Which of the following is correct about the law of limitation.

The Limitation Act, 1963 is a procedural law, not "It is a substantive law": under Section 3 a suit, appeal or application filed after the prescribed period is dismissed, so "It bars the remedy" while leaving the substantive right intact. The only exception is Section 27, under which the right to property itself is extinguished when the period for a suit for possession expires, so as a general rule it is not true that "It extinguishes the right".