Balance-sheet acknowledgment in limitation: a duly signed balance-sheet may extend limitation, including in insolvency disputes.

A duly signed balance-sheet may constitute an acknowledgment of liability in writing for the purposes of section 18 of the Limitation Act, including in insolvency proceedings, and the statutory preparation of accounts does not by itself exclude that effect. The order surveys Supreme Court and High Court authority supporting that position and notes that limitation may still depend on the pleaded facts and evidence in each case. It also records that the contrary view in V. Padmakumar was not accepted as settled law and was referred for reconsideration by a five-member Bench. The matter therefore remained open for authoritative reconsideration of the limitation question.

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Issues: (i) Whether an entry in a company's balance-sheet can amount to an acknowledgment of debt for the purposes of section 18 of the Limitation Act, 1963, including in insolvency proceedings; (ii) whether the earlier view in V. Padmakumar v. Stressed Assets Stabilisation Fund (SASF) requires reconsideration.

Issue (i): Whether an entry in a company's balance-sheet can amount to an acknowledgment of debt for the purposes of section 18 of the Limitation Act, 1963, including in insolvency proceedings.

Analysis: The order surveys a consistent line of authority from the Supreme Court and several High Courts holding that an admission of liability in a duly prepared and signed balance-sheet may constitute an acknowledgment in writing and extend limitation. It also notes that the statutory nature of balance-sheet preparation does not by itself exclude the possibility of acknowledgment, and that the question of limitation may depend on pleaded facts and evidence in a given case.

Conclusion: The view that section 18 is inapplicable to insolvency proceedings was not accepted.

Issue (ii): Whether the earlier view in V. Padmakumar v. Stressed Assets Stabilisation Fund (SASF) requires reconsideration.

Analysis: The order records that the majority view in V. Padmakumar is inconsistent with the settled judicial position on balance-sheet acknowledgments, while the minority view aligns with that position. It further notes that the reasoning in the earlier decision did not adequately address the cited precedents and that the matter is of sufficient importance to warrant reconsideration by a larger Bench.

Conclusion: The earlier decision was referred for reconsideration by a five-member Bench.

Final Conclusion: The appeal was not finally decided on the merits and was carried forward for authoritative reconsideration of the limitation question.

Ratio Decidendi: A duly signed balance-sheet may constitute an acknowledgment of liability in writing for the purposes of section 18 of the Limitation Act, 1963, and the statutory preparation of such accounts does not by itself negate that legal effect.

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