Section 18 Limitation Act: Effect of acknowledgment in writing

Section 18 of Limitation Act: Effect of acknowledgment in writing

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

(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.

(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 (1 of 1872), oral evidence of its contents shall not be received.

Explanation.— For the purposes 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,

(b) the word "signed" means signed either personally or by an agent duly authorised in this 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.

Legal Commentary & Landmark Judgments: Section 18

Section 18 of the Limitation Act, 1963 provides that a written acknowledgment of liability in respect of any property or right, signed by the debtor before the expiration of the prescribed period, starts a fresh period of limitation.

Statutory Period of Limitation: Under Section 18(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 thereof 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.
Evidentiary Presumption & Proof: Sub-section (2) permits oral evidence of the date of signing where the document is undated, but excludes oral evidence of its contents. The Explanation clarifies that an acknowledgment is sufficient even if it omits to specify the exact amount, is accompanied by a refusal to pay, or is coupled with a claim to set-off, provided it admits the ongoing jural relationship of debtor and creditor.

Section 18 provides that a valid written acknowledgment of liability resets the statutory limitation clock, enabling creditors to enforce debt claims from the date of signing.

Key Landmark Precedents:

Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal, (2021) 6 SCC 366: A 3-Judge Bench held that an entry in a company's balance-sheet constitutes a valid acknowledgment of debt in writing under Section 18 of the Limitation Act, resetting limitation for proceedings under Section 7 of the IBC.
Khan Bahadur Shapoor Fredoom Mazda v. Durga Prosad Chamaria, AIR 1961 SC 1236: The Supreme Court held that the acknowledgment must admit the subsisting jural relationship of debtor and creditor, though the admission need not be an express promise to pay.

Legal Commentary:

Crucially, the acknowledgment must be made *before* the original limitation period expires. An acknowledgment executed after the limitation period has elapsed is completely void under Section 18 (though it may qualify as a fresh promise to pay a time-barred debt under Section 25(3) of the Indian Contract Act, 1872). Balance-sheet acknowledgments are now routine in corporate insolvency and debt recovery litigation.

Section 18: Effect of acknowledgment in writing

Section 18 of Limitation Act: Effect of acknowledgment in writing

Legal Commentary & Landmark Judgments: Section 18