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Civil Law

Section 18 Limitation Act

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 28-Jul-2025

M/S. Airen and Associates v. M/S. Sanmar Engineering Services Limited

"Acknowledgment of partial debt would not extend limitation period for entire debt under Section 18." 

Justices Sanjay Kumar and SC Sharma

Source: Supreme Court 

Why in News? 

Recently Justices Sanjay Kumar and SC Sharma observed that "acknowledgment of partial debt would not extend the limitation period for the entire debt under Section 18 of the Limitation Act, 1963" while upholding the Chhattisgarh High Court's decision in a debt recovery case. 

  • The Supreme Court held this in the matter of M/S. Airen and Associates v. M/S. Sanmar Engineering Services Limited (2025). 

What was the Background of M/S. Airen and Associates v. M/S. Sanmar Engineering Services Limited (2025) Case? 

  • The appellant filed a suit seeking recovery of Rs. 3,07,115.85 (Rupees three lakhs seven thousand one hundred fifteen and eighty-five paisa only) along with interest at the rate of 18% per annum. 
  • The debtor (respondent) acknowledged only a partial debt of Rs. 27,874.10 (Rupees twenty seven thousand eight hundred seventy four and ten paisa only) out of the total claimed amount. 
  • The appellant sought extension of limitation for the full amount based on the partial acknowledgment by the debtor. 
  • The trial court dismissed the suit on limitation grounds, finding that the claim was time-barred. 
  • The appellant then appealed to the Chhattisgarh High Court, which allowed the appellant's claim only with respect to the acknowledged amount. 
  • The High Court held that the benefit of Section 18 cannot be extended to the entire claim as the same was not fully acknowledged by the debtor. 
  • The respondent's reply never admitted the appellant's full claim and only explicitly disputed the contract value while acknowledging only the smaller amount as due. 

What were the Court's Observations? 

  • A bench of Justices Sanjay Kumar and SC Sharma upheld the Chhattisgarh High Court's decision, denying the benefit of Section 18 to the appellant for the entire claim. 
  • The Supreme Court observed that "there was no acknowledgment of the full amount claimed by the appellant, in terms of the requirement prescribed in Section 18 of the Act of 1963, the question of extending the period of limitation for the entire suit claim of the appellant did not arise." 
  • The Court clarified that Section 18 could not revive the time-barred claim for the unacknowledged balance since only a partial amount was acknowledged. 
  • The Court emphasized that limitation is extended only for the admitted sum, not the entire claim, reinforcing established jurisprudence on debt acknowledgment. 
  • A reference was made to the precedent case of J.C. Budhraja vs. Chairman, Orissa Mining Corporation Ltd. & Anr., (2008) 2 SCC 444, where the Court had similarly held that limitation is extended only for the admitted sum. 
  • The Supreme Court dismissed the appeal, confirming that partial acknowledgment cannot benefit the entire claim under Section 18. 

What are the Legal Principles Established by Case ? 

Partial v. Full Acknowledgment: 

  • Partial acknowledgment of debt does not extend limitation for the entire claim but only for the acknowledged portion. 
  • The debtor must acknowledge the full liability claimed by the creditor for Section 18 to apply to the entire debt. 
  • Disputed portions of the claim remain subject to the original limitation period and cannot benefit from acknowledgment of undisputed amounts. 

What is Section 18 of the Limitation Act, 1963? 

About: 

  • Section 18 of the Limitation Act, 1963 deals with the "Effect of acknowledgment in writing" and provides for extension of the limitation period in cases where debt is acknowledged. 
  • The section states that where, before the expiration of the prescribed period, the person liable for any debt or legacy acknowledges his liability in respect of such debt or legacy by any writing signed by him and addressed to the person entitled thereto or to his agent, a fresh period of limitation shall be computed from the time when such acknowledgment was so signed. 
  • The acknowledgment must be clear, unequivocal, and unambiguous regarding the liability of the debtor. 
  • The acknowledgment must be made before the expiration of the prescribed limitation period. 
  • The acknowledgment must be in writing and signed by the person liable for the debt. 

Requirements for Valid Acknowledgment under Section 18 of the Act : 

  • The acknowledgment must be clear and unambiguous about the extent of liability. 
  • It must be made in writing and signed by the person liable. 
  • The acknowledgment must be made before the limitation period expires. 
  • Conditional or qualified acknowledgments may not satisfy the requirements of Section 18. 

Effect on Limitation Period: 

  • A valid acknowledgment starts a fresh limitation period from the date of acknowledgment. 
  • The fresh period applies only to the acknowledged debt, not to any additional or disputed amounts. 
  • Time-barred claims for unacknowledged portions cannot be revived through partial acknowledgment.