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Write a short note on effect of acknowledgement on limitation [ D.H.J.S 2015 ]
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.
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.
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.
Essentials
(1) It is mere acknowledgement
of the liability in respect of the right
(2) It need not be
accompanied by a promise to pay either expressly or even by implication
(3) It must relate to a
present subsisting liability though the exact nature or the specific character
of the said liability may not be indicated in words
(4) It must indicate
the existence of jural relationship between the parties
(5) The intention of
the acknowledgement can be inferred from the nature of admission, it need not
be expressed in words
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 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 night;
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.
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.
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.
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.
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.
NOTES -
It is not necessary that an acknowledgment within Section 18 must contain a
promise pay or should amount to a promise to pay. (Subbarsadya v.Narashimha,
AIR 1936 Mad.939)
The above section
corresponds to S.19 of the old Act and makes slight changes.
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.
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.
The effect of a
‘without prejudice’ communication is found in Section 23 of the Indian
Evidence Act, 1872, which reads as follows:
“In civil cases no
admission is relevant, if it is made either upon an express condition
that evidence of it is not to be given, or under circumstances from
which the Court can infer that the parties agreed together that evidence of
it should not be given.”
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