The limitation period for an Original Application (OA) filed by a bank against a defaulting borrower is 3 years from the date of default. This means that the bank must file the OA within 3 years of the date on which the borrower first defaults on their loan payments.
The limitation period is set out in Article 113 of the Limitation Act, 1963. This article applies to suits for “money lent or advanced on a contract expressed or implied, where the money is recoverable by action.”
There are a few exceptions to the 3-year limitation period. For example, if the borrower acknowledges the debt in writing, the limitation period will start from the date of the acknowledgement.
If the bank fails to file the OA within the 3-year limitation period, the borrower may be able to argue that the bank’s claim is time-barred. This means that the court may dismiss the bank’s case.
