Limitation period for recovery of Debt in India is governed by the Limitation Act,

1963. The Limitation Act, 1963 specifies certain prescribed period within which any
suit appeal or application can be made. A banker is allowed to take legal action by
filing a suit, prefer an appeal and apply for recovery only when the documents are
within the period of limitation.
If the documents are expired or are time barred, the banker cannot take any legal
course of action to recover the dues. Banks should be careful to ensure that all legal
loan documents held are valid and not time barred. Banks should ensure that all loan
documents are properly executed and they are within the required limitation period as
per the limitation act.
Banks are expected to hold valid legal documents as per the provisions of the
limitation act.

Extension of Limitation Period:

Well, can this period of limitation be extended? Yes the limitation period can be
extended in the following manners:

Acknowledgement of debt:
By obtaining acknowledgement of debt in writing from the borrower before expiry of
the prescribed period of limitation, limitation period is extended.
Part payment:
Limitation period is extended when borrower of his duly authorized agent makes part
re- payment of the loan, before expiry of the documents. Evidence of such payments
should be under the signature of the borrower or his authorized agent.

If the limitation period expires:

If limitation period expires, it can be extended only by executing fresh set of
documents. Fresh limitation period will be available from the date of execution of
such documents.

Period of limitation for certain documents

Nature Of Documents Limitation period

A Demand Promissory Note
A Bill of exchange payable at sight or
upon presentation
An Usance Bill of exchange
Three years from the date of DP
Note.
Three years when the bill is
presented
Three years from the due date
 Three years from the loan was
Money payable for money lent
made.
Three years from the date of
A guarantee
invocation of the guarantee
A mortgage – enforcement of payment of Twelve years from the date the
money money sued becomes due
Twelve years from the money
A mortgage – foreclosure secured by the mortgage becomes
due
A mortgage – possession of Immovable Thirty years when the mortgagee
property becomes entitled to possession

If Courts are closed

If the court is closed on the date of expiration of limitation period, suit, the suit appeal or
application may be made, on the day when the court reopens