Under Section 18 of the Limitation Act, where, before the expiry of the prescribed period, an acknowledgement of liability in respect of the debt has been made in writing and signed by the debtor (or its agent), a fresh period of limitation is computed from the date of the acknowledgement. The acknowledgement need not state the exact amount or promise to pay; it must admit a subsisting liability. If undated, oral evidence of the date is allowed.
How Section 18 works in India
The acknowledgement must relate to the particular debt and admit that it exists. "We confirm the balance of ₹4,50,000 as on 31 March" qualifies. "We will settle your account once our dues are received" has been held to qualify as it admits a liability. "We dispute your bill" does not. The signature can be that of a partner, director, authorised signatory or accountant acting within authority. Each valid acknowledgement restarts the clock, so a debt can be kept alive indefinitely by annual confirmations. Entries in the debtor company's balance sheet showing the creditor have been accepted by courts and the NCLT as acknowledgements.
Why it matters for getting paid
Suppliers who carry old dues on friendly terms must collect an acknowledgement before the three years run out, or lose the claim. The simplest route is a year-end balance confirmation signed and stamped by the buyer, which also helps with GST and audit. A legal notice that draws an admission in reply does the same. See ledger confirmation, reply to legal notice and the 3-year limitation period.
How FundRaksha uses it
FundRaksha's advocates search the client's correspondence for acknowledgements before deciding whether a claim is alive, and draft notices to invite an admission. Where limitation is near, filing is expedited. This review is part of the free consultation, and the 30% fee applies only to money recovered.
Worked example (hypothetical)
A Chennai electrical contractor completed work on 1 June 2023 with payment due on completion; limitation would expire on 1 June 2026. On 31 March 2025 the client's accounts manager signed and stamped a balance confirmation showing ₹6,20,000 payable to the contractor. This is a Section 18 acknowledgement, so the fresh period runs to 31 March 2028. On 15 May 2027 the contractor sends a legal notice; the client replies admitting ₹6,20,000 but seeking a discount. That reply is a further acknowledgement, extending the period to 15 May 2030. The contractor files a summary suit in July 2027 with both documents as exhibits.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.