Acknowledgement of debt in balance sheet, held, extends period of limitation under Section 18 of Limitation Act: Delhi HC

Delhi High Court: A Single Judge Bench comprising of Jayant Nath, J. allowed an application filed by the plaintiff seeking a decree on admission under Order 13-A Rule 3 of the Commercial Courts, Commercial Division and Commercial Appellate Division of the High Courts Act, 2015.

The suit was filed for recovery of certain sums along with interest. The plaintiff submitted that as per the balance sheet of the defendant, a sum of Rs 2,25,38,966 was payable to the plaintiff. The defendant challenged the suit on the ground of limitation. The petitioner, relying upon earlier judgments of the Court, contended that acknowledgment in the balance sheet by the defendant extended the period of limitation.

The High Court after considering submissions of the parties, cited the observations in Shahi Exports (P) Ltd. v. CMD Buildtech (P) Ltd., 2013 SCC OnLine Del 3739 including inter alia: “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 acknowledgment of the debt and has the effect of extending the period of limitation under Section 18 of the Limitation Act, 1963.”

Relying on the above case, the Court held that acknowledgment of debt in the balance sheet extends the period of limitation. On the basis of such position in law, the suit was held to be within the limitation period. The application was accordingly allowed. [Zest Systems (P) Ltd. v. Centre for Vocational Entrepreneurship Studies,2018 SCC OnLine Del 12116, dated 19-09-2018]

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