Vakil Help Desk News: the Supreme Court has held that entries in a company's balance sheet can amount to an acknowledgment of a subsisting debt under Section 18 of the Limitation Act, starting a fresh limitation period, and revived a money-recovery suit.
Vakil Help Desk News, Litigation & Courts. The Supreme Court has held that entries in a company's balance sheet can amount to an acknowledgment of a subsisting debt under Section 18 of the Limitation Act, 1963, which starts a fresh period of limitation. A bench of Justice Vikram Nath, Justice Augustine George Masih and Justice Sandeep Mehta ruled so in Yusuf v. Vigyapan Loke Delhi Advertising CGHS Ltd., reviving a money-recovery suit that the Delhi High Court had thrown out as time-barred.
The plaintiff had filed a summary suit in 2014 to recover dues of about ₹11.16 lakh under a civil works contract, relying on running bills and on the defendant's balance sheets, in which the amounts appeared from 2004-05 onwards. The High Court had rejected the plaint, holding there was no acknowledgment and that the claim was barred by limitation.
Setting that aside, the Supreme Court held that an acknowledgment under Section 18 need not name the creditor or follow any set format — it is enough that, read with the surrounding circumstances, it shows a subsisting liability. Because such entries were carried forward year after year, each acknowledgment renewed the limitation period. The Court also held that at the stage of rejecting a plaint, a court should only see whether a prima facie case is disclosed, not weigh the evidence, and restored the suit for trial with all questions left open.
What this means for you
A debt recorded and carried forward in a company's balance sheet can restart the limitation clock — so old dues reflected in the accounts may still be legally recoverable.