Limitation Act 1963 for JAIIB LRAB 2026: Complete Limitation Period Guide
The Limitation Act 1963 is one of the highest-scoring topics in the JAIIB LRAB exam. And most candidates lose easy marks here simply. They try to memorise it blindly.
This guide fixes that. We break down the entire law into plain English. Give you a ready-to-revise limitation period table.
And show you exactly how examiners frame questions from Module C - Banking Related Laws.
Whether you are attempting the Legal & Regulatory Aspects of Banking paper for the first time or revising in the final week. This is your one-stop resource. Let us make this scoring chapter genuinely easy.
Key Takeaways
- The Limitation Act 1963 fixes the time limit within which a suit. Appeal or application must be filed in court.
- The most common limitation period for banking-related suits is 3 years. But always confirm the exact entry on the latest official IIBF notification.
- The "period of limitation" is defined in Section 2(j). The time from. The period runs is just as important as the period itself.
- For a banker. The most tested entry is the limitation period on a customer's deposit. Which runs from the date of demand.
- Expired limitation does not erase the debt - it only bars the legal remedy through court.
What Is the Limitation Act 1963?
The Limitation Act 1963 is the Indian law that prescribes the time limits for instituting suits. Appeals and applications. In simple words. It tells you how long you have to go to court to enforce a right.
If you miss that window. The court will normally refuse to hear the matter. The right may still exist, but the legal remedy becomes time-barred. This is why the topic matters so much in banking and law.
The Act applies to the whole of India. It came into force on a date notified by the Central Government in the Official Gazette. For the precise extent and applicability today. Always confirm on the latest official IIBF notification. The current text of the Act.
Why It Matters for Bankers
Banks lend money, accept deposits, and hold negotiable instruments every single day. Each of these creates a legal right with a time limit attached.
If a bank wants to recover a loan. It must file the suit within the limitation period. Miss the deadline, and recovery through court can fail. That is real money lost - so the law is far from theoretical.
Section 1 and Section 2: The Foundation
Two opening sections set the base for the entire Act. Examiners love direct questions from these definitions.
- Section 1 contains the short title, extent and commencement. It states the Act may be called the Limitation Act. 1963. And comes into force from the date notified by the Central Government in the Official Gazette.
- Section 2 contains the definitions of the terms used throughout the Act.
Within Section 2, two definitions are critical for the exam:
- Period of limitation [Section 2(j)]: the period of limitation prescribed for any suit. Application or appeal by the Schedule.
- Prescribed period: the period of limitation computed in accordance with the provisions of this Act.
The difference looks small but is testable. The "period of limitation" is the raw number in the Schedule. The "prescribed period" is that number after applying the Act's rules for computing time.
How the Limitation Period Is Computed
The Act does not only fix a number of years. It also fixes the starting point from which those years are counted. This starting point is called the time "from. The period begins to run".
Get the starting point wrong and your whole calculation collapses. For example. The period for a loan repayable on demand runs from the date the loan is made. Not from the date of demand. Small distinctions like this decide marks.
A Worked Example for Clarity
Suppose a customer deposits money repayable on demand. The limitation period of 3 years runs from the date the demand is made. Not from the date of deposit.
So a deposit lying untouched for years does not become time-barred automatically. The clock only starts ticking when the customer formally demands repayment. This protects ordinary depositors and is a favourite MCQ.
Limitation Period Table for JAIIB LRAB
Below is the consolidated limitation period table covering suits relating to accounts. Contracts under the Schedule. Almost every entry here carries a 3-year limitation period - what changes is the starting point.
Use this as your primary revision sheet. Read the third column - the trigger date - more carefully than the period itself. Because that is where examiners set traps. For any borderline entry, confirm on the latest official IIBF notification.
| No | Suit Description | Limitation Period | Time From Which Period Begins to Run |
|---|---|---|---|
| Part 1 - Suits Relating to Accounts | |||
| 1 | Mutual, open and current account where both parties reciprocally demand payment | 3 years | The close of the year in. The last item admitted or proved was entered in the account |
| 2 | Against a factor for an account | 3 years | When the account is. During the continuance of the agency. Demanded and refused; or. Where no demand is made, when the agency terminates |
| 3 | By a principal against an agent for movable property received. Not accounted for | 3 years | When the account is demanded and refused; or. Where no demand is made, when the agency terminates |
| 4 | By a principal against an agent for neglect or misconduct | 3 years | When the neglect or misconduct becomes known to the plaintiff |
| 5 | For an account and profits on dissolution of a partnership | 3 years | The date of dissolution |
| Part 2 - Suits Relating to Contracts | |||
| 6 | For the wages of a seaman | 3 years | The end of the voyage during which the wages are earned |
| 7 | For wages of any other person | 3 years | When the wages accrue due |
| 8 | Price of food or drink sold by a hotel-keeper. Tavern-keeper or lodging-house keeper | 3 years | When the food or drink is delivered |
| 9 | For the price of lodging | 3 years | When the price becomes payable |
| 10 | Against a carrier for compensation for loss of or injury to goods | 3 years | When the loss or injury occurs |
| 11 | Against a carrier for non-delivery or delay in delivery of goods | 3 years | When the goods ought to be delivered |
| 12 | For the hire of animals, vehicles, household furniture or boats | 3 years | When the hire becomes payable |
| 13 | For the balance of money advanced for goods to be delivered | 3 years | When the goods ought to be delivered |
| 14 | Price of goods sold and delivered with no fixed period of credit | 3 years | The date of delivery of the goods |
| 15 | Price of goods sold and delivered, payable after a fixed credit period | 3 years | When the period of credit expires |
| 16 | Price of goods sold to be paid by a bill of exchange. No such bill being given | 3 years | When the period of the proposed bill elapses |
| 17 | Price of trees or growing crops sold with no fixed credit period | 3 years | The date of sale |
| 18 | Price of work done where no time was fixed for payment | 3 years | When the work is done |
| 19 | For money payable for money lent | 3 years | When the loan is made |
| 20 | For money lent by a cheque | 3 years | When the cheque is paid |
| 21 | For money lent under an agreement that it shall be payable on demand | 3 years | When the loan is made |
| 22 | For money deposited under an agreement that it shall be payable on demand. Including money of a customer in the hands of his banker | 3 years | When the demand is made |
| 23 | For money payable for money paid on behalf of the defendant | 3 years | When the money is paid |
| 24 | For money received by the defendant for the plaintiff's use | 3 years | When the money is received |
| 25 | For interest upon money due from the defendant to the plaintiff | 3 years | When the interest becomes due |
| 26 | For money due on accounts stated between the parties | 3 years | When the accounts are stated in writing. Signed by the defendant (or his authorised agent). Unless made payable at a future time by simultaneous written agreement |
| 27 | Compensation for breach of a promise to do something at a specified time or on a contingency | 3 years | When the time specified arrives or the contingency happens |
| 28 | On a single bond where a day is specified for payment | 3 years | The day so specified |
| 29 | On a single bond where no such day is specified | 3 years | The date of executing the bond |
| 30 | On a bond subject to a condition | 3 years | When the condition is broken |
| 31 | On a promissory note or bill of exchange payable at a fixed time after date | 3 years | When the bill or note falls due |
| 32 | On a bill of exchange payable at sight or after sight. But not at a fixed time | 3 years | When the bill is presented |
| 33 | On a bill of exchange accepted payable at a particular place | 3 years | When the bill is presented at that place |
| 34 | On a bill or note payable at a fixed time after sight or after demand | 3 years | When the fixed time expires |
| 35 | On a bill or note payable on demand. With no writing restraining the right to sue | 3 years | The date of the bill or note |
| 36 | On a bond or note payable by instalments | 3 years | The expiration of the first term of payment for that part. And for the others. The expiration of the respective terms |
| 37 | On a bond or note payable by instalments with an acceleration-on-default clause | 3 years | When the default is made. Unless the payee waives the benefit. Then when a fresh non-waived default occurs |
| 38 | On a note given to a third person to be delivered to the payee after an event | 3 years | When the delivery is made to the payee |
| 39 | On dishonoured foreign bills protested and notified | 3 years | When the notice is given |
| 40 | By the payee of a bill of exchange not accepted by the drawee | 3 years | When acceptance is refused |
| 41 | By the acceptor of an accommodation bill against the drawer | 3 years | When the acceptor pays the amount of the bill |
| 42 | By a surety against the principal debtor | 3 years | When the surety pays the creditor |
| 43 | By a surety against a co-surety | 3 years | When the surety pays anything in excess of his own share |
| 44(a) | On a life insurance policy, sum payable on proof of death | 3 years | The date of death; or. Where the claim is denied wholly or partly. The date of such denial |
| 44(b) | On an insurance policy, sum payable on proof of loss | 3 years | The date of the loss; or. Where the claim is denied wholly or partly. The date of such denial |
| 45 | By the assured to recover premium on a policy avoided by the insurers | 3 years | When the insurers elect to avoid the policy |
| 46 | Under the Indian Succession Act. 1925 to compel a refund of a legacy or distributed assets | 3 years | The date of the payment or distribution |
| 47 | For money paid upon an existing consideration that afterwards fails | 3 years | The date of the failure |
| 48 | For contribution by a party who paid more than his share under a joint decree or joint estate | 3 years | The date of the payment in excess of the plaintiff's own share |
| 49 | By a co-trustee to enforce a claim for contribution against a deceased trustee's estate | 3 years | When the right to contribution accrues |
| 50 | By the manager of a joint estate of an undivided family for contribution | 3 years | The date of payment |
| 51 | For the profits of immovable property wrongfully received by the defendant | 3 years | When the profits are received |
| 52 | For arrears of rent | 3 years | When the arrears become due |
| 53 | By a vendor of immovable property for personal payment of unpaid purchase money | 3 years | The time fixed for completing the sale. Or (where title is later accepted) the date of acceptance |
| 54 | For specific performance of a contract | 3 years | The date fixed for performance. Or, if none, when the plaintiff has notice that performance is refused |
| 55 | Compensation for breach of any contract not specially provided for | 3 years | When the contract is broken; or. For successive breaches. When the relevant breach occurs; or. For a continuing breach, when it ceases |
Notice the pattern. The period stays constant at three years across these entries. But the starting trigger keeps changing. That is the single most important insight for this chapter.
Quick Facts About the Limitation Act 1963
Here is a snapshot table for last-minute revision. Verify every figure against the current bare Act. The latest official IIBF notification before the exam.
| Feature | Detail |
|---|---|
| Name of the law | The Limitation Act, 1963 |
| Short title and extent | Section 1 |
| Definitions | Section 2 (period of limitation defined in Section 2(j)) |
| Most common limitation period for banking suits | 3 years (confirm the exact entry on the latest official IIBF notification) |
| Customer's deposit with banker | 3 years from the date of demand |
| Relevant JAIIB paper | Paper 3 - Legal & Regulatory Aspects of Banking (Module C) |
How to Study the Limitation Act for JAIIB
Do not try to memorise 55 rows word for word. That approach fails under exam pressure. Instead, study smart with a structured method.
- Group the entries. Cluster suits by theme - accounts. Sale of goods, loans, negotiable instruments, sureties, insurance. Patterns are easier to recall than isolated facts.
- Anchor on the 3-year rule. Since most banking entries are three years. Focus your energy on the starting date column instead.
- Master the banker-specific rows. Entries on deposits. Money lent, cheques and negotiable instruments are the most exam-relevant. Know these cold.
- Practise application MCQs. Examiners give a scenario and ask when limitation begins. Solve plenty of mock tests to build that reflex.
- Revise with the table weekly. Spaced repetition beats one long cram session. Keep the quick-facts table handy.
Pair this reading with structured revision from our free guides. Consistent short sessions will lock this chapter into memory faster than you expect.
Common Mistakes Students Make
Most marks are lost here through avoidable errors, not lack of knowledge. Watch out for these traps.
- Confusing the period with the start date. The number of years is often the same. The trigger date is what the question actually tests.
- Assuming the deposit clock starts at deposit. For a customer's deposit payable on demand. The period runs from the date of demand. Not the date of deposit.
- Treating a time-barred debt as wiped out. Limitation bars the remedy, not the debt itself. The liability can still exist.
- Ignoring exceptions. Instalment bonds and acceleration clauses have special rules. Read entries 36 and 37 carefully.
- Relying on outdated notes. Syllabus framing changes. Always cross-check with the latest official IIBF notification.
Frequently Asked Questions
What is the limitation period for most banking suits under the Limitation Act 1963?
Most suits relating to accounts and contracts carry a 3-year limitation period. However, the starting date differs for each type of suit. Always confirm the exact period on the latest official IIBF notification. The current bare Act.
What is the limitation period for a customer's deposit with a bank?
The period is 3 years. Counted from the date the customer makes a demand for repayment. The clock does not start on the date of deposit. This is why long-dormant deposits do not automatically become time-barred.
Does an expired limitation period cancel the debt?
No. Expiry of the limitation period bars only the legal remedy through court. The underlying debt or right continues to exist. The creditor simply loses the ability to enforce it through a suit.
Which section defines the period of limitation?
The "period of limitation" is defined in Section 2(j) of the Limitation Act. 1963. It refers to the period prescribed by the Schedule for any suit. Application or appeal.
Is the Limitation Act important for the JAIIB LRAB exam?
Yes, it is a high-yield topic in Module C - Banking Related Laws. Questions are usually direct and scoring if you understand the periods and starting dates. Practising application-based mock tests is the fastest way to secure these marks.
Final Word: Turn This Chapter Into Easy Marks
The Limitation Act 1963 looks intimidating because of its long Schedule. But once you see the pattern - a steady 3-year period with a shifting start date - it becomes one of the easiest scoring areas in JAIIB LRAB.
Group the entries, master the banker-specific rows, and drill application questions. Do that consistently, and this topic will reward you on exam day. Always validate the latest figures against the official IIBF notification before you sit the paper.
You have got this. Revise smart, practise hard, and walk into that exam with confidence.
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