Under Section 3 of the Indian Limitation Act, a suit or an appeal or an application filed beyond the time prescribed is to be dismissed by the court although limitation was not set up and pleaded by the opposite party.
The wordings shows that it is the right to file the suit which is barred but the original right on which the suit was to be based is not barred. This right is the right based on the cause of action. For instance, A from time to time advances money to B and each time he enters the item advanced in his account books. Thus he advances six items of money on six different dates each succeeding item being separated from the previous one by a period of six months.
Four years after the first advance was made, the period for filing suit for recovery of the first item of advance has expired (the prescribed period of filing such suit being three years) and the remedy of A for filing the suit is barred by limitation but here the right of A to recover the amount of the first advance is not extinguished but still survives, and only his right to file the suit for the recovery thereof has become barred by limitation.
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So, if B pays the amount to A, the payment would be a valid one and according to law B cannot recover it back from A on the ground that the right of A to recover the amount and become barred by limitation.
There is, however, one case where the right to property is also extinguished, that is, when the suit is not brought for possession within the time prescribed. (Section 27). In such a case, not only the rights of the owner bring a suit but .also the title of the owner of the property is extinguished.