The Supreme Court has held that a written acknowledgement of a subsisting liability — such as a debt carried forward in a company's balance sheets — gives rise to a fresh period of limitation, commencing from the date on which the acknowledgement is made. A three-judge bench of Justices Vikram Nath, Augustine George Masih and Sandeep Mehta delivered the judgment on November 6 in Yusuf v. Vigyapan Loke Delhi Advertising CGHS Ltd. (2026 INSC 1207), allowing the appeal and reviving the suit before the trial court.

Source: Verdictum

"Simply stated, a written acknowledgment of a subsisting liability gives rise to a fresh period of limitation, commencing from the date on which the acknowledgment is made. In effect, the period of limitation is renewed, or extended," the bench held, reiterating the principle recognised in Axis Bank Ltd. v. Naren Sheth that Section 18 of the Limitation Act applies where balance sheets acknowledge a debt.

Source: Verdictum

The bench explained that an acknowledgement under Section 18 need not name the creditor specifically or follow any fixed format, so long as it acknowledges a subsisting liability and shows a continuing legal relationship between the parties. The accounts, it said, must be read as a whole, including qualifications, explanatory notes and the auditor's report. Because the entries in this case operated as successive acknowledgements, each one started a fresh period, and no separate application to condone delay was necessary — though an acknowledgement must still be made before the existing limitation period expires.

Source: LawChakra

The case began with a summary suit filed in 2014 by the original plaintiff, contractor Wazir Hussain, under Order XXXVII of the Code of Civil Procedure to recover money due under a civil works contract dated February 10, 2000. The defendant housing society's balance sheets for 2004 and 2005 to 2013 continued to reflect the outstanding amounts; its balance sheet as on March 31, 2013 showed Rs 21,79,465 under sundry creditors pertaining to 2004-05, and a bank reconciliation statement recorded three cheques issued to the contractor.

Source: AdvocateKhoj (judgment text)

The trial court had refused to reject the plaint in January 2020, but the Delhi High Court, by its order of November 4, 2024, allowed the society's revision petition and rejected the plaint as barred by limitation, holding that the bank entries did not establish an acknowledgement extending beyond 2005. The Supreme Court disagreed, holding that the High Court had gone too far into disputed evidence at the threshold stage.

Source: AdvocateKhoj (judgment text)

The court was careful to limit its ruling: revival of the suit is not a decree for payment. The entries did not conclusively establish that the entire sum claimed belonged to the contractor, and the precise relationship between the cheques, the balances carried forward and the amount sued for will require evidence at trial. "The suit shall stand revived on the file of the Trial Court. All questions on the merits of the claim shall remain open," the bench directed.

Source: LawChakra