Whether acknowledgement of liability in the balance sheet by a Company extends the period of limitation U/S 18 of limitation Act?

In Zest Systems Pvt. Ltd. v. Center for Vocational and

Entrepreneurship Studies, 2018 SCC OnLine Del 12116, the Delhi High Court held:

“5. In Shahi Exports Pvt. Ltd. v. CMD Buildtech Pvt. Ltd. (supra)

this court held as follows:—

“7. It is hardly necessary to cite authorities in support

of the well-established position that an entry made in

the company’s balance sheet amounts to an

acknowledgement of the debt and has the effect of

extending the period of limitation under section 18 of

the Limitation Act, 1963. However, I may refer to only

one decision of the learned single judge of this Court

(Manmohan, J.) in Bhajan Singh Samra v. Wimpy

International Ltd., 185 (2011) DLT 428 for the simple

reason that it collects all the relevant authorities on the

issue, including some of the judgments cited before me

on behalf of the petitioners. This judgment entirely

supports the petitioners on this point.”{Para 31}


6. In view of the legal position spelt out in judgments noted

above, the acknowledgement of the debt in the balance sheet

extends the period of limitation. The acknowledgement is as on

31.3.2015. This suit is filed in 2017. The suit is clearly within

limitation. The present application is allowed.”

32. In Agni Aviation Consultants v. State of Telangana, 2020 SCC

OnLine TS 1462 : (2020) 5 ALD 561, the High Court of Telangana held:

“107. In several cases, various High Courts have held that an

acknowledgement of liability in the balance sheet by a

Company registered under the Companies Act, 1956 extends

the period of limitation though it is not addressed to the creditor

specifically. (Zest Systems Pvt. Ltd. v. Center for Vocational

and Entrepreneurship Studies, 2018 SCC OnLine Del 12116,

Bhajan Singh Samra v. Wimpy International Ltd., 2012 SCC

OnLine Del 2939, Vijay Kumar Machinery and Electrical Stores

v. Alaparthi Lakshmi Kanthamma, (1969) 74 ITR 224 (AP), and

Bengal Silk Mills Company, Raja of Vizianagram v. Official

Liquidator, Vizianagram Mining Company Limited, AIR 1952

Mad 1361).

108. Therefore it is not necessary that the acknowledgement of

liability must be contained in a document addressed to the

creditor i.e. the petitioners in the instant case.”

33. It is, therefore, clear that the majority decision of the Full Bench in V. Padmakumar (supra) is contrary to the aforesaid catena of judgments.The minority judgment of Justice (Retd.) A.I.S. Cheema, Member (Judicial), after considering most of these judgments, has reached the correct conclusion. We, therefore, set aside the majority judgment of the Full Bench of the NCLAT dated 12.03.2020.







Author: R.F. Nariman, J.

Dated:April 15, 2021.

Leave a Reply


Like The Idea Of Tablet Computing On A Budget?

Solid state drives are pricier than different exhausting drive choices, but they’re also quicker. There are a lot of avenues that thieves use to gather your data, they usually come up with new methods on a regular basis. Shred all documents which have sensitive data, similar to account numbers or your social safety quantity. Each […]

Read More

Pros And Cons – Astigmatism And Speak To Lenses

Also, individuals had this operation appreciate sports additional fun activities where vision was a previous problem sunglasses because of the glasses or contact lenses that they should wear so that you can play video game properly. There’ve also been cases with normal folks wearing glasses or contact lenses where accidents would occur when an item […]

Read More

How To Estimate Linked To Obesity . Of A Garage Door Opener

The third thing to test is if for example the door rollers are gummed up with excess oil or fat. Other objects additionally inhibit the traveling from the door. An accumulation of dirt and many other materials commonly evident in a garage can test the google lifetime of your door. This is your next best […]

Read More