Money lent payable on demand:
how long do you have?
Last reviewed: 2026-08-19 · quoted from the India Code bare-Act PDF
When the loan is made.
The Schedule row, as the Act prints it
Article 21Description: For money lent under an agreement that it shall be payable on demand.
Period: Three years.
Time from which period begins to run: When the loan is made.
Open the bare Act on India Code →
In plain English
The classic trap: a loan expressly 'payable on demand' is treated as immediately repayable, so limitation runs from the date of the loan itself, not from the date you actually demand it. Contrast Article 22, where a deposit payable on demand runs from the demand.
Where this comes up
- Promissory-note-style loan 'repayable on demand' sued on after four years
- Director's loan to a company recorded as payable on demand
What can reset or extend this period
General rules for entries in the Suits division. The full statutory quotes (ss.5, 12, 18-19, 6-8) are on the finder page.
No condonation — ever
Section 5 applies only to appeals and applications, never to suits. A time-barred suit must be dismissed under s.3 'although limitation has not been set up as a defence'. There is no discretionary mercy for suits.
Acknowledgment and part-payment reset the clock
A written acknowledgment of liability signed by the party (s.18), or a part-payment acknowledged in the payer's handwriting or signed writing (s.19), gives a fresh period — but only if made BEFORE the current period expires. An acknowledgment of an already-barred debt creates no fresh period under this Act.
Computation exclusions
s.12(1) excludes the first day; s.4 lets you file on the reopening day if the period expires while the court is closed; s.14 excludes time spent prosecuting in good faith in a court without jurisdiction; s.15 excludes stay/injunction periods and statutory-notice time; s.17 postpones the start until discovery in cases of fraud, concealment or mistake. But s.9: once time begins to run, no subsequent disability stops it.
Legal disability
If the person entitled to sue is a minor or of unsound mind when the period would start, ss.6-7 let them sue within the same period after the disability ceases — capped by s.8 at three years from cessation, and denied entirely to pre-emption suits (Article 97).
Frequently asked
Why does a demand loan run from the loan date but a demand deposit from the demand date?
The Schedule draws exactly that line: Article 21 (money lent on demand) — 'When the loan is made'; Article 22 (money deposited on demand) — 'When the demand is made'. Whether the transaction is a loan or a deposit therefore decides which clock applies.
How can I keep an old demand loan alive?
Obtain a written, signed acknowledgment of the debt (s.18) or an acknowledged part-payment (s.19) before the current three-year period expires; each restarts limitation.
This is a reference to the statutory text, not advice on a live matter. Limitation is brutally fact-sensitive — when the cause of action accrued, whether an acknowledgment or part-payment reset the clock, and which exclusions under ss.4-15 apply all turn on your specific facts. This page is a reference to the statutory text, not advice on a live matter, and it does not create an advocate-client relationship. A single day's error can be fatal to a claim: s.5 condonation never applies to suits, and several special-statute deadlines (Arbitration s.34(3), IBC s.61(2)) are hard ceilings no court can extend. Verify every period against the bare Act as currently amended and against current case law, and take advice on your own facts before acting. Provisions here were reviewed on 19 August 2026.