DRT Limitation Period and Key Timelines

The question behind most searches for the DRT limitation period has a two part answer. A bank’s claim to recover the money it lent is ordinarily governed by a three year period. A claim to enforce a mortgage over immovable property carries twelve years. Both operate in the Debt Recovery Tribunal, because Section 24 of the Recovery of Debts and Bankruptcy Act 1993 applies the Limitation Act 1963 to applications made to the Tribunal.

That one section does a great deal of work. It means a time barred claim is a complete answer to a bank’s Original Application, and Section 3 of the Limitation Act requires the Tribunal to dismiss such a claim even if the borrower never raises the point. It also means everything the Limitation Act says about when time begins, when it restarts and when it is excluded applies to a recovery application, which is where most of the real fighting happens.

When time starts running

Time does not begin when the bank decides to sue, and it does not begin on the date of sanction in the loose way people assume. Which Article of the Limitation Act applies depends on the nature of the facility and the wording of the documents.

Claim	Article	Period	Runs from
Money payable for money lent	19	3 years	When the loan is made
Money lent under an agreement that it is payable on demand	21	3 years	When the loan is made
Enforcement of money charged upon immovable property	62	12 years	When the money sued for becomes due
Residuary, where no other Article fits	113	3 years	When the right to sue accrues

Two practical points follow. First, a bank holding a mortgage usually has two claims running on different clocks: a personal claim against the borrower and guarantors, and a claim against the property. An old account can be dead as a personal claim while the security remains enforceable. That single distinction decides a surprising number of cases.

Second, for a term loan repayable in instalments, time can run separately for each instalment unless there is an acceleration clause and the bank has actually invoked it by recalling the loan. This is a fact sensitive area and the loan documents decide it, so read the recall notice against the sanction letter rather than arguing from general principle.

The three ways a dying clock restarts

Most limitation arguments are not about the original period. They are about whether something the borrower did reset it.

Acknowledgment in writing, Section 18

An acknowledgment of liability, in writing and signed by the party or an agent, made before the period expires, gives a fresh period running from the date of signature. The usual candidates are:

• annual balance confirmation letters, which banks obtain precisely for this purpose,
• a revival letter signed at the branch,
• entries in a company’s audited balance sheet where the debt is admitted without qualification,
• correspondence, including an offer of one time settlement, that admits the liability.

The timing requirement is absolute. An acknowledgment signed after limitation has already run does not revive a dead claim under Section 18.

Part payment, Section 19

Payment of interest as such, or part payment of the principal, made before the period expires, also gives a fresh start. There is a formality attached: for part payment of principal, the fact of payment must appear in the handwriting of, or in a writing signed by, the person making it. A credit entry generated by the bank alone is on weaker ground than a payment made by the borrower’s own cheque or transfer instruction. Recoveries the bank makes by selling security are not the same thing as payment by the debtor.

A fresh promise, Section 25(3) of the Contract Act 1872

This is the trap. A promise in writing and signed by the debtor to pay a debt that is already time barred is enforceable as a contract, even though an acknowledgment under Section 18 at that stage would be worthless. So a borrower who writes “I will pay Rs 15 lakh in full settlement” long after the claim went stale may have created a fresh enforceable obligation with a stroke of a pen. Settlement correspondence on an old account needs to be drafted with that provision in mind.

Time that does not count

• Section 14. Time spent bona fide prosecuting the same matter in a forum that lacked jurisdiction is excluded. A suit filed in the civil court and later returned for want of jurisdiction is the classic example.
• Section 12. For appeals, the time taken to obtain a certified copy of the order is excluded.
• The pandemic exclusion. The Supreme Court directed that the period from 15 March 2020 to 28 February 2022 be excluded in computing limitation for all proceedings, with a minimum balance of 90 days available after that. Accounts that went bad around 2019 and 2020 still need this checked before anyone declares a claim time barred.
• Moratorium under the IBC. Once a moratorium under Section 14 of the Insolvency and Bankruptcy Code 2016 is in force against a corporate debtor, proceedings cannot continue against it. The effect on limitation depends on the order and on the outcome of the insolvency process.

Limitation is a defence under SARFAESI too

Borrowers often assume that enforcement without a court is enforcement without limitation. It is not. Section 36 of the SARFAESI Act 2002 says a secured creditor is not entitled to take any measure under Section 13(4) unless the claim in respect of the financial asset is made within the period of limitation under the Limitation Act.

So a bank cannot revive a stale debt by issuing a Section 13(2) notice. What it can often do, where there is a mortgage, is proceed on the twelve year clock, which is why the borrower’s reply has to address the security claim and not just the money claim. Where enforcement has already begun, limitation becomes one of several arguments in a Section 17 application, alongside the grounds to challenge a bank auction sale.

Beyond the DRT limitation period: clocks inside the tribunal

Limitation gets you to the tribunal door. A separate set of timelines applies inside.

The Original Application is filed under Section 19 of the RDB Act. The summons requires the defendant to show cause within 30 days of service. The 2016 amendment tightened these internal timelines considerably, and the Tribunal’s power to extend is meant to be exercised for reasons recorded, not as routine. A defendant who lets the 30 days pass while looking for an advocate starts the case on the back foot.

Section 19(24) directs the Tribunal to endeavour to dispose of the application within 180 days of receiving it. Read that word carefully. It is an endeavour, not a guarantee, and contested matters at most tribunals run longer. The design assumption is that evidence goes in by affidavit and the case is decided on documents, so the pleadings and annexures filed in the first two months usually determine the outcome.

When the Tribunal decides, it issues a Recovery Certificate to the Recovery Officer, who executes it by attachment and sale, appointment of a receiver and other modes under the Act. An order of the Recovery Officer can itself be appealed to the Tribunal under Section 30 of the RDB Act within 30 days.

Step	Provision	Time limit
Show cause and written statement in an OA	RDB Act s.19	30 days from service of summons
Tribunal to endeavour to decide the OA	RDB Act s.19(24)	180 days from receipt
Borrower’s challenge to SARFAESI measures	SARFAESI s.17	45 days from the measure
Appeal against a Recovery Officer’s order	RDB Act s.30	30 days
Appeal from DRT to DRAT, recovery case	RDB Act s.20 and s.21	30 days, with 50 percent pre-deposit reducible to not less than 25 percent
Appeal from DRT to DRAT, SARFAESI case	SARFAESI s.18	30 days, with 50 percent pre-deposit reducible to not less than 25 percent

The pre-deposit deserves emphasis. In a SARFAESI appeal it is calculated on the debt due as claimed by the secured creditor or as determined by the DRT, whichever is less, and the DRAT may reduce it but not below 25 percent. In practice this means the DRT is the forum where a borrower’s full case must be put, because appealing is expensive in cash terms before a single argument is heard. We appear in these matters before DRT Jabalpur and the appellate tribunal, and this work sits within our banking and debt recovery practice.

After the Recovery Certificate

A Recovery Certificate is not the end of the timeline. It creates a fresh cause of action of its own. Where the debtor is a company, a certificate issued by the DRT can support an application under Section 7 of the Insolvency and Bankruptcy Code 2016, and that application carries its own three year period running from the date of the certificate, since Section 238A applies the Limitation Act to proceedings before the adjudicating authority. That authority is the NCLT for corporate debtors, and the boundary between the two forums is set out in the note on what the NCLT decides.

The practical lesson for a creditor is not to let a certificate sit unexecuted for years. The practical lesson for a debtor is that a certificate obtained long ago does not simply expire because nothing happened.

Where limitation cases are actually lost

• The bank produces a confirmation nobody signed. Undated or unsigned balance confirmations are common in old files, and they do not satisfy Section 18.
• The borrower’s own settlement letter revives the claim. Written after expiry, it can create a fresh promise under Section 25(3) of the Contract Act.
• The guarantor point is never taken. Limitation against a guarantor under a guarantee payable on demand generally runs from the date the guarantee is invoked, which can be later than the borrower’s default. The wording of the deed decides it, and it is worth reading before conceding.
• Limitation is argued but never pleaded. Take the point in the written statement, with the dates set out, rather than raising it for the first time in argument or in appeal.
• Nobody prepares a date chart. Disbursement, due dates, last payment, last signed acknowledgment, NPA date, recall notice, Section 13(2) notice, filing date. One page. Almost every limitation argument either survives or dies on that page.

This post is general information about the DRT limitation period and the procedural timelines around it. It is not legal advice on any specific account, and limitation turns entirely on dates and documents that differ from file to file. To discuss your own dates, use the contact page.