Limitation Period for an Advance amount paid but not claimed back

Refund of advance amount would start either from the date of expiry of the time stipulated in the
agreement or in case no time has been stipulated, from the date on which the plaintiff gets knowledge
of refusal on the part of the other party to perform. In addition, when a party which refuses to perform
his part of the obligations under the agreement opts to cancel the agreement, then, for him the
limitation for seeking refund of advance amount and/or damages shall start running from the date of
such cancellation, in case no time is fixed in the agreement for performance or such cancellation is
made before the expiry of the time fixed in the agreement. In case a time has been fixed in the
agreement itself and the same was not cancelled earlier, then the limitation for refund of advance
amount shall start running from the date of expiry of the period stipulated in the agreement. Such a
date of cancellation or the date of expiry of the time stipulated in the agreement, as the case may be,
whichever is earlier, shall be the date on which the right to sue for refund of the advance amount
would have accrued.

Article 54 of the Limitation Act, 1963 reads as follows:

“For Specific performance of a contract:

Three years

The date fixed for the performance, or, if no such date is fixed, when the plaintiff has notice that
performance is refused.”

In Ahmmadsahb Abdul Mila vs. Bibijan1, it was held by the Supreme Court that the date fixed for the
performance of the contract should be a specified date in the calendar, and submitted that since no
specified date in the calendar for performance of the contract is mentioned in the agreement of sale,
the second limb of Article 54 of the Limitation Act is applicable.

Was also held in Madina Begum vs. Shiv Murti Prasad Pandey 2 and Rathnavathi vs. Kavita
Ganashamdas3. The relevant portions have been highlighted.

1
2009 (5) SCC 462
2
(2016) 15 SCC 322
3
(2015) 2 SCC (Civ) 736