TaxTMI 
TaxTMI 
2025 (7) TMI 1985
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....itation under Section 18 of the Limitation Act, 1963 ["Act of 1963", for short], for its entire suit claim. The appellant undertook certain work for the respondent and claimed to have completed it on 07.02.1991. It then addressed notice dated 14.03.1992 to the respondent, raising a claim for Rs.3,07,115.85 (Rupees three lakhs seven thousand one hundred fifteen and eighty five paisa only). The respondent issued reply dated 21.05.1992 through an Advocate, stating that the contract value of the work itself was 1,55,223/- (Rupees one lakh fifty five Rs. thousand two hundred twenty three only) and that a sum of Rs.1,00,000/- (Rupees one lakh only) had already been paid to the appellant after certain deductions. The respondent, however, acknow....
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....ndent, the appellant would be entitled to recovery of only the acknowledged sum of 27,874.10 (Rupees twenty Rs. seven thousand eight hundred seventy four and ten paisa only) along with interest thereon at the rate of 12% per annum from 01.04.1991 till the date of actual payment. Aggrieved by such reduction of its claimed amount, the appellant is before this Court. The facts having been set out hereinabove, the short point for consideration is whether the acknowledgment given by the respondent, under its legal notice dated 21.05.1992, would amount to an acknowledgment that would attract the extended period of limitation under Section 18 of the Act of 1963 for the entire suit claim. Section 18 of the Act of 1963 reads as follows: - ....
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....stated provision, there must be an 'acknowledgment of liability in respect of the property or right in question' and even if such an acknowledgment is accompanied by refusal to pay, it would mean that the period of limitation would have to be computed from the time when such acknowledgment is signed. In the case on hand, the respondent never acknowledged the sum claimed by the appellant in its notice dated 14.03.1992. On the other hand, the respondent clearly asserted that the contract value was much lesser, being just 1,55,223/- (Rupees one lakh fifty five Rs. thousand two hundred twenty three only), and went on to state that only a sum of 27,874.10 (Rupees twenty seven thousand eight Rs. hundred seventy four and ten paisa only) was due....
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....y in regard to the sum of Rs. 75,000/- which is due. If the contractor files a suit for recovery of the said Rs. 75,000/- due in regard to work done and also for recovery of Rs. 50,000/- as damages for breach by the employer and the said suit is filed beyond three years from completion of work and submission of the bill but within three years from the date of acknowledgement, the suit will be saved from bar of limitation only in regard to the liability that was acknowledged, namely Rs. 75,000/- and not in regard to the fresh or additional claim of Rs. 50,000/- which was not the subject-matter of acknowledgement. What can be acknowledged is a present subsisting liability. An acknowledgment made with reference to a liability, cannot extend li....