Under the Schedule to the Limitation Act, 1963, a suit for the price of goods sold and delivered, or for work done, must be filed within three years. Where no credit period was agreed, the period runs from the date of delivery (Article 14); where credit was agreed, from the expiry of the credit period (Article 15); for other contract claims, from when the breach occurred (Article 55). A written acknowledgement (Section 18) or a part payment (Section 19) made before expiry starts a fresh three years.
How limitation works in India
Each invoice has its own limitation date unless the parties maintain a mutual, open and current account, in which case Article 1 runs from the close of the year in which the last item was entered. Acknowledgements and part payments are the usual lifelines: a signed ledger confirmation, a reply to a notice admitting the dues, a cheque (even one that bounces), a TDS entry or a part payment by bank transfer each restart the period if made before it expires. For arbitration, the period runs until the notice invoking arbitration is served. For Section 138 complaints, separate timelines apply.
| Situation | Three years run from |
|---|---|
| Goods delivered, no credit agreed | Date of delivery |
| Goods delivered, 60 days credit | Day 60 after delivery |
| Running account, mutual and open | End of the year of the last entry |
| Written acknowledgement on a later date | That date |
| Part payment on a later date | That date |
Why it matters for getting paid
Suppliers lose enforceable claims every year by waiting out "good relations". An invoice from more than three years ago with no acknowledgement or payment since cannot be sued on. The practical rules are to review the ageing report every quarter, obtain ledger confirmations at year end, and send a legal notice well before the three years end. Use the limitation period calculator and read about acknowledgement under Section 18.
How FundRaksha uses it
The first thing FundRaksha's advocate checks is the limitation date of each invoice and whether any acknowledgement or payment has extended it. Claims close to expiry are prioritised, and the notice is drafted to elicit an acknowledgement. The company has reviewed ₹50 Cr+ of invoices for 1,000+ businesses; the free consultation includes this check.
Worked example (hypothetical)
A Ludhiana knitwear supplier delivered ₹5,00,000 of goods on 15 March 2023 on 30 days' credit, so the dues fell due on 14 April 2023 and limitation would expire on 14 April 2026. On 10 January 2025 the buyer paid ₹50,000 by NEFT with the remark "part payment against outstanding". That part payment restarts the period: the supplier can now sue for the balance ₹4,50,000 until 10 January 2028. Without it, a suit filed in May 2026 would have been dismissed as time-barred regardless of how clear the debt was.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.