Sunday, 20 May 2018

SHORT NOTES ON LIMITATION ACT PART 3


S 18. Effect of acknowledgment in writing:-
Acknowledgment means a definite, clear admission of existing liability.

It is not necessary that there should be promise to pay. An acknowledgment does not create any new right of action but only enlarges the time and has the effect of making a new period run from the date of acknowledgment. Under this section, 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. There must be an unqualified,or an admission qualified by a condition which is fulfilled.

Ingredients of S 18 and essentials of a valid acknowledgment:-

To constitute a valid acknowledgment and thus to give a fresh period of limitation under this section,the following conditions must be satisfied.
1) The acknowledgment must have been made before the expiration of the period prescribed.


2) The acknowledgment must have been made by the party against whom the right is then claimed or by any person through whom he derives his title or liability.


3) acknowledgment must be in writing: however, if the acknowledgment is undated, oral evidence may be given of the time when it was signed.

4) Such acknowledgment must have been signed by the party, his agent or party against whom the right is then claimed or by any person through whom he derives his title or liability.

5) The acknowledgment must be an acknowledgment of liability. It is not necessary that the acknowledgment must also contain or import a promise to pay;a simple admission that debt is due,is quite sufficient under the Indian law. 
An acknowledgment will be sufficient for the purposes of this section even though it is coupled with a refusal to pay,or with a claim to set off, or with a statement that time for payment has not yet arrived. But all the same, it must be an admission of liability: a statement by the debtor implying that there is no liability does not amount to an acknowledgment.

6) The acknowledgment is not required to be made to the creditor or person entitled to the right or the property; it may be made to any person, even to one who has no connection with creditor.{See Explanation (a)}.

An acknowledgment of liability need not be express;it may by implication.

Read important judgments on acknowledgment:


S 18 LIMITATION ACT AND S 25 OF INDIAN CONTRACT ACT:-

The distinction between an 'acknowledgment' under S.18 of limitation act and 'promise' under S 25 of Contract Act is of great importance. Both must be in writing signed by the party or his agent authorized in that behalf, and both create a fresh starting point of limitation. But while an acknowledgment under limitation Act is required to be made before expiration of period of limitation, a promise under S 25 of contract may be made after limitation period. If a debt is time barred, there can be no acknowledgment of the debt; there can only be a promise to pay that sum. Such a promise would amount to a new contract.

New period,how computed

A new period of limitation shall be computed from time of acknowledgment that is from the time when it was signed.

S 19. EFFECT OF PAYMENT ON ACCOUNT OF DEBT OR INTEREST ON LEGACY:-

Ingredients of this section
This section provides that fresh period of limitation, will be computed in the following cases of payment:

a) it is paid before the expiration of the prescribed period.

b) it is paid by the person liable to pay debt or interest or legacy,or by his agent duly authorized in this behalf.

c) an acknowledgment of payment appears in the hand writing of or in a writing signed by the person making the same.

Just as,where acknowledgment of liability is made under S 18 of the Act,all the period that has run up to then is cancelled and a fresh period commences so also where payment is made under this section,a fresh starting point of limitation is afforded to the creditor.

S 20. EFFECT OF ACKNOWLEDGMENT OR PAYMENT BY ANOTHER PERSON

SCOPE OF THIS SECTION

This section explains the meaning of the words “agent duly authorized” as used in S 11 and S 18. According to this section,lawful guardian, committee or manager would be an agent duly authorized to sign the acknowledgment or to make the payment. So also agents so authorized by such guardian, committee or manager. The expression lawful guardian is not limited to guardian appointed by the court. It means any person who is entitled to act as guardian under the personal law of the minor.

Manager of a joint family
Sub S 3(a) of this section lays down two conditions in order that the acts of a member of a joint hindu family specified in S 18 and S 19 may extend the period of limitation against all the members. These conditions are

1) that the loan must have been incurred by or on behalf of the joint family, and

2) that the specified acts must be the acts not of any member of the family but must be the acts of the karta.

It is not, however necessary that the document evidencing the loan must on the face of it show that the loan has been incurred on behalf of joint family. If the fact that the loan has been incurred on behalf of family be established on the evidence,Sub S 3(b) of this section is attracted,if acknowledgment or part payment of the principal and interest has been endorsed by karta.

S 21. EFFECT OF SUBSTITUTING OR ADDING NEW PLAINTIFF OR DEFENDANT

Sub S 1. Where after the institution of a suit, a new plaintiff or defendant is substituted or added, the suit shall as regards him, be deemed to have been instituted when he was so made a party;

Provided that where the court is satisfied that the omission to include a new plaintiff or defendant was due to a mistake made in good faith,it may direct that suit as regards such plaintiff or defendant shall be deemed to have been instituted on any earlier date.

Sub S 2. Nothing in sub section 1 shall apply to a case where a party is added or substituted owing to an assignment or devolution of any interest during pendency of proceeding.

S 22 CONTINUING BREACHES AND TORTS

In the case of a continuing breach of contract or in the case of a continuing tort, a fresh period of limitation begins to run at every moment of the time during which the breach or the tort continues.

Object

Object of this section is to prevent multiplicity of suits and to enable one action to be brought for all loss suffered during the whole period the breach continued.

Continuous cause of action

A continuous cause of action is one arising from the repetition of acts or omissions similar to those in respect of which an action is brought.

Continuing breach

A continuing breach must be distinguished from successive breaches, as for instance, failure to pay rent,interest or other sums payable periodically. Here each successive breach constitutes an independent cause of action which is liable to become time barred after prescribed period.

S 23 SUITS FOR COMPENSATION FOR ACTS NOT ACTIONABLE WITHOUT SPECIAL DAMAGE

In the case of a suit for compensation for an act which does not give rise to a cause of action unless some specific injury actually results therefrom, the period of limitation shall be computed from the time when the injury results.

Specific injury

This section applies only to suits based on tort and does not apply to a case of negligence which constitutes a breach of contract. The word 'injury' includes legal injury.

S 24 COMPUTATION OF TIME MENTIONED IN INSTRUMENT

All instruments shall for the purposes of this Act be deemed to be made with reference to Gregorian calendar.



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