Indian contract law and debt recovery

Time-Barred Debt in India: Written Promise to Pay Under Section 25(3)

Legal information updated: 9 October 2026

A debt may become time-barred when the statutory period for filing a recovery suit expires. However, Section 25(3) of the Indian Contract Act, 1872 recognises a fresh, enforceable promise to pay a debt that could otherwise have been recovered but for the law of limitation, provided the statutory conditions are met.

Key distinction: Expiry of limitation generally bars the judicial remedy; it does not automatically extinguish an ordinary debt. A written and signed promise under Section 25(3) can create a new enforceable contractual obligation. Special rules may apply to secured claims and other proceedings.

What is a time-barred debt?

Under Section 3 of the Limitation Act, 1963, a suit filed beyond the prescribed period is ordinarily liable to dismissal even if limitation is not pleaded as a defence, subject to the Act's applicable provisions. The limitation period depends on the nature of the transaction, the terms of repayment and the relevant article in the Schedule.

Section 25(3) of the Indian Contract Act, 1872

Section 25 generally addresses agreements without consideration. Clause (3) provides an exception for a promise, made in writing and signed by the person to be charged or an agent generally or specially authorised, to pay wholly or partly a debt that the creditor could have enforced except for the limitation law.

Conditions for an enforceable promise

Existing debt: The debt must be one that was otherwise legally recoverable, apart from the bar of limitation.
Express promise: The debtor must clearly undertake to pay the whole debt or a specified part. A mere statement that money was once owed may not suffice.
Written document: The promise must be recorded in writing.
Valid signature: The debtor or an appropriately authorised agent must sign it.
Lawful obligation: The provision does not validate a claim unenforceable for independent reasons, such as illegality.

A new promise may be made after the original limitation period expires. It need not cover the entire amount. The enforceability and limitation of a suit on the fresh promise depend on its actual terms and applicable law.

Acknowledgment versus promise to pay

Section 18 of the Limitation Act: A written acknowledgment of subsisting liability, signed by the debtor or authorised agent before the original limitation period expires, can start a fresh limitation period from the date of acknowledgment. An express promise to pay is not necessarily required.

Section 25(3) of the Contract Act: After a debt is already time-barred, a mere acknowledgment ordinarily does not revive the remedy. A clear written and signed promise to pay is required to create the fresh contractual obligation.

The Supreme Court explained this distinction in its judgment dated 5 August 2022, noting that a qualifying promise can form an independent basis for a suit.

Part payment before expiry of limitation

Under Section 19 of the Limitation Act, payment on account of a debt or interest, made before expiry of the prescribed period by the liable person or a duly authorised agent, may start a fresh limitation period from the date of payment. The statutory requirement concerning acknowledgment of the payment in the handwriting of, or in a writing signed by, the payer must also be satisfied, subject to the provision's explanations. Part payment made after expiry does not by itself satisfy Section 19.

Common limitation periods for debts and instruments

The following examples are drawn from the Schedule to the Limitation Act, 1963. They are general guides rather than a substitute for identifying the correct article for a particular contract.

Transaction or claim	Typical period	Starting point
Money lent (Article 19)	3 years	When the loan is made
Money lent by cheque (Article 20)	3 years	When the cheque is paid
Money lent under an agreement payable on demand (Article 21)	3 years	When the loan is made
Money deposited under an agreement payable on demand (Article 22)	3 years	When demand is made
Money payable by instalments (Article 36, where applicable)	3 years	When the particular instalment becomes due, subject to contractual acceleration terms
Bills of exchange and promissory notes	Generally 3 years	Depends on the instrument and the applicable Schedule article; presentation, maturity or another specified event may control
Enforcement of payment secured by mortgage or charge (Article 62)	12 years	When the money sued for becomes due

For bills payable at sight or at a fixed time after date, different articles and triggering events may apply. It is incorrect to assume that every bill or promissory note runs from presentation. Likewise, mortgage limitation should not automatically be calculated from the date of mortgage or from each default without examining the governing article and instrument.

How is the limitation period calculated?

Section 12 generally excludes the day from which the prescribed limitation period is reckoned. The calculation must also consider the relevant statutory rules on court holidays, exclusion of time, disability, fraud, acknowledgments and payments where applicable. Whether a suit filed on an anniversary date is in time depends on the precise starting event and computation rules.

Joint borrowers, partners and authorised signatories

An acknowledgment or payment by one of several liable persons does not automatically extend limitation against the others. Section 20 of the Limitation Act addresses the effect of acknowledgment or payment by another person, including rules concerning agents and joint contractors. For a Section 25(3) promise, authority to bind the relevant debtor must also be established. The wording of the document and the legal capacity of the signatory are therefore important.

Practical example of a fresh promise

Suppose a legally valid loan of Rs. 1,00,000 becomes time-barred. The borrower subsequently signs a written document expressly promising to repay Rs. 60,000 of that debt. Subject to the statutory conditions and other applicable defences, the creditor may sue on that fresh promise for the promised amount. An unsigned statement of account or a mere admission of an old balance would not automatically produce the same result.

Documents to preserve

Original loan agreement, invoices, promissory notes or other debt instruments.
Payment records and proof of the date on which repayment became due.
Written acknowledgments made before the limitation period expired.
Evidence of part payments and signed records meeting Section 19.
Any later written and signed promise specifying the debt and repayment undertaking.
Evidence of the signatory's authority where an agent or representative signs.

Official legal references

This article provides general legal information. Limitation depends on the particular facts, documents, applicable article and judicial interpretation; obtain legal advice before initiating recovery proceedings.