Bills dated 2000-03, suit filed in 2014: balance sheets running to 2013 save the plaint
Justice Vikram Nath, Justice Augustine George Masih and Justice Sandeep Mehta set aside the Delhi High Court and revive a contractor suit, holding that the society kept carrying his dues forward in its own balance sheets.
A contractor’s running bills dated from 2000 to 2003. He sued for them in 2014. The Delhi High Court threw out his plaint as time-barred, and on 6 November 2026 the Supreme Court restored it, because the society that owed him had kept the amount in its balance sheets up to 2013.
A bench of Justice Vikram Nath, Justice Augustine George Masih and Justice Sandeep Mehta held that entries in the society’s accounts can amount to a written acknowledgment under Section 18 of the Limitation Act, 1963. Each acknowledgment starts a fresh limitation period, so the suit could not be rejected at the threshold.
The judgment, written by Justice Nath, is marked reportable. It does not decide that the contractor is owed the money. That is for the trial court.
Mayur Vihar building, Rs 22 lakh claim
The original plaintiff, Wazir Hussain, sued in 2014 under Order XXXVII of the Code of Civil Procedure, 1908. He sought money due under a civil works contract dated 10 February 2000, made with a housing society for construction work on a multi-storey building in Mayur Vihar, Delhi.
He relied on running bills raised between 2000 and 2003. He claimed Rs 11,16,000, plus Rs 11,04,840 in interest at 9 per cent a year, with pendente lite and future interest at the same rate until payment. His legal heir, Yusuf, is the appellant in the Supreme Court.
Trial court and High Court part ways
The society applied under Order VII Rule 11 of the Code for rejection of the plaint. It said the suit was time-barred, disclosed no cause of action and was not maintainable in view of alleged embezzlement.
On 6 January 2020 the Trial Court refused. It noted that the outstanding amounts appeared in the society’s balance sheets for 2004, 2005 and on to 2013, which amounted to an acknowledgment of debt and gave a fresh period of limitation. Maintainability and the genuineness of the bills needed evidence.
The society went to the High Court in revision. By its order of 4 November 2024 in C.R.P. No. 66 of 2020 the High Court allowed the revision and rejected the plaint as barred by limitation.
It said the bank statements did not show an acknowledgment of liability beyond 2005, and that no balance sheet or other document showing acknowledgment had been produced. It also found that the balance sheet at 31 March 2013 showed a sum under sundry creditors for 2004-05 but did not indicate that it was due to the plaintiff.
The balance sheet question
The bench defined the question narrowly:
“whether in the face of entries of defendant’s balance sheets up to 2013, the suit could have been rejected at threshold as being barred by limitation.” (para 5)
The plaintiff’s case did not rest on the 2000-03 bills alone. The society had issued cheques to him that were dishonoured. He pointed to the society’s balance sheets, which carried an amount for 2004-05 forward to 2012-13, and to the entry of 31 March 2013 in particular.
What Section 18 asks for
Section 18 says that where, before the limitation period expires, an acknowledgment of liability is made in writing signed by the party against whom the right is claimed, a fresh period is computed from the date it was signed. The bench put it simply: a written acknowledgment of a subsisting liability renews limitation.
It relied on two of its own rulings. In Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal, a three-judge bench held that book entries, including balance sheets, may amount to acknowledgment. The caveat is that an entry must be read with the whole balance sheet, including notes and the auditor’s report.
Axis Bank Ltd. v. Naren Sheth reiterated that Section 18 applies where a balance sheet acknowledges a debt.
Cheques, reconciliation statements and carried-forward sums
The bench looked at what the plaintiff placed on record. The society’s bank reconciliation statements for 2004-05 name three cheques issued to Wazir Hussain Contractor. That, it said, connects the plaintiff directly with the society’s own financial records and with the transactions behind the suit.
Later balance sheets continued to carry about Rs 21.79 lakh under the head Balances pertaining to 2004-05. Read with the cheques and the reconciliation statements, the plaintiff said, the sum acknowledged liability from 2005 onwards.
The Court agreed that the surrounding circumstances supported that claim. Section 18 does not require the acknowledgment to name the creditor or take a fixed format. It requires only that, read with the circumstances of the transaction, it indicate “a subsisting jural relationship” (para 14).
On that footing the liability was reflected in the society’s own balance sheets and carried to 2013, renewing limitation each year.
A limit, and a rejected objection
The bench added a limit. The entries do not conclusively show that the whole claimed sum is owed. How the cheques, carried-forward amounts and claimed sum relate would need evidence, which is a matter for trial.
At the Order VII Rule 11 stage, it said, a court should not go into the depth of evidence and decide conclusively that no liability exists. It need only ask whether the plaint discloses a prima facie case on the available material.
The society argued that a time-barred debt cannot be revived indefinitely, least of all without an application to condone delay. The bench did not accept that. Since the entries amount to acknowledgments under Section 18, a fresh period runs from each date, and no condonation application was needed.
Order
The Supreme Court allowed the appeal and set aside the High Court’s order of 4 November 2024. The suit stands revived on the file of the Trial Court, and all questions on the merits of the claim remain open.
Pending applications were disposed of. The judgment records that the Court heard counsel for the parties; it does not name them.