Computation of limitation: exclusion of time, fraud, acknowledgment, part-payment and continuing wrongs

1. General rules of computation (sections 12 and 24)

• The first day is excluded (section 12(1)): the day from which the period is reckoned is not counted. If a loan is made on 1 March 2023, three years under Article 19 end on 1 March 2026.
• Appeals, revisions and reviews (section 12(2) and (3)): the day the judgment was pronounced and the time requisite for obtaining a copy of the decree or order, and of the judgment, are excluded. Time taken by the court to prepare the decree before the application for copy is made is not excluded (Explanation).
• Setting aside an award (section 12(4)): the time to obtain a copy of the award is excluded.
• Calendar (section 24): all instruments are deemed to refer to the Gregorian calendar. Under the General Clauses Act, 1897, a month and a year are reckoned according to the British calendar.
• Court closed on the last day: section 4 (see the previous note).

2. Exclusion of time (sections 13 to 15)

Section 13. Where leave to sue or appeal as a pauper (indigent person) was applied for and refused, the time during which the applicant prosecuted the application in good faith is excluded, and the court may treat the suit as if court-fee had been paid at the start.

Section 14: proceeding bona fide in a court without jurisdiction. In computing limitation for a suit, the time during which the plaintiff was prosecuting with due diligence another civil proceeding against the defendant, in a court of first instance, appeal or revision, is excluded where:

• the earlier proceeding related to the same matter in issue (for an application, the same relief);
• it was prosecuted in good faith (section 2(h): with due care and attention); and
• the court was unable to entertain it from defect of jurisdiction or other cause of a like nature. Misjoinder of parties or causes of action is a cause of a like nature (Explanation (c)).

Both the day the earlier proceeding began and the day it ended are counted in the excluded period (Explanation (a)). Section 14(3) applies the exclusion to a fresh suit filed with permission under Order XXIII rule 1 where permission was granted for a jurisdictional defect. In Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department, 2008 INSC 447, (2008) 7 SCC 169, the Court held that section 14 is to be construed liberally to advance justice, and that it applies to an application to set aside an arbitral award under section 34 of the Arbitration and Conciliation Act, 1996, since that Act does not exclude it.

Section 15. Time is excluded:

• while the suit or execution is stayed by injunction or order (sub-section (1));
• for the period of a statutory notice, such as the two months under section 80 CPC, or the time needed to obtain a required consent or sanction of the Government (sub-section (2));
• for a receiver or liquidator, from the institution of the insolvency or winding up till three months after his appointment (sub-section (3));
• for an execution purchaser's suit for possession, while proceedings to set aside the sale were pending (sub-section (4)); and
• while the defendant was absent from India (sub-section (5)).

3. Postponing the start (sections 16, 17 and 23)

Death (section 16). Where the person who would have had the right to sue dies before the right accrues, or the right accrues only on someone's death, limitation runs from the time there is a legal representative capable of suing; and similarly on the defendant's side. It does not apply to pre-emption suits or suits for possession of immovable property or a hereditary office.

Fraud and mistake (section 17). Where (a) the suit is based on the fraud of the defendant or his agent, (b) knowledge of the right is concealed by such fraud, (c) the suit is for relief from the consequences of a mistake, or (d) a document necessary to establish the right has been fraudulently concealed, limitation does not begin until the plaintiff discovered the fraud or mistake or could with reasonable diligence have discovered it (or, for a concealed document, first had the means to produce it). The proviso protects a bona fide purchaser for value who was not a party to the fraud and had no reason to believe in it. Under section 17(2), where the judgment-debtor has by fraud or force prevented execution within time, the court may extend the period on the decree-holder's application made within one year of discovery of the fraud or the cessation of force.

Special damage (section 23). For acts not actionable without special damage, such as slander not actionable per se or withdrawal of support to land, time runs from when the injury results.

4. Acknowledgment in writing (section 18)

Where, before the expiry of the prescribed period, an acknowledgment of liability in respect of property or a right has been made in writing signed by the party against whom it is claimed (or a person through whom he derives title or liability), a fresh period of limitation is computed from the date it was signed.

Essentials of a valid acknowledgment:

• it must be made before the period expires; an acknowledgment of a time-barred debt does not revive it under section 18 (though a written promise to pay may be a fresh contract under section 25(3) of the Contract Act);
• it must be an admission of a subsisting liability, express or implied, with an intention to admit the jural relationship of debtor and creditor;
• it must be in writing; oral evidence of its contents is not admitted, though oral evidence of the date of an undated writing is (section 18(2));
• it must be signed by the party or his duly authorised agent (Explanation (b));
• it must relate to the property or right in question, but need not specify its exact nature or amount.

Explanation (a) adds that an acknowledgment is sufficient even though it omits the exact nature of the right, says the time for payment has not come, is accompanied by a refusal to pay, is coupled with a claim to set-off, or is addressed to someone other than the person entitled. An application for execution is not an application in respect of property or a right (Explanation (c)), so section 18 does not apply to execution.

In Khan Bahadur Shapoor Fredoom Mazda v. Durga Prosad Chamaria, AIR 1961 SC 1236, the Court held that the statement must indicate the existence of a jural relationship, such as debtor and creditor, and an intention to admit it, express or implied; it need not amount to a promise to pay; and the words used must be construed in the light of the surrounding circumstances, liberally but without stretching them to make out an acknowledgment that is not there.

5. Part-payment (sections 19 and 20)

Where payment on account of a debt, or of interest on a legacy, is made before the period expires by the person liable or his authorised agent, a fresh period runs from the date of payment (section 19). Conditions: the payment must be made within the period; it must be on account of the debt; and an acknowledgment of the payment must appear in the handwriting of, or a writing signed by, the person making it (proviso). A mortgagee's receipt of rent or produce from mortgaged land in his possession is payment (Explanation (a)). A decree debt is not a “debt” for this purpose (Explanation (b)).

Section 20 extends “agent duly authorised” to the guardian of a person under disability, and makes an acknowledgment or payment by the karta of a Hindu undivided family bind the family. One of several joint contractors, partners, executors or mortgagees is not bound merely by another's acknowledgment or payment (section 20(2)).

6. New parties and continuing wrongs (sections 21 and 22)

Section 21. A newly added or substituted plaintiff or defendant is deemed to be sued when he is made a party, unless the court finds that the omission was a good faith mistake and directs an earlier date. This does not apply to parties added on assignment or devolution during the suit.

Section 22. In a continuing breach of contract or a continuing tort, a fresh period begins to run at every moment the breach or tort continues. In Balkrishna Savalram Pujari v. Shree Dnyaneshwar Maharaj Sansthan, 1959 INSC 27, AIR 1959 SC 798, the Court explained that a continuing wrong is one that creates a continuing source of injury and renders the doer responsible for its continuance. Where the wrongful act is complete, though its effect continues, as on wrongful dispossession, the wrong is not continuing. Exclusion from a temple office by dispossession was held to be a completed act, not a continuing wrong.

7. Problem

Bargav borrowed money from Sagar. Before limitation expired, he wrote to Sagar: “I owe you ₹50,000. But I refuse to pay the same.” Is this a valid acknowledgment? (February 2025)

Issue. Whether a written admission accompanied by a refusal to pay is an acknowledgment under section 18.

Law. Section 18 requires an admission of subsisting liability, in writing, signed by the debtor, made before the period expires. Explanation (a) says an acknowledgment may be sufficient though it is accompanied by a refusal to pay. Shapoor Fredoom Mazda requires only that the jural relationship be admitted; a promise to pay is not needed.

Application. “I owe you ₹50,000” clearly admits the relation of debtor and creditor and a present liability. The refusal to pay is exactly what Explanation (a) contemplates and does not take the statement out of section 18. It was written before the period expired. The only further requirement is that the letter be signed by Bargav or his authorised agent.

Conclusion. If signed, it is a valid acknowledgment, and Sagar gets a fresh period of three years from the date of signing within which to sue.

How this is examined

“State essentials of valid acknowledgement” (June 2025) is answered from part 4 with Shapoor Fredoom Mazda, and the Bargav problem (February 2025) as in part 7. “Effects of fraud on the period of limitation” and “General rules as to calculation of limitation period” (both August 2024) use parts 3 and 1. Section 14 is a frequent short note; mention Consolidated Engineering. Continuing wrong under section 22 also appears as a short note.