the loan is made, not when you demand it |
| Balance of a mutual, open and current account with reciprocal demands | Article 1 | 3 years | Close of the year in which the last item is admitted or entered |
| Compensation for breach of contract | Article 55 | 3 years | When the contract is broken |
| Any other suit that no specific article covers | Article 113 | 3 years | When the right to sue accrues |
| Executing a decree you've already won | Article 136 | 12 years | When the decree becomes enforceable |
Applying the table to your own invoices
Suppliers often mix up Article 14 and Article 15. Say your invoices read "payment within 45 days" and the buyer accepted that term. Your three years then run from the end of those 45 days. Not from delivery. If no credit period was ever agreed, delivery starts the clock. And if the contract says nothing but your invoices print a credit period, be ready for a fight over whether the buyer ever agreed to it.
Services are similar. When the contract fixes a payment date or milestone, the right to sue usually arises on that date, and Article 113 or Article 55 tends to govern. When nothing is fixed, Article 18 runs from the date the work was done. On a phased project, each milestone invoice may have a different starting date.
Each invoice is normally a separate claim, with its own clock. So a supplier who has traded with a customer for three years may find the oldest invoices already dead while the recent ones are fine. That's why, when an old recovery file lands on our desk, the first thing we ask for isn't the total. It's a list of every unpaid invoice with its due date.
The counting itself follows the calendar. Section 12(1) of the Limitation Act leaves out the day from which the period runs. If the last day falls on a court holiday, Section 4 lets you file on the day the court reopens. Don't plan your filing around either rule. E-filing portals usually take filings outside court hours anyway, but a plaint filed with a week in hand spares you arguments about holidays, registry objections and the portal going down at 11 pm. And once time starts running, Section 9 says nothing that happens later will stop it. The debtor shutting its Okhla office or changing its name makes no difference.
Running accounts and when the whole balance counts as one claim
Article 1 is different. For the balance of a mutual, open and current account, it starts time from the close of the year in which the last item was admitted or entered. It looks tempting, because it seems to keep the whole ledger alive in one go. But it only applies where there are reciprocal demands. Both sides must have had dealings that created obligations each way, like two businesses that buy from and sell to each other.
A normal supplier ledger isn't that. You sell. They pay. Even if everyone calls it a "running account", it usually isn't a mutual account in the legal sense, and courts generally treat each sale in it as a separate claim. Don't lean on Article 1 unless the trade genuinely went both ways.
What actually keeps a running ledger alive is acknowledgments and part payments. A customer who signs a balance confirmation every year, or pays something against the outstanding, keeps restarting the clock on the debt. Each step has to come before the earlier period ran out. That condition matters more than anything else on this page.
The provisions that restart or pause the clock
Section 18, Limitation Act, 1963 (acknowledgment)
If the debtor, before limitation expires, admits the liability in a writing signed by it or by its authorised agent, a new period starts from the date of signing. It doesn't have to mention the exact figure. It has to show that the debtor accepts a debt exists. A balance confirmation can do it. So can an email from their accounts head admitting the dues, a letter asking for more time, or a settlement offer that accepts liability. A promise made over the phone can't.
Section 19, Limitation Act, 1963 (part payment)
Any payment on account of the debt, or of interest on it, made by the debtor or its agent before the period ends, starts a fresh period from the date it's paid. There's one more condition. The payment has to be acknowledged in the payer's handwriting, or in a writing the payer signed. In practice the proof is usually a bank transfer with a narration, or the customer's payment advice. Keep every one of them.
Section 12A(3), Commercial Courts Act, 2015 (mediation time)
Time spent in pre-institution mediation doesn't count towards limitation, so if you apply with four months left and the mediation eats up three of them, you walk out the other end with your full four months still in hand. But mediation has to begin before the claim expires. It won't bring a dead claim back.
Section 14, Limitation Act, 1963 (wrong court)
If you spent time pursuing a case, in good faith and with due diligence, in a court that had no jurisdiction, that time is left out. It protects a plaintiff who went to the wrong court by honest mistake, over pecuniary value or territory for instance. A careless choice won't be covered.
Section 25(3), Indian Contract Act, 1872 (promise to pay a time-barred debt)
A written, signed promise to pay a debt that's already time-barred is a valid contract. You can sue on that promise, within three years of it being made. Don't confuse it with a Section 18 acknowledgment. This one works after the period has expired, and it needs a clear promise to pay. A bare admission isn't enough.
Things that don't stop the clock
Your legal notice doesn't extend limitation. Nor do reminders, phone calls, your own WhatsApp messages, or meetings at which the customer swears it'll pay. People sometimes confuse this with Section 80 of the CPC, which needs two months' notice before you sue the government. That notice period is excluded under Section 15(2). Private debtors get no such pause.
Talks don't help either. We've seen long settlement talks end with the customer simply walking away, and the supplier finding it's now out of time. If talks are dragging and the date is getting close, file the suit or start Section 12A mediation, and keep talking alongside. You can record a settlement at any stage. You can't get back a missed limitation date.
A bounced cheque doesn't, on its own, restart limitation for the debt behind it. Still, cheques are usually given against a liability both sides accept, and the cheque or its covering letter may work as an acknowledgment. A civil claim on the cheque itself has its own three-year period. Don't assume one covers the other.
Checking where you stand on limitation, step by step
We run this check on every old dues file before telling a client whether to send a notice, go to mediation or file straight away.
List each unpaid invoice with its due date
Go through your ledger and write down each invoice, the delivery or completion date, the agreed credit period and the date payment fell due. It's usually the due date that starts the clock. The invoice date often doesn't.
Mark the three-year date against each
Add three years to every starting date. Already passed? That invoice is at risk. If the date falls anywhere in the next three to six months, treat the file as urgent and put it at the top of the pile.
Hunt down every acknowledgment and part payment
Search the emails, signed ledger confirmations, letters asking for time, settlement offers and bank statements. Note the date of each one and who signed it or paid it. Every valid one restarts the clock from its own date.
Check that each reset came in time
An acknowledgment or payment only helps if it arrived before the earlier period ran out. Take a balance confirmation signed three years and one month after delivery. It won't save that invoice.
Fix mediation and filing around the earliest date
Section 12A mediation pauses the clock, but only if it starts before expiry. If your earliest date is near, apply for mediation now. If you genuinely need urgent interim relief, file directly.
Decide what to leave out
If some invoices are plainly time-barred, choose whether to drop them or plead an acknowledgment. A weak time-barred head can sour the court's view of everything else in the plaint.
Which court hears the recovery suit: value, territory, forum
Limitation is the same all over India, since the Limitation Act is a central law. The court is what varies. A dispute out of a business contract is a commercial dispute under Section 2(1)(c) of the Commercial Courts Act, 2015, and once its specified value reaches Rs 3 lakh it goes to a commercial court. Value includes interest up to the date of filing.
In Delhi, commercial suits up to Rs 2 crore are heard by the District Judge (Commercial Court) in the district courts, at Saket, Tis Hazari, Karkardooma and the rest. Bigger suits go to the Commercial Division of the Delhi High Court. There's been a proposal since late 2025 to raise the district limit, so check the current figure. In Uttar Pradesh and Haryana, they go to whichever court is designated Commercial Court for the district, Ghaziabad, Gautam Buddh Nagar, Gurugram and Faridabad included.
Territory is decided under Section 20 of the CPC. You sue where the defendant lives or does business, or where the cause of action arose wholly or in part. Going to the wrong court costs time. Section 14 may exclude that time later, but it's a gamble you don't want with a limitation date close by. If you're unsure, read which court will hear my case.
From today to a decree: time and costs
| Stage | Usual time | Costs to budget for (lawyer fees not shown) |
|---|---|---|
| Reconciling the ledger and checking limitation | A few days | Your own staff's time |
| Legal notice | Usually 15 to 30 days to pay, whatever the notice says. It doesn't stop limitation | Drafting and courier |
| Section 12A pre-institution mediation | Up to 3 months, plus 2 more with consent. Excluded from limitation | Rs 1,000 to apply, then a one-time mediation fee by claim slab (Rs 15,000 to Rs 75,000), split equally. Check the current schedule |
| Filing the suit | A day to file. Registry objections can take one to three weeks | Ad valorem court fee under the state's schedule. In Delhi, a little under one percent on larger claims. Check the current schedule |
| Written statement | 30 days, 120 days at most from service | Nothing for the plaintiff |
| Leave stage, if you file a summary suit under Order XXXVII | Commonly a few months | Same court fee. The route costs nothing extra |
| Evidence and arguments if the suit is contested | Often a year or more | Witness expenses, copying, translation |
| Appeal | Within 60 days of judgment, under Section 13 | Ad valorem court fee on the amount in appeal |
| Execution | Within 12 years of the decree. The Supreme Court has directed that it be decided ordinarily within six months | A small fixed fee, plus attachment and sale costs |
Loans, advances and deposits
Money lent to another business is where a lot of claims quietly go time-barred. Friendly loans often have no repayment date at all. Under Article 19, the three years run from the day the loan was made. Under Article 21, even a loan expressly payable on demand runs from the day it was made, not the day you asked for it back. Lenders tend to find this out too late.
Again, paper protects you. Interest paid on the loan counts as part payment under Section 19. A confirmation in the borrower's books, or a letter acknowledging the loan, restarts the period under Section 18. If the borrower is a company, look at its balance sheet. In Asset Reconstruction Company (India) Ltd v. Bishal Jaiswal (2021) the Supreme Court accepted that entries in a signed balance sheet can amount to an acknowledgment, depending on how they're worded and qualified. Our page on recovering loans and advances given to another business takes it from there.
Advances paid for goods or services that never came are a little different. You're usually claiming back money paid for a consideration that failed. The clock tends to run from when the deal clearly fell apart. Fix that date from the emails and letters.
Limitation for suppliers, service firms, MSMEs, startups and large companies
Suppliers with long relationships are the most exposed, because they keep sending goods month after month while the old invoices sit unpaid, and by the time things finally break down the first year's invoices may already be lost. One habit protects them. An annual balance confirmation, signed by the customer's accounts team.
Service firms and IT vendors often have weaker acknowledgments, because their customers dispute the work, not the figure. Suppose the client's email says "we will release payment once the issues are fixed". That may still be an acknowledgment of liability. It's arguable, though. We wouldn't rely on it if you can file comfortably within time.
Registered micro and small enterprises can refer disputes to the MSME Facilitation Council under Section 18 of the MSMED Act, 2006. That doesn't get you round limitation. The Supreme Court has held that the Limitation Act applies once the Council's proceeding goes to arbitration, though not at the conciliation stage. A stale claim gains little by going there.
Startups chasing bigger customers often hold off to protect the relationship. Understandable. But asking for a signed balance confirmation once a year is a routine accounting step, and most customers won't read it as hostile. Large companies, on the other side, should know what that signature does. It keeps the supplier's claim alive. Their accounts teams should only sign figures they actually agree with.
Related deadlines that run on their own clocks
A cheque bounce complaint under Section 138 of the Negotiable Instruments Act, 1881 runs on much shorter deadlines. You send a demand notice within 30 days of the return memo, and file the complaint within one month after the 15-day payment window ends. These sit apart from the three-year civil period. Missing them doesn't hurt the civil suit. The criminal side is covered on chequebouncelawyer.com.
Got an arbitration clause? The Limitation Act still applies to the arbitration, through Section 43 of the Arbitration and Conciliation Act, 1996. The arbitration usually counts as begun when the other side receives your notice invoking it. That process is dealt with on arbitrationlawyer.in.
Once you have a decree, the clock changes again. The losing side has 60 days to appeal under Section 13 of the Commercial Courts Act. You have 12 years to execute. Don't take that literally. Every month you wait gives the debtor time to move assets. See execution of decree.
An invented example: which invoices survive
This is a made-up case, not a real client. An auto parts maker in Faridabad supplies an assembler in Gurugram on 30-day credit. In October 2026 it finally reviews the account. Rs 58 lakh is unpaid across 40 invoices, and the oldest dates from August 2023.
The invoices for August and September 2023 deliveries fell due in September and October 2023. Their three years ran out in September and October 2026. On the face of it, gone. But in July 2026 the assembler's finance head had emailed a signed reconciliation admitting Rs 61 lakh due. That came before those invoices expired, so a fresh three years runs from July 2026 for everything it admits. The assembler also paid Rs 3 lakh against the account in August 2026. That helps too.
Change one fact. Say the reconciliation wasn't signed until late October 2026. By then the August and September 2023 invoices would already be time-barred, and the reconciliation couldn't revive them. The exception is if it held a clear written promise to pay, which would bring in Section 25(3) of the Contract Act. The later invoices would still be in time. A one-month delay in getting a signature would have decided how much of the claim survived.
Papers that prove your claim is in time
- Invoices backed by delivery challans, e-way bills or completion certificates that show when you actually supplied
- The purchase orders or contract showing the agreed credit period or payment milestones
- Your customer ledger, and a statement of account showing each invoice, each payment and the balance
- Any balance confirmation or reconciliation the debtor signed
- Emails or letters where the debtor admits the dues, asks for time or offers a settlement
- Bank statements and payment advices for each part payment, narrations visible
- TDS certificates (Form 16A), because they show the debtor deducting tax against your invoices
- For loans and advances, the loan agreement, the transfer records and proof of interest payments
- Your Section 12A mediation application and report, so the excluded dates are on record
- A certificate under Section 63 of the Bharatiya Sakshya Adhiniyam, 2023 for every electronic record you rely on
Mistakes that turn good claims into time-barred ones
The commonest is counting from the last reminder, or from the legal notice. Next comes relying on oral promises. For limitation they're worth nothing. Third, waiting for the customer's "quarterly settlement meeting" that keeps getting postponed, while the oldest invoices quietly expire one by one.
Another is treating a running ledger as a single debt. Courts generally look invoice by invoice. So will the defendant's lawyer. On any old recovery file, Advocate B.K. Singh starts by sorting the invoices by due date and matching each one against the acknowledgments and payments. That single list shows straight away which part of the claim is safe and which part will need argument.
And people forget that the court will raise limitation itself, even if the defendant doesn't. Your plaint should explain, in its own paragraphs, why the claim is within time, pointing to the acknowledgment or the payment. If it doesn't, it invites rejection under Order VII Rule 11. Plead the dates.
What to do this week
Open the ledger for each slow payer and find the oldest unpaid invoice. Work out its due date. Add three years. Write it down. If that lands within the next six months, move now. Ask for a signed balance confirmation, send a recovery notice, and get ready to start Section 12A mediation or file. If the date has already passed, look for an acknowledgment or part payment that came before it.
Then choose. A clean invoice claim may suit a summary suit. Our guide comparing summary and regular suits explains the choice, and the one on court fee for a recovery suit in Delhi will help you budget.
If you'd like your invoices, ledger and correspondence checked for limitation before you act, send them to Advocate B.K. Singh's team through the contact page.
Frequently asked questions
What is the limitation period for recovering money in India?
For most business money claims it's three years under the Limitation Act, 1963. When it starts depends on the claim: delivery of goods, the end of the credit period, completion of work, or the day a loan was made. A suit filed after that has to be dismissed.
Does a legal notice extend limitation?
No. Your legal notice, reminders and emails don't stop or restart the clock. Only a written acknowledgment signed by the debtor, or a part payment made before expiry, restarts it. Time spent in pre-institution mediation under Section 12A is also excluded.
Can I recover money after 3 years?
Only if the clock was restarted in time, say by a signed acknowledgment or a part payment before the three years ended. A written, signed promise to pay a time-barred debt also creates a fresh claim under Section 25(3) of the Contract Act. Without one of those, the court can't decree it.
Does a WhatsApp message admitting the debt count as an acknowledgment?
It can. It has to come from the debtor or its authorised person, clearly admit a liability, and be sent before limitation expired. You'll need a certificate under Section 63 of the Bharatiya Sakshya Adhiniyam to prove it. A signed letter or email is easier.
Is limitation counted from the invoice date or the due date?
Usually the due date. Where a credit period was agreed, the three years run from when it ends, under Article 15. Where none was agreed, Article 14 runs from the date of delivery.
What is the limitation for recovering a loan given to a company?
Three years from the day the loan was made, even if it was payable on demand. Interest payments and acknowledgments can restart the period, and in some cases so can entries in the borrower's signed balance sheet. Check the borrower's records for them.
Can the court condone delay in filing a recovery suit?
No. Section 5 of the Limitation Act lets courts condone delay in appeals and applications. Not suits. A time-barred suit must be dismissed even if the defendant doesn't object. Only the specific exclusions in the Act, like time spent in a wrong court under Section 14, can help you.
How long do I have to execute a money decree?
Twelve years from when the decree becomes enforceable, under Article 136 of the Limitation Act. Don't wait that long, though, because delay gives the debtor time to move assets. Courts are expected to decide execution applications ordinarily within six months.
Advocate B.K. Singh
Founder of B.K. Singh & Associates. MCA, LL.B., LL.M. More than twenty years in practice before the Supreme Court, the Delhi High Court, district and commercial courts in Delhi NCR, and tribunals.
This guide explains the law in general terms and is not legal advice. For advice on your own papers, contact the team.