LAW OF LIMITATION
(This topic is not dealt with in detail in the class. A mention of time-barred debt is made in The Contract Act. At that stage, the context and its significance will be referred to. For a lawyer who earns his bread and butter at the courts, this may be the most important act. For a student of Business Management it serves as information)
The 'Law of Limitation' prescribes the time limit for
different suits within which an aggrieved person can approach the court for
redress or justice. The suit, if filed
after the exploration of time-limit, is struck by the law of limitation.
It's basically meant to indirectly punish persons who go
into a long slumber over their rights. The statutory law was established in
stages. The very first Limitation Act was enacted for all courts in India in
1859. And finally took the form of the Limitation Act in 1963.
TIME-BARRED DEBT:
Limitation period:
In computing the limitation for any suit, the date from
which such period is to be reckoned shall be excluded. The suit can be filed on
the anniversary day. The limitation in respect to debts is as follows:
Loan payable in
instalments
3 years from the date on which the relative instalment falls
due.
Money repayable by
the mortgagor
On-demand and on instalment repayments are agreed to - 12
years from the date of the mortgage deed.
In case of default of
an instalment of principal or interest on a mortgage
The whole of mortgage amount becoming due - 12 years from
date of default.
Personal liability of
the borrower
3 years from the date of acknowledgement of debt/demand
promissory note.
Others including
where the lender has given a cheque
3 years from the time the cheque is paid.
Acknowledgement of
debt
Impliedly includes the acknowledgement of security for the
debt. An acknowledgement signed by one of the joint borrowers or partners does
not bind the others unless it can be established by evidence that the person
signing was authorised expressly or impliedly to sign.
Part-payment
If the debtor makes a part payment before the expiry of the
limitation period, either by himself or by his agent duly authorised on his
behalf or in the handwriting of himself or such agent, a fresh period of
limitation starts from the date of such part payment.
A credit entry by itself does not save limitation.
Pay in slip signed by the borrower or his duly authorised
agent amounts to part-payment.
Pay in slip signed by an employee of a partnership firm or
a company does not save limitation.
It needs to be noted that acknowledgement of debt and part
payment should be obtained before the expiry of the limitation period as they
cannot revive the limitation if already expired.
Fresh promise to pay
Even after the expiry of limitation, the liability can be
enforced if there is a fresh promise to pay the outstanding debt already barred
by limitation, because u/s 25(3) of the Contract Act, a time-barred debt is a
valid consideration for a fresh promise to pay.
No comments:
Post a Comment