Section 18 of the Limitation Act, 1963 provides that:
(1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.
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ADVERTISEMENTS:
(2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872, oral evidence of its contents shall not be received.
Explanation:
For the purpose of this Section, —
(a) An acknowledgment may be sufficient though it omits to specify the exact nature of the property or right or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set off, or is addressed to a person other than a person entitled to the property or right;
ADVERTISEMENTS:
(b) The word ‘signed’ means signed either personally or by an agent duly authorised in the behalf; and
(c) An application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right;
Acknowledgement is a statement in writing that a debt is due and unpaid. Under the Indian Law, acknowledgment means a definite admission of liability; it is not necessary that there should be a promise to pay, and the simple admission of a debt is sufficient. In India, an acknowledgment in which there is no express promise implying a new contract to pay, must be made before the debt is barred by time, and in this respect an acknowledgement under Section 18 of the Limitation Act differs from a promise to pay a barred debt under Section 25(3) of the Contract Act. An Acknowledgement does’ not create a new right of action but merely extends the period of limitation.
The acknowledgment, if any has to be prior to the expiration of the prescribed period for filing the suit, in other words, if the limitation has already expired, it would not revive under Section 18. It is only during subsistence of a period of limitation, if any such document is executed, the limitation would be received fresh from the said date of acknowledgement.
ADVERTISEMENTS:
An acknowledgment is not limited in respect of a debt only it may be in respect of ‘any property or right’ which is the subject-matter of the suit.
In Preet Mohinder Singh v. Mohinder Parkash [AIR 1989 SC 1775] it has been held by the Supreme Court that a recital in a sale deed executed by the mortgagee in respect of the transfer to the purchaser the right of recovering the principal amount and interest according to the mortgage deed as an acknowledgement that mortgage money remains unpaid and also that the mortgagor had subsisting right of redemption which he could exercise against the mortgagee.
Mere statement expressing jural relationship between parties does not constitute acknowledgement. The endorsement itself must contain the acknowledgement either express or implied but surrounding circumstances can be taken into consideration in construing the words used in writing.
Promise to pay is not acknowledgement. An acknowledgement need not contain a promise to pay either in express terms or even in an implied way; what is necessary is that there should be an admission of the subsisting liability. Even if such admission is accompanied by a refusal to pay, its character as an acknowledgement will not be altered.
The acknowledgement of liability must be in writing. Oral evidence is to be excluded. The acknowledgement has to be signed by the party against whom the property or right is claimed. It has to be within the period of limitation. So, just sending a letter to the higher authorities to settle the dues does not amount to acknowledgement.
The acknowledgement within the meaning of Section 18 of the Limitation Act must be unqualified. It must be an acknowledgement of an existing liability. An admission of liability coupled with a declaration as to the arrangement proposed for its satisfaction is an acknowledgement of liability, or with a prayer to grant time for payment, in such a case limitation will be saved only to the date of the letter of acknowledgement and not upto the time mentioned in the letter.
A mere reference to arbitration does not amount to an acknowledgement. An agreement to refer the matter in dispute to arbitration and the award thereon would amount to an acknowledgement of the debt.
Section 18 of the Limitation Act deals with the requirement for an authority of acknowledgement which can be summarised as under:
(i) An admission of the acknowledgement;
(ii) Such acknowledgement must be in respect of a liability in respect of property or right;
(iii) It must be made before the expiry of the period of limitation; and
(iv) It should be in writing and signed by the party against whom such property or right is claimed or an agent duly authorised in this behalf.
Section 18 of the Limitation Act is applicable to local or special laws, unless expressly excluded as per Section 29 of the Limitation Act. Section 18 is not applicable for execution of decree.
An acknowledgement does not create any new right. It only extends the period of limitation. The person claiming benefit of an acknowledgement must be bona fide. The onus lies on the creditor to prove that the acknowledgement was made within time.
The correct interpretation of the words ‘prescribed period’ in Section 18 is that the acknowledgement or payment should have been made before the claim had become time-barred, and that is prescribed period. The Section 18 requires that the payment must be made within the prescribed period. It does not require that the writing should be made before the expiry of the prescribed period where the plaintiff in a suit for redemption relies on acknowledgement he must show that it was made before the expiry of the period of limitation.
In Sampuran Singh v. Niranjan Kaur [AIR 1999 SC 1047], the Supreme Court has held that the acknowledgement of liability has to be made prior to the expiry of the period of limitation and if the limitation has already expired, it would not revive a suit under Section 18 of the Limitation Act, 1963.
It is pointed out that it is only during the subsistence of the period of limitation, if any document is executed acknowledgement the dues, the limitation would be received afresh from the said date of acknowledgement. Thus the acknowledgement of liability which must be in writing by the party against whom the property or right is claimed has to be within the period of limitation.
In P. Sreedevi v. P. Appu [AIR 1991 K.er.76], it has been held that an admission of past liability, that is, a debt already barred by limitation is not material and it is the admission of subsisting liability that is an acknowledgement of liability giving rise to fresh start of limitation. Therefore, there must appear that the statement is made with relation to admit an existing jural relationship of debtor and creditor.
An acknowledgement has the effect of making a new period run from the date of acknowledgement. It does not create a new contract. It must, therefore distinct from a novation of contract within the meaning of Section 62 of Contract Act. Therefore, an acknowledgement of a barred debt cannot give a fresh period of limitation in favour of the credit. However, a time barred debt cannot be revived by an acknowledgement but it can be revived only by a new contract that is by promise to pay under Section 25(3) of the Limitation Act.
Even if the acknowledgement be a conditional one, the condition must be fulfilled that such acknowledgement should save limitation.
It is not necessary that the acknowledgement of liability must be made to the person who is entitled to the right in respect of which the liability arises, or to any one through whom he claims. An acknowledgement, to whomsoever made, is a valid acknowledgement if it points with reasonable certainty to the liability under dispute. Thus an admission of liability in respect of a decree amounts to an acknowledgment although the admission is not made to the decree-holder.
An admission of liability contained in a deed of gift executed by the debtor or in a will of a deceased is a valid acknowledgement. A statement contained in a Kabala that a certain mortgage on some of the properties comprised in the Kabala is still subsisting is an acknowledgment.
If the insolvent writes down a debt in his schedule as owing the debt to a named person and signs the schedule, it would operate as an acknowledgement under Section 18 of the Limitation Act.
An acknowledgement without signature is no acknowledgement. Signature need not necessarily be by writing one’s name. Making his mark by an illiterate debtor is sufficient. Under Section 3(52) of the General Clauses Act, “Sign should, with reference to a person who is unable to write his name, includes his mark”. Initials are equivalent to signature.
As per explanation (b) of Section 18 of the Limitation Act, it is not necessary that the acknowledgement must be in the handwriting of the maker. But it must be signed by the person making it or by his agent otherwise it will not be valid.
In the case of acknowledgement made by an agent, it is necessary for the plaintiff to prove that the agent was duly authorised by the defendant to make an acknowledgement of a liability on his behalf. In the case of acknowledgement made by an agent, it is further necessary for the plaintiff to prove that the agent was duly authorised by the defendant to make an acknowledgement of a liability on his behalf. An acknowledgement by an agent being sufficient to affect has principal – acknowledgement by one party will, it is apprehended, be regarded as an acknowledgement by the firm.
To attract the explanation (b) of Section 18(1), a special power of attorney acknowledging debt is not necessary, general authroisation is sufficient.
Unstamped acknowledgement is not acknowledgement. If any acknowledgement is unstamped, it, no doubt, comes within the mischief of
Section 35 of the Stamps Act, and is inadmissible. An improperly stamped promissory note cannot be admitted in evidence to prove acknowledgement of liability in order to save limitation in respect of promissory notes previously executed.
A receipt may be an acknowledgement of the previous debt and be an acknowledgement within the meaning of the Section 18 and if the following three conditions are satisfied, namely:—
(i) The acknowledgement must have been made before the expiration of the period prescribed for the suit;
(ii) It must be a clear and unambiguous acknowledgement specifically admitting liability in respect of the debt sued upon; and
(iii) It must be signed on stamp by the party or his authorised agent.
An acknowledgement of liability has only the effect of extending limitation and does not confer a title.
In Tanjore Ramchandra v. Vellyanandan, [14 Mad. 258 (PC)] it has been held that the acknowledgement does not entitle the creditor to claim interest at a higher rate than that which was prevailing upto the date of acknowledgement.
In Velayudu v. Narasimha, [32 MLJ 263] -it has been held that an acknowledgement of a mortgage -debt is good not only as against the person acknowledging, but also as against those deriving title under him even prior to the date of acknowledgement and subsequent to the debt acknowledged.
If a person admits a right he also admits the legal consequences of that right In Gurucharan v. Surendra, [19 CWN 263] it has been held that a person admits that the land of which he is in possession belongs to another, he admits that he is liable to restore the land to that other.
In K.M. Mohammed Sultan v. K.S. Muhammed Nurdin [(1963) 1 MLJ 300], it has been held that acknowledgement of the portion of the claim can be used to save limitation only with respect to the portion of the claim acknowledged.
In Venkataramayyar v. Kothandaramayyar, [13 Mad. 135] it has been held that if an acknowledgement is made in favour of a minor, the new period of limitation is to be computed from the date when the plaintiff attains majority.
In computing the period of limitation, the date on which the acknowledgement was signed must be excluded.
As per Section 18(2) of the Limitation Act, 1963 oral evidence of the contents of a document cannot be received, but where the writing containing the acknowledgement is undated, oral evidence may be given of the time when it was signed. In Uppi v. Mammavan, [16 Mad.366] it has been held that where there is only one debt, and the acknowledgement omits to mention the name of the mortgagor or the date of the mortgage or the amount of the debt, parole evidence is admissible to prove the name, date or the amount.
In Athmaramayya v. Seshappa, [AIR 1941 Mad.409] it has been held that where plaintiff relies on post cards and containing acknowledgement, but there is nothing on the face of the post cards that they necessarily referred to the suit debt, oral evidence is admissible to prove that the post cards relate to the suit debt.
According to explanation (a) to Section 18, an acknowledgement may be sufficient though it omits to specify the nature of the property or right. In S.F. Mazda v. Durga Prasad Chamaria, [AIR 1961 SC 1236], the Supreme Court has held that the acknowledgement need not specify the exact nature of the property or right in respect of which the liability is acknowledged. In Jainarain v. Governor-General of India, [AIR 1951 Cal. 462], it has been held that it is not necessary that if there is an admission of facts of which the liability in question is a necessary consequence there would be an acknowledgement within meaning of Section 18.
The authorization of an agent need not be in writing, it can be implied. Observe the implied acknowledgement power of the following agents:
(1) A guardian appointed under the Guardians and Wards Act, 1890, is an ‘agent duly authorised’ and competent to make an acknowledgement, provided it be shown that the guardians’ act was for the benefit of the word.
(2) The Court of wards has power to make acknowledgement of a debt due by the ward which would bind the ward and give a fresh starting point of limitation.
(3) The Sarbarakar of a disqualified person not being a guardian and having nothing to do with the person or property of the proprietor, but appointed only to manage the lands cannot be regarded as a person authorised to admit the personal debt of the proprietor.
(4) Acknowledgement or payment by one co-mortgagor shall not extend the period of limitation against the other co-mortgagor.
(5) When the mortgage is joint and incapable of being redeemed piece meal, one mortgagee is not an agent of the other joint mortgagees and acknowledgement of mortgagor’s title made and signed by one co-mortgagee only cannot avail against the other mortgagees for the purpose of saving limitation in respect of the mortgagor’s suit redemption.
(6) A payment or acknowledgement made by the Karta of Hindu Joint Family binds the other members of the joint family.
(7) A receiver of a partnership firm may be a person authorised to make an acknowledgement binding on the firm, if the acknowledgement was necessary for the preservation of the partnership assets.
(8) An acknowledgement by one person of a partnership firm saves limitation against the other partners.
(9) An acknowledgement by the pleader of the liability of his client, the debtor is a valid acknowledgement by the person duly authorised to make the acknowledgement.
(10) Acknowledgement singed by the defendant’s ex-agent cannot prevent the operation of limitation.
(11) An acknowledgement made by one of the active directors of the company is a sufficient acknowledgement.
(12) The official assignee is not the agent of the insolvent, and an acknowledgement made by him does not save limitation.
(13) An acknowledgement of liability by the official receiver will furnish a fresh starting point for limitation.
(14) On the death of the debtor an acknowledgement of debt by the legal representative of the debtor may be treated to be a valid acknowledgement for filing a suit against the legal representative.
(15) An acknowledgement by surety only save limitation against him but not against the principal debtor.
(16) A co-owner has no authority to acknowledge liability for all and thereby to make the limitation start a fresh against all.