Introduction

• An Acknowledgement is an admission by the writer that there is a debt owing by him, either to the receiver of the letter or to some other person on whose behalf the letter is received, but it is not enough that he refers to a debt being due from somebody.
• An acknowledgement must be one from which an absolute promise to pay can be inferred, or an unconditional promise to pay the specific debt, or that there must be a conditional promise to pay the debt and evidence that the condition has been performed.

Effect of acknowledgment in writing 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 acknowledgement 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 acknowledgement was so signed.

(2) Where the writing containing the acknowledgement 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 authorized 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.

Principle of Section 18 of Limitation Act, 1963:

• This section is based on the principle that the bar of limitation should not be allowed to operate in cases in which the existence of a claim is acknowledged by persons who are under the liability. Every acknowledgement affords a new proof of the existence of debt.
• Section 18 does not enlarge the period of limitation, but a fresh period begins to run from the date of acknowledgement. Acknowledgement of liability by the defendant interrupt limitation i.e., cancels the already elapsed portion of the period of limitation and allows a fresh period of limitation from the date of such interruption.
• Such an acknowledgement, however, does not extinguish the original cause of action nor create a new one. An acknowledgment merely recovers the debt.

Requisites of a Valid Acknowledgement:

• Acknowledgment must be made before the expiration of the limitation period. It must be made after the period of limitation has begun to run and while it is actually running.
• Acknowledgement of liability must be in writing. Hence oral acknowledgment is not sufficient.
• Acknowledgment must be signed by the person making the acknowledgment or by his duly authorized agent.
• Acknowledgment must be made by the party against whom any property or right is claimed or by some person through whom he derives title or liability.
• Acknowledgment must be in respect of the particular property or right claimed in the suit or application.
• Acknowledgment need not be express, it may be by necessary implication.

Section 19 of Limitation Act, 1963:

Effect of payment on account of debt or of interest on legacy-

• Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorized in this behalf, a fresh period of limitation shall be computed from the time when the payment was made:
• Provided that, save in the case of payment of interest made before the 1st day of January, 1928, an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment.
• Explanation. —For the purposes of this section:
• • (a) where mortgaged land is in the possession of the mortgagee, the receipt of the rent or produce of such land shall be deemed to be a payment;
  • (b) “debt” does not include money payable under a decree or order of a court."
• Section 19 provides for the computation of the period of limitation when a payment on account of debt or of interest on legacy is made.

Essential Conditions of Section 19:

• The payment must be made within the prescribed period of limitation.
• It must be acknowledged by some form of writing either in the handwriting of a prayer himself or signed by him. If there is no acknowledgment in the required form, the payment by itself is of no avail.
• Th word “prescribed” means the period prescribed in the First Schedule, not the period within which the plaintiff may bring his suit.
• The term ‘person liable to pay debt’ includes not only a person who is personally liable but also a person who is not personally liable but whose interest in the family property is liable.

Section 20 of Limitation Act, 1963:

Effect of acknowledgement or payment by another person-

• This section is an explanatory as well as supplementary section to Section 18 and 19 and does not constitute an exception in the case of either of these section.
• Section 20 deals with the question as to who can keep alive a right which is not time- barred. It does not deal with the question as to who can revive a time-barred debt.
• According to sub-section (1), the expression “agent duly authorized in this behalf” in Section 18 and 19 shall, in the case of a person under disability, include his lawful guardian, committee or manager or an agent duly authorized by such guardian, committee or manager to sign the acknowledgment or make the payment.
• Sub-section (2) declares that one of several joint contractors, partners, executors, mortgagees, will not render the other joint contractors, partners, executors or mortgagees chargeable under an acknowledgment or payment made by him or his duly authorized agent.
• Sub- section (3)(a) provides that an acknowledgment signed by or a payment made, in respect of any liability, by any limited owner of property (e.g., widow) governed by the Hindu law, shall be a valid acknowledgment or payment, against a reversioner succeeding to such liability.
• Sub-section (3)(b) provides that the manager of a Hindu joint family can make acknowledgment and payment so as to save limitation in regard to liabilities which are binding on the family. Such payment or acknowledgment must be deemed to be made on behalf of the family.

Case laws:

• Bhagwan v. Madhav (1922):
  • The Bombay High Court held that an acknowledgment or liability need not be expressed; it may be by implication.
• Union of India v. Seyadu Beedi Co. (1970):
  • The Madras High Court held that just sending a letter to the higher authorities to settle the dues does not amount to acknowledgment. The respondent gave notice of the filing of suit to which the appellants replied that the matter was under investigation and if before investigation the suit is filed then respondents will be responsible for the costs. The court held that the reply of the appellants was not an express acknowledgment of liability, and the facts were not sufficient even for the implied admission of liability. Therefore, the limitation period was not allowed to start afresh.
• Kishori Engineering Works v. Bank of India (1991):
  • The Patna High Court held that where the debtor was making part-payment the limitation would run from the last made part-payment.