Business owners assume they have plenty of time to chase an unpaid invoice. They don't. Under the Limitation Act 1963, the right to sue on a commercial debt typically expires three years from the date the cause of action arose. Once it lapses, no court will hear the matter — regardless of how clear-cut the underlying claim is.
- Article 14 — Suit for price of goods sold and delivered: 3 years from delivery (or agreed payment date, if later)
- Article 18 — Suit for compensation for breach of contract: 3 years from breach
- Article 23 — Suit on a money decree: 12 years
- Article 36 — Suit by surety: 3 years from date the surety paid
For unpaid invoices — the date payment was due per the invoice or contract, not the date you finally lost patience. For services — completion of the service or agreed milestone date. For bounced cheques — date of dishonour for the civil claim; the 30-day demand notice triggers the separate Section 138 criminal clock.
Claim viability without written acknowledgment
Indicative funded-matter observation. Recovery probability declines steeply as the 3-year limitation mark approaches; a written Section 18 acknowledgment resets the entire curve to month zero.
Section 18 of the Limitation Act says: if the debtor acknowledges the debt in writing before limitation expires, the clock restarts from the date of acknowledgment. The acknowledgment doesn't have to be elaborate. A WhatsApp reply admitting 'yes, will pay soon' is enough. A signed annual balance confirmation is gold.
What counts as written acknowledgment
- A WhatsApp or email reply confirming the debt and intent to pay
- A balance confirmation letter (those routine year-end statements)
- A part payment with a covering note attributing it to specific invoices
- A signed reconciliation statement
- A response to a demand notice that admits the debt while disputing the amount
What doesn't
- Verbal acknowledgment
- Unsigned reminder emails sent by you
- Your own invoice — that's a claim, not an admission
- A response that purely denies the debt
- 1Send a formal demand notice via registered post with acknowledgment due.
- 2Ask explicitly for a balance confirmation reply.
- 3Offer a small concession — 5 to 10 percent rebate for immediate payment — to provoke a written response.
- 4If you get any reply admitting the debt, save it with date. The clock restarts.
- 5If you get a part payment, have the counterparty confirm in writing that it is against the disputed invoices.
The civil claim is dead. Section 138, if a cheque exists, may still be alive under its separate limitation. Criminal complaints under IPC Section 420 (cheating) may still be available if you can prove deceit at inception. The IBC route is closed — the Supreme Court in B.K. Educational Services v. Parag Gupta (2018) confirmed that debts time-barred under the Limitation Act cannot be revived through IBC.
For any unpaid bill above ₹5 Lakhs outstanding more than a year: send a balance confirmation request before 31 March each year, get it back signed (PDF on letterhead is fine), and file it. This single step keeps your claim alive indefinitely. It is the quietest, cheapest, most under-used recovery tool in Indian B2B.