A creditor need not be named in a fixed form of acknowledgment for Section 18 of the Limitation Act to apply. The Supreme Court has revived a contractor’s recovery suit after finding that the society’s financial records, read together, carried forward the liability and renewed limitation. Whether the entire sum claimed was actually payable remains for trial.
New Delhi: A civil-works contractor’s money-recovery suit is back before the trial court after the Supreme Court held that the Delhi High Court went too far into disputed evidence while deciding whether the claim was time-barred [Yusuf v. Vigyapan Loke Delhi Advertising CGHS Ltd.].
A three-judge bench of Justices Vikram Nath, Augustine George Masih and Sandeep Mehta allowed the appeal on November 6, 2026. The judgment restores the suit to the trial court and expressly leaves all questions on the merits open.
Revival of the suit is not a decree for payment
Paragraph 15 draws an important limit. The entries did not conclusively establish that the whole amount claimed belonged to the contractor. The precise relationship between the cheques, the balances carried forward and the sum sued for required evidence.
At the plaint-rejection stage, the High Court should not have conclusively determined that liability did not exist by examining those disputed matters in depth. The consequence of the Supreme Court’s ruling is that the recovery claim can proceed to trial, where the society remains free to contest its merits.
The financial records behind the dispute
The original plaintiff, Wazir Hussain, brought a summary suit in 2014 over a construction contract dated February 10, 2000, relating to a multi-storey building in Mayur Vihar. He sought Rs.11.16 lakh as principal, interest already calculated at nine per cent a year, and further interest until payment. His legal heir pursued the appeal.
The society sought rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure. It argued, among other things, that claims based on running bills from 2000 to 2003 were too late. The trial court declined to reject the suit, but the High Court allowed the society’s revision in November 2024.
The Supreme Court examined the creditor’s reliance on balance sheets and bank-reconciliation records. The reconciliation statement expressly recorded three cheques issued to the contractor, while later accounts continued to carry forward balances relating to 2004–05. The plaintiff’s case was that the money claimed formed part of those carried-forward amounts.
Acknowledgment must be read in context
Section 18 provides for a fresh limitation period where a signed written acknowledgment of liability is made before the existing prescribed period expires. The Court applied the principle that balance-sheet entries can constitute such an acknowledgment, while stressing that the accounts must be read as a whole, including qualifications, explanatory notes and the auditor’s report.
In paragraph 14, the bench explained that the acknowledgment need not specifically name the creditor or follow a fixed format. Read with the surrounding circumstances, it must show a subsisting legal relationship between the parties. Here, the financial records and the identified cheques supported the contractor’s case that the liability continued to be reflected up to 2013.
The Court rejected the society’s argument that a separate application to condone delay was necessary. Because the entries operated as successive acknowledgments under Section 18, a fresh period ran from each acknowledgment. This reasoning applies to the continuing acknowledgments found in these records; it does not dispense with the statutory requirement that acknowledgment occur before limitation expires.
Case: Yusuf v. Vigyapan Loke Delhi Advertising CGHS Ltd.
Proceeding: Civil appeal arising from SLP(C) No.30778/2024
Citation: 2026 INSC 1207
Bench: Justices Vikram Nath, Augustine George Masih and Sandeep Mehta
Date: November 6, 2026
Outcome: Appeal allowed; High Court order set aside; suit revived with merits left open.
