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What is the limitation period for filing a recovery suit in India?

What is the limitation period for filing a recovery suit in India?

08-Dec-2024

Recovery

Answer By law4u team

In India, the limitation period for filing a recovery suit (to recover money or property) is governed by the Limitation Act, 1963. The limitation period depends on the nature of the claim. Here are the key provisions: For a suit based on a contract (e.g., recovery of money under a contract): The limitation period is 3 years from the date when the cause of action arises. This means the period starts from the day the debt is due or the contract is breached. For a suit based on a written agreement (promissory note, bond, etc.): The limitation period is 3 years from the date of the default or dishonor. For example, in the case of a dishonored cheque (under Section 138 of the Negotiable Instruments Act), the limitation period is 3 years from the date of the dishonor. For a suit for recovery of money based on a decree (if a judgment has been passed in a prior suit): The limitation period for executing the decree (i.e., to recover money as per a court's judgment) is 12 years from the date of the decree. For a suit for recovery of possession of immovable property: The limitation period is generally 12 years from the date when the defendant's possession becomes adverse to the plaintiff’s rights (i.e., when the possession is unauthorized or unlawful). For recovery of money in case of fraud: If the recovery suit is based on fraud, the limitation period is 3 years from the date when the fraud is discovered or could have been discovered with due diligence. For recovery of money in case of a contract under a special law: If the recovery suit is governed by a specific law (like under the Indian Contract Act, 1872 or Negotiable Instruments Act, 1881), the limitation period may vary based on the nature of the agreement or transaction. Key Points: 3 years is the general limitation period for filing recovery suits based on contracts, debts, or dishonored cheques. For suits related to property recovery, the limitation period is typically 12 years. The period starts from the time the cause of action arises, such as the default or dishonor. If the limitation period expires, the person is barred from filing the suit unless they can show valid reasons for delay (such as fraud or disability).

Answer By Anik

Dear Client, A money recovery suit in India is basically the legal procedure filed by the creditor, that is, plaintiff for recovering his debts, claimed by a debtor who may be considered as defendant. The typical grounds that generally constitute these suits range from breach of contract to a promissory note, or goods and services provided for payment. Mainly, such suits operate based on Indian Contract Act 1872 and Code of Civil Procedure CPC 1908. The limitation period, under the recovery suit filed in India, is mainly governed by the Limitation Act, 1963. The exact duration would vary according to the nature of a claim and circumstances surrounding an action. Limitation Periods for Recovery Suits 1. General Recovery of Money: • Period: The limitation period of filing a suit for recovery of money is three years. • Applicable Article: This is found under Article 22 of the Limitation Act, which says that the limitation runs from when the amount becomes payable or the date of demand for the payment, whichever applies depending on the facts of the case. 2. Recovery Suits Involving Contracts: In the case of a contract-based suit, Article 113 of the Limitation Act applies where the said recovery suits are also limited to three years after the right to sue accrues. 3. Suits for Declaration and Recovery of Possession: Where a suit embraces both declaration of title and recovery of possession, the period of limitation is extended to twelve years from the date when possession becomes adverse to the plaintiff, Article 65. 4. Special Cases: In some cases like undue influence or fraud claims, some other articles may be applicable to the respective claim which might change the limitation of time period depending on when such cause of action arises. Important Considerations • Commencement of Limitation: The limitation period typically begins when the cause of action arises, which can be influenced by various factors such as demand notices or acknowledgment of debt. • Legal Notices: Sending a legal notice before filing a suit does not extend the limitation period; it merely serves as a formal request for payment. • Consequences of Delay: Filing a suit after the expiration of the limitation period can lead to dismissal on grounds of being time-barred unless specific exceptions apply. In summary, while most recovery suits in India are subject to a three-year limitation period, certain circumstances may warrant longer periods, particularly in property disputes or complex contractual matters. It is crucial for plaintiffs to be vigilant about these timelines to ensure their claims are not barred by limitation. Hope this answer helps you.

Answer By Ayantika Mondal

Dear Client, Money recovery suit is a legal remedy available under Indian law, which provides for the recovery of debts or dues wrongly withheld or unpaid. A civil suit is filed before the court of competent jurisdiction by the creditor, who is known as a plaintiff against a debtor known as defendant with the objective of recovering the money owed under a contract, loan, or any other financial obligation. Limitation Act, 1963 deals with limitation to institute a recovery suit. This sets the timeframe by which a party can initiate a suit for recovering of money. It varies due to the type of action involved, kind of contract or other surrounding facts. General Limitation Period for Recovery of Money Article 19 in the Schedule to the Limitation Act 1963 sets limitations with regard to bringing a recovery suit within three years from: Arising of cause of action arising through the debt or money or on the falling due time. Examples of when causes of action arise are recovery of loan advanced, money recoverable in some contract or agreement, or a situation where invoices remain unpaid over goods and services. Calculation of the Limitation Period • The three-year period starts from the day the money becomes payable, which may be: i. The date specified in the agreement for repayment. ii. Date of breach of contract or failure to pay. iii. The date when debt is acknowledged, so long as acknowledgment is made in writing and signed by the debtor. • In case of part payment or written admission of liability within the limitation period, the period runs again and the limitation of three years runs from the date of such payment or admission in writing under Section 18 of the Limitation Act. Exceptions and Variations 1. Recovery Based on Mortgage (Article 62): If the recovery relates to mortgaged property, then the limitation period is 12 years from the date the money becomes due. 2. Summary Suits (Order XXXVII of the CPC): Even though this procedure is faster, the limitation to bring a summary suit still remains three years because it is based on the transaction or contract of the financial undertaking. 3. Recovery of Arrears of Rent (Section 52): The limitation period for rent arrears shall run from the date on which the arrears became due. 4. Government Claims: For suits instituted by the Government, the limitation period may depend on specific statutes relevant to the claim. Consequences of Filing Beyond the Limitation Period If a recovery suit is started after the expiry of the time period of limitation, it is provided under Section 3 of the Limitation Act that the defendant can urge the plea of limitation. The courts are, therefore directed to dismiss such time barred suits unless the plaintiff satisfies the court with a valid reason for delay in instituting the suit based on the reasons that have been envisaged under Section 5 of the Limitation Act, which condone the delay in certain cases. Conclusion The limitation period for filing a recovery suit in India is generally three years from the date the money becomes due. Parties intending to recover money must act promptly within this prescribed time frame to avoid dismissal of their suit. It is advisable to seek legal assistance to draft the plaint, issue legal notices, and ensure compliance with procedural requirements for filing the recovery claim within the applicable limitation period. Hope this answer helps you.