Electronic acknowledgement of debt can extend limitation when an e-mail admits liability and is traceable to the debtor.

A written acknowledgement of liability for limitation purposes need not follow any particular form, and an e-mail can satisfy the requirement where it is traceable to the debtor and admits the dues. Applying the Limitation Act alongside the Information Technology Act, the Karnataka HC recognised electronic correspondence as a valid acknowledgement when transmission was undisputed. The admitted debt was therefore not time-barred, and the continuing failure to pay supported the company's inability to discharge its debt. On that basis, the winding up petition was admitted.

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Issues: Whether an e-mail acknowledging liability constitutes a valid acknowledgement of debt for the purpose of limitation, and whether the company petition for winding up could be admitted on the basis of the admitted outstanding debt.

Analysis: Section 18 of the Limitation Act, 1963 requires an acknowledgement of liability to be in writing and signed, but the expression is not confined to any particular form. The e-mails sent by the respondent admitted the dues and indicated an intention to settle them progressively. In the context of the Information Technology Act, 2000, an electronic record has legal recognition, and communication by e-mail from the originator to the addressee satisfies the requirement of writing. The Court held that such electronic acknowledgement, when traceable to the respondent and not disputed as to transmission, answers the requirement of Section 18. The respondent's admitted liability was therefore not barred by limitation. As the admitted dues remained unpaid despite opportunity, the respondent was shown to be unable to pay its debt.

Conclusion: The e-mail constituted a valid acknowledgement of debt, the claim was not time-barred, and the winding up petition was admitted.

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