Supreme Court: balance sheet entries can acknowledge debt under Limitation Act

The case concerns whether a suit for recovery of money under a civil works contract was barred by limitation, specifically addressing if entries in the defendant's balance sheets constitute an acknowledgment of debt under Section 18 of the Limitation Act.

Who it concerns: Petitioner: Yusuf (legal heir of original plaintiff Wazir Hussain); Respondent: Vigyapan Loke Delhi Advertising CGHS Ltd.; Bench: Justices Vikram Nath, Augustine George Masih, and Sandeep Mehta.

What the court decided

• Set aside the High Court's order that rejected the plaint as barred by limitation.
• Held that balance sheet entries reflecting the debt up to 2013 constitute an acknowledgment of liability under Section 18 of the Limitation Act, 1963.
• Revived the suit on the file of the Trial Court.
• Allowed the appeal and disposed of any pending applications.

Also in the document

• The Court clarified that a written acknowledgment of liability does not need to be specifically addressed to the creditor or follow a fixed format, provided it indicates a subsisting jural relationship.
• The Court noted that the precise relationship between the cheques, carried-forward amounts, and the claimed sum requires examination of evidence at trial, rather than being determined at the threshold stage under Order VII Rule 11 CPC.
• The Court rejected the argument that a time-barred debt cannot be revived indefinitely without an application for condonation of delay, stating that a fresh limitation period automatically runs from each acknowledgment.