LIMITATION BARS

THE REMEDY, IT
DOES NOT
EXTINGUISH THE
RIGHT
SUBMITTED TO-Dr. Karan
Jawanda

SUBMITTED BYAdi
tya Dassaur
Ro
ll No-206/10
8 th
Semester
SectionA

ACKNOWLEDGMENT
I would like to express my Gratitude to my teacher, Dr. Karan Jawanda, who gave me the
golden opportunity to do this wonderful project on the topic Limitation bars the remedy, it
does not extinguish the right which also helped me in doing a lot of Research and I came to
know about so many new things. Secondly I would also like to thank my parents and friends
who helped me a lot in finishing this project within the limited time.

INTRODUCTION
The Laws of Limitation are statutes of peace and repose, statues that manifest the policy of
law in lending its aid only to those who are vigilant and not those who sleep over their
rights(Vigilantibus Non Dormentibus Juria Subvenient). Limitation laws suggest that all
disputes/claims/remedies should be kept alive only for a legislatively fixed period of time, for
otherwise disputes would be immortal when man is mortal. Though arbitrarily fixed limits
may seem unfair to some, however they are most pragmatic insofar as there is rarely any
justice in stale claims and evidence also gets destroyed, hence keeping remedy alive serves
no useful purpose.
Law of Limitation is rigid courts have no power to free the litigant from its shackles by
using its inherent powers, however the rigidity of the law has been cut down by providing the
principles of exception & Exclusion1

these principles make just allowances ex debito

justitate and are based on one rational principle or the other.

LIMITATION BARS THE REMEDY UT DOES NOT EXTINGUISH THE RIGHT
It is well- settled principle that the rules of limitation are not meant to destroy the rights of
parties. They are meant to bar the remedy for those who seek dilatory tactics to enforce their
rights within a specified time prescribed by the legislature. Section 3 of the Limitation Act
only bars the remedy but does not destroy the right to which the remedy relates. The word
right means a primary or substantive right only.5 In case a loan advanced by a bank which
is time-barred, the bank can adjust it on maturity of the fixed deposit receipts deposited by
the guarantor with the bank as security. It is not obligatory for the bank to file suit to recover
the loan. It is no doubt true that the Limitation Act bars the remedy but not the right. The
right remains, but it cannot be enforced by judicial process. Thus, in the Court a time barred
mortgagee has no legal status and no right. He cannot sue and his presence as a defendant
cannot enlarge or in any way affect proceedings which without him are defective and must
fail. The vital section is Section 3 upon which the whole Limitation Act depends for its
efficacy. The section requires that every suit instituted after the period of limitation shall be
dismissed and every application made after such period of Limitation shall also meet a
similar fate.7 But after the expiry of limitation for suit for the recovery of debt if the debtor
1 S.4-24 of the Limitation Act, 1963

pays the debt to the creditor, he cannot claim back the amount subsequently on the ground of
payment of atim e-barred debt. The right to apply for execution is not merely a matter of
procedure and the immunity from execution which the judgment-debtor has acquired by lapse
of time is a substantive right which cannot be taken away or impaired in the absence of
express words or necessary implication. in the statute enlarging the period of limitation. A
creditor having lien over his debtors property for debt, loses his right on passing a decree for
the debt. Thereafter, the creditors right is confined to enforcing the decree. If the decree is
time-barred, he cannot fall back upon his lien. If a suit for possession of any property
becomes barred by limitation, the right to the property itself is destroyed except in special
cases. The fact that a remedy is barred by limitation does not by itself put an end to the right
to which the remedy relates2.
S.33 mandates the court to dismiss a suit even though limitation is not set up as a defense.
Normally in actual practice court frames a preliminary issue on the question of limitation as
the same relates to a bar of law, if the bar of limitation is apparent on the face of the plaint it
may also entail Rejection u/o 7 R 11 of the CPC. Otherwise evidences are taken which
leads to a dismissal or the suit continues.
It is pertinent to remember that Limitation Act does not extinguish the right but negatives its
remedial qualities by turning it into an imperfect right i.e right without a corresponding
remedy. Since it seemingly is at cross purposes with the celebrated maxim of ubi jus ibi
remedium courts have constantly held that when there are two views possible one that saves
the

remedy

should

be

preferred.

Section 27 of the Limitation Act provides that when the period limited to a person for
instituting a suit for possession of any property has expired, his right to such property is
extinguished. And the authorities have held-and rightly, that when the property is incapable of
possession, as for example, a debt, the section has no application, and lapse of time does not
extinguish the right of a person thereto. It is the the only exception to the general effect of the
act in barring only the remedy and not the right. This section, in cases of recovery of
2 Rameshwar Bux v. Ganga Bux, AIR 1950 All 598 (FB)
3 Ibid

possession, if an action is not brought within the period stipulated destroys the very right.
Also known as the doctrine of adverse possession if use of property/its care or attempt to
regain is foregone for a period and an adverse title being established is not opposed to
through the instrumentality of law or otherwise. The other person does acquire a valid title.
This is baffling for a reasonable man, how does some years of illegality turn into a legality.
This concept of adverse possession is affront to the notions of justice and equity and run
counter to modern ideas of propriety rights. The Supreme Court has gone to the extent of
saying that adverse possession is an area where justice and law do not happily co-incide.
Keeping in mind this observation and the inherent unjust nature of this principle, courts have
been consistently insisting on a very rigid satisfaction of conditions only after which
adverse possession ripes into title. These conditions have to be specifically claimed and
proved.

Under Section 25(3)4 , a barred debt is good consideration for a fresh promise to pay the
amount. When a debtor makes a payment without any direction as to how it is to be
appropriated, the creditor has the right to appropriate it towards a barred debt. It has also been
held that a creditor is entitled to recover the debt from the surety, even though a suit on it is
barred against the principal debtor. And when a creditor has a lien over goods by way of
security for a loan, he can enforce the lien for obtaining satisfaction of the debt, even though
an action thereon would be time-barred5.
In American Jurisprudence,6it is aptly stated:
'A majority of the courts adhere to the view that a statute of limitations as distinguished from
a statute which prescribes conditions precedent to a right of action, does not go to the
substance of a right, but only to the remedy. It does not extinguish the debt or preclude its
enforcement, unless the debtor chooses to avail himself of the defence and specially pleads it.
4 Indian Contract Act

5 Bombay Dyeing and Mfg Co. Ltd. v. State of Bombay AIR 1958 SC 328

6
Vol. 34, page 314

An indebtedness does not lose its character as such merely because it is barred, it still affords
sufficient consideration to support a promise to pay, and gives a creditor an insurable interest.'
In Corpus Juris Secundum, Vol. 53, page 922, we have the following statement of the law:
'The general rule, at least with respect to debts or money demands, is that a statute of
limitation bars, or runs against, the remedy and does not discharge the debt or extinguish or
impair the right, obligation or cause of action. '

The position then is that under the law a debt subsists notwithstanding that its recovery is
barred by limitation.
The modes in which an obligation under a contract becomes discharged are well defined, and
the bar of limitation is not one of them. The following passages in Anson's Law of
Contract7, are directly in point:
'At Common Law, lapse of time does not affect contractual rights. Such a right is of a
permanent and indestructible character, unless either from the nature of the contract, or from
its terms, it be limited in point of duration. But though the right possesses this permanent
character, the remedies arising from its violation are withdrawn after a certain lapse of time;
interest reipublicae ut si finis litium. The remedies are barred, though the right is not
extinguished."
"And if the law requires that a debtor should get a discharge before he can be compelled to
pay, that requirement is not satisfied if he is merely told that in the normal course he is not
likely to be exposed to action by the creditor." The rules of limitation are not meant to destroy
the rights of the parties. They are meant to see that the plaintiff does not take dilatory tactics
but seeks remedy within the period stipulated by the Legislature. The rules of limitation thus
will only bar the remedy but does not extinguish the right. The right continues to exist even
though the remedy is barred by limitation8. Therefore, a debtor may pay the time barred debt
and cannot claim it back on the plea that it was barred by limitation. Similarly when a debtor
has several debts due to a creditor and he makes payment without any specification, then the
7
19th edition, page 383

creditor can adjust it towards any of the debts even if recovery of such debt is barred by time.
A barred debt may constitute a valid consideration for a fresh contract9. However, there are
special cases in which on the remedy being barred right itself is extinguished as contemplated
in s. 27 of the Limitation Act 196310.
Therefore except in cases when the right itself is extinguished by lapse of time the remedy
only is barred. So a debt does not cease to exist only because its recovery is barred by the
statute of limitation11. But although the existence of the right is not affected by the remedy
becoming barred by limitation, the fact that remedy is barred may prevent the right being
availed of in some other way also. However, in what ways the right can be availed of or
whether the availaibility of the right in a particular manner is preserved by the suitbeing
barred by limitation depends upon branches of law and not to be looked into in the statute of
limitation. If a barred debt can be recovered by any other means than by suit, the limitation
Act does not prevent anybody from recovering such debt12. In Punjab National Bank v
Surendra13 the Supreme Court has also expressed the view that the Limitation Act bars only
the remedy of suit, appeal or application but does not extinguish the right to which the
remedy relates. In that case the Bank granted a loan to a person for which the respondent and
his wife became the guarantors and executed a security bond in which certain Fixed Deposit
Receipts were pledged as security for the loan. The borrower failed to repay the loan. The
Bank then adjusted the amount of the FDRs towards its dues and the balance was credited to
the savings bank account of the respondent. The respondent lodged a complaint against the
8
Hariraj Singh v Sanchalak AIR 1988 All 246.
9
First National Bank v Seth Sant Lai AIR 1959 Punj 328.

10
Jawaharlal v Bhagchand AIR 1981 Del 334.
11
Nur Din v Allah Ditta AIR 1932 Lah 419.
12
First National Bank v Seth Sant Lai AIR 1959 Punj 328.

13
Punjab National Bank v Surendra AIR 1992 SC 1815; 1993 Supp (1) SCC
499

Bank, the Chairman, Managing Director of the Bank by name and other officers in the
appropriate Criminal Court that the debt became barred by limitation and the bank with
dishonest intention to save itself from the financial obligation neglected to recover the loan
from the principal debtor and allowed the claim to be barred by limitation and embezzled the
amount of the FDRs and thereby committed offences punishable under ss. 109,114 and
409,1.P.C. The Magistrate without adverting whether the allegations made out a prima facie
case of an offence or not issued process against the Bank officers. The High Court declined to
quash the complaint. The Supreme Court has quashed the complaint holding that the
allegation did not make out any criminal offence having been committed by the Bank or its
officers. The Supreme Court has made it clear that the rules of limitation are not meant to
destroy the rights of the parties, that s. 3 of the Limitation Act only bars the remedy and not
the right which the remedy relates to, that though the remedy to enforce the debt by judicial
process is barred, the time barred debt does not cease to exist, only exception being s. 27 of
the Limitation Act 1963 and that the right can be exercised in any other manner than by
means of the suit. It has also been observed that when the creditor is in possession of an
adequate security he could adjust the time barred debt from the security in his possession and
custody and credit the balance in favour of the guarantor and that there was no occasion for
the creditor committing any violation of law nor could he be said to have converted the FDR
dishonestly for his own use.
The Punjab and Haryana High Court has also held that it is an acknowledged position of law
that the law of limitation only bars a remedy and does not take away the rights of the courts
to adjudicate die rights according to law but do not revive the rights of the parties unless
permitted by a particular statute14. It does not extinguish the right but renders it
unenforceable15.

The Bombay High Court in the case of J.K. Chemicals Ltd. v. CIT16, again considered the
14
Tara Wanti v. State of Haryana AIR 1995 P & H 32 (FB)
15
C.I.T. v. Suggali Sugar Works ltd. AIR 1999 SC 1144
16
[1966] 62 ITR 34

question. The assessee-company, which kept its accounts on the mercantile system, debited
the accounts as and when it incurred any liability on account of wages, salary or bonus due to
its employees even though the amounts were not disbursed in cash to the employees, and
obtained deduction of the amounts so debited in the respective years in computing its total
income. Certain portion of the wages, salary and bonus, so debited, was in fact not drawn by
the employees. On June 30, 1957, a sum of Rs. 5,929 which had remained undrawn but had
been allowed to be deducted during the accounting years 1945 to 1953 was credited to the
profit and loss account of the said year. The Department included this amount in the total
income of the accounting year on the ground that the trading liability in respect of which
deduction had been allowed had ceased to exist, and under section 10(2A), the amount in
question

should

be

deemed

to

be

income.

The Bombay High Court held that, in order that an amount may be deemed to be income
under section 10(2A), there must be a remission or cessation of the liability in respect of that
amount. The mere fact that more than three years had elapsed since the accrual of the liability
and that the debts had become unenforceable against the assessee under the general law does
not constitute cessation of the trading liability within the meaning of section 10(2A). A mere
entry of credit in the accounts in respect of the amount would also not bring about a
remission or cessation of the liability. Section 10(2A) was not, therefore, applicable and the
amount was not liable to be assessed as income of the accounting year in which the credit
entry was made.

BIBLIOGRAPHY

STATUTES/RULES
1. The Limitation Act, 1963

BOOKS
1. Mulla; The Code of Civil Procedure (17th Ed.), 2007 Lexis Nexis Butterworths
Publications
2. C.K. Takwani; Civil procedure (6th Ed),2009, Eastern Book Company Lucknow.
3. Sarkar; Code of Civil Procedure (11th Ed), 2006 Wadhawa Publications Nagpur.
4. M.P. Jain; The Code of Civil Procedure (2007), Wadhawa Publications, Nagpur
WEB SITES
1.
2.
3.
4.

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