Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Nirali Nayak   28 June 2021

Debt money

Dear learned counsel, it would be of great help if you could provide me with a legal opinion as to whether the acknowledgment of a debt by the borrower, after the period of limitation has lapsed, helps the moneylender in proving debtors liability and subsequently claiming the money back?

Are there any relevant case laws to support the argument?



 6 Replies

Advocate Bhartesh goyal (advocate)     29 June 2021

As per sec 18 of limitation Act acknowledgment of debt must be within   limitation period and in writing , acknowledgment made after expiry of limitation period does not give right to claim debt.Debtor can't claim debt on basis of acknowledgement made after expiry of limitation period.

G.L.N. Prasad (Retired employee.)     29 June 2021

26th Academic query in the month of June from a first-year law student

K.K.Ganguly (Advocate)     29 June 2021

1. Yes, the limitation period gets extended from the date of acknowledging the debt by the borrower.

 

2. This is why Banks are taking pre-signed undated blank acknowledgement of debts from the Borrowers while providing loand to them.

 

3, Such blank acknowledgement of debts are filled up and used as cause of action to satisfy the limitation period while filing Original Application for recovery of the outstanding amount before the Debt Recovery Tribunals.

 

4. However, now a days the DRTs are refusing to accept such acknowledgements in case of very old NPAs where no amount has been paid for years.  

Vasundhara Singh (Student)     01 July 2021

Dear reader,  

Acknowledgement means acceptance or admission of something that exists and Section 18 of the limitation act mentions the term acknowledgement which means acceptance of liability and if such acknowledgement is done within the limitation period of the debt, the limitation period stands extended. It should be made sure that the acknowledgement is done explicitly in writing without any conditions and if the acknowledgement is done after the expiry of the limitation period of filing a suit, the limitation period will not be extended under this section. This section is often confused with Section 25(3) of the Indian Contract Act, 1972 which deals with a promise to pay. 

Where section 18 of the Limitation Act extends the limitation period only the acknowledgement is done within the limitation period whereas Section 25(3) of the Indian Contract Act, 1972 deals with cases where the limitation period is already expired.   

Section 18 of the Limitation Act would extend limitation only according to provisions mentioned in Limitation Act. Once the debt becomes time-barred which means the limitation period has already expired and the creditor cannot claim his money, the only way it can be revived is when the debtor enters into a new agreement with the creditor and promises to pay the time-barred unconditionally.   

Regards  

Vasundhara Singh  

G.L.N. Prasad (Retired employee.)     01 July 2021

Past debt, to pay the expired debt (limitation) is also treated as consideration.  Agreements may be oral or in writing.  When there is no opportunity to recover the expired debt, some advocates link these two things to cook up a story to file suits on some grounds.  This is risky and winning such a suit is uncertain.

T. Kalaiselvan, Advocate (Advocate)     01 July 2021

The Limitation Act provides for the bar of limitation on the institution of legal proceedings in India. No suit, appeal or application filed after the expiration of the period prescribed in the Schedule to the Limitation Act may be entertained. However, such expiration is subject to certain exceptions, one of them being contained in Section 18, which provides for extension of the limitation period.

The essential ingredients for invocation of this provision are: (i) there must be an acknowledgement of liability in respect of a property or a right; (ii) the acknowledgement must be in writing, signed by the party against whom such right or property is claimed (or by any person through whom he derives his title or liability); and (iii) the acknowledgement must be made before the expiration of the prescribed limitation period.

Certain other essential requirements, prescribed by the Supreme Court in Khan Bahadur Shapoor Fredoom Mazda v. Durga Prosad Chamaria, are that the acknowledgement must (i) relate to a subsisting liability; (ii) indicate the existence of a jural relationship between the parties; and (iii) be intended, either expressly or impliedly, to admit that jural relationship.

 


Leave a reply

Your are not logged in . Please login to post replies

Click here to Login / Register  



Post a Suggestion for LCI Team
Post a Legal Query