Balance Sheet Entries Restart Limitation: Supreme Court

Balance Sheet Entries Can Restart Limitation: Supreme Court Revives Money Suit Rejected as Time-Barred

Yusuf v. Vigyapan Loke Delhi Advertising CGHS Ltd. 2026 INSC 1207 Decided 6 November 2026

Published: 6 November 2026 · NyayVidhan · 3 min read

In Yusuf v. Vigyapan Loke Delhi Advertising CGHS Ltd. (2026 INSC 1207), the Supreme Court held that a society's balance sheet entries carrying forward the amount claimed, read with cheques and bank reconciliation statements, amounted to an acknowledgment under Section 18 of the Limitation Act. A fresh limitation period ran from each acknowledgment, so no condonation application was needed. It set aside the Delhi High Court's rejection of the plaint and revived the suit, leaving the merits open (paras 14, 16-17).

Key holdings

Balance sheet entries can be an acknowledgment of liability under Section 18, read in context (para 10).

Section 18 needs no fixed format and no naming of the creditor, only an acknowledgment of a subsisting liability (para 14).

A fresh period of limitation runs from each acknowledgment, so no condonation application is required (para 16).

At the Order VII Rule 11 stage, a court should not conclusively find that no liability exists (para 15).

The Court did not decide the merits of the claim; all questions remain open for trial (paras 15, 17).

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Brief Facts

The original plaintiff sued in 2014 under Order XXXVII CPC for money due under a civil works contract of 10.02.2000 with the defendant-society, relying on running bills raised between 2000 and 2003 (paras 3.1, 6). On 06.01.2020 the Trial Court rejected the society's Order VII Rule 11 application, noting that its balance sheets for 2004, 2005 till 2013 reflected the outstanding amounts, which amounted to an acknowledgment of debt (para 3.3). On 04.11.2024 the Delhi High Court allowed the society's revision and rejected the plaint as barred by limitation, holding that the entries did not show an amount due and payable to the plaintiff (paras 3.5, 8). The plaintiff's legal heir appealed (para 3.6).

Court's Findings

The limited question was whether, given the balance sheet entries up to 2013, the suit could be rejected at the threshold as time-barred (para 5). Section 18 gives a fresh limitation period from a written acknowledgment of a subsisting liability (para 9). Balance sheet entries may amount to such an acknowledgment, read in the context of the balance sheet as a whole, as held in Bishal Jaiswal and reiterated in Naren Sheth (paras 10-11). Here the bank reconciliation statement recorded three cheques issued to the plaintiff, and later balance sheets carried forward an amount under ‘Balances pertaining to 2004-05’ (paras 12-13). Section 18 requires no fixed format and no naming of the creditor, only an acknowledgment of a subsisting liability, read with the surrounding circumstances (para 14). The entries do not conclusively prove the whole amount claimed; that needs evidence, and an Order VII Rule 11 court should not conclusively find that no liability exists (para 15). The argument that a time-barred debt cannot be revived without a condonation application failed, because a fresh period runs from each acknowledgment (para 16).

Legal Principle

Entries in a debtor's balance sheets, read with the surrounding documents and the balance sheet as a whole, can amount to a written acknowledgment of liability under Section 18 of the Limitation Act. A fresh period of limitation then runs from each acknowledgment, so the plaint cannot be rejected as time-barred at the threshold on that ground (paras 10, 14-16).

NyayVidhan's view · Practice note

Why It Matters

The ruling is about the stage of the case: a plea that a money suit is time-barred cannot be decided against the plaintiff at the Order VII Rule 11 stage if the plaint and the defendant's own accounts point to written acknowledgments (paras 14-16). Claimants relying on balance sheet entries should place the full set of balance sheets, with any notes and the auditor's report, before the court, since an entry is read in the context of the balance sheet as a whole (para 10). The Court left open how much is owed (paras 15, 17).

Editorial comment by the NyayVidhan Editorial Desk. It is not part of the Court's judgment and is not legal advice.

Precedents Relied Upon

Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal 2021 INSC 254 2021 INSC 254
Relied Upon Discussed at ¶ 10
Three-judge bench: entries in books of account, including balance sheets, may constitute an acknowledgment of liability under Section 18 of the Limitation Act, but an entry must be assessed in the context of the balance sheet as a whole, including qualifications or explanations in the notes or the auditor's report.
Axis Bank Ltd. v. Naren Sheth 2023 INSC 820 2023 INSC 820
Relied Upon Discussed at ¶ 11
Reiterated the same principle: Section 18 of the Limitation Act applies where balance sheets acknowledge a debt.