Section 19. Effect of payment on account of debt or of interest on legacy

Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made:

Provided that, save in the case of payment of interest made before the 1st day of January, 1928, an acknowledgement of the payment appears in the handwriting of, or in a writing signed by, the person making the payment.

Explanation: For the purposes of this section –

(a) where mortgaged land is in the possession of the mortgagee, the receipt of the rent or produce of such land shall be deemed to be a payment;

(b) “debt” does not include money payable under a decree or order of a court.


Two conditions are essential: First, the payment must be made within the prescribed period of limitation and secondly, it must be acknowledged by some form of writing either in the handwriting of a payer himself or signed by him. If there is no acknowledgment in the required form, the payment by itself is of no avail. A written or signed acknowledgement is the only mode of proof of the payment.

The principle underlying the section is that such payment implies an admission of a right and an acknowledgment of the corresponding liability. The term ‘person liable to pay debt’ includes not only a person who is personally liable but also a person who is not personally liable but whose interest in the family property is liable.

An example – A took a loan of Rs. 500 from B and went out. After 2 years and 11 months he sent money to his son, instructing him to pay the same to B towards interest of the said loan. The son pays the money to B and signs the endorsement of the payment on the loan deed. After 2 years of the said payment, B brings suit against A to recover the loan and remaining interest, claiming fresh period of limitation from the date of payment. The suit is within time inasmuch as the last payment was made by A’s son who was duly authorised by A in this behalf. So, the limitation period would start afresh from the date of that payment.

Another example – The plaintiff lent money to the defendant who passed a promissory note for Rs. 18,500/- on February 4, 1980. The defendant paid Rs. 100 to the plaintiff, and made an endorsement on the note on January 24, 1983, stating “paid Rs. 100 today in the pro-note” and signed it. Soon after the plaintiff made entries in his books of account showing that he had given credit for the sum of Rs. 100 against the principal sum, and, on December 15, 1985 a copy of the account was sent to the defendant. The plaintiff sued on January 24, 1986 to recover the amount due on promissory note. A question arose whether the claim was within time. The plaintiff relied on the endorsement of January 24, 1983, and contended that the payment by the defendant and the appropriation thereof towards part-payment of the principal by the plaintiff, within the period of limitation, brought the claim within time under the Limitation Act. The defendant contended that payment was a general one and the creditor’s appropriation was not valid in law.

Here, the defendant pays Rs. 100 in his own handwriting within the prescribed period and the plaintiff appropriates it towards principal amount straightaway. This payment is part-payment of principal from which fresh period of limitation begins to run.

Mode of Payment – This section does not specify any particular mode or form of payment. Payment under Sec. 19 may be made not only in money but in any other medium that the creditor may choose to accept. Payment in kind may be made. The deposits in the bank by the defendant to plaintiff’s account must be accompanied by deposit or signed by the person making the payment.

In Today Stationers & Gift Centres V. Allahabd Bank 2004(1) ICC 166 (P & H), it was held that mere entry by the bank in its books of account of the interest due to the debtor would not stop the time running because such unilateral entry by the bank was not based on mutual transactions.

Where a cheque is signed by the debtor and addressed to the creditor in part-payment of the principal, and the cheque is honoured, Sec. 19 is complied with. If the cheque is dishonoured, the limitation would not be saved, as it is not a valid payment or acknowledgment of the debt within the meaning of this section. (Arjunlal Dhanji Rathod v. Dayaram Premji Padhion, 1971 BLJR 307).

Part-Payment of principal — Where part of the principal is paid, the fact of its being a part[1]payment need not be so stated; it may be inferred from the state of accounts between the parties.

Sec. 19 covers any part-payment by debtor though the debtor had not made it clear whether the payment was towards the interest or towards the principal as such.

Payment of interest made by one heir of the original debtor is effectual under this section to save limitation against the other co-heirs also.

Where an endorsement of payment on a bond is sought to save the bond from the limitation, it is not necessary that there should be an actual payment of money at the time of endorsement. But the period is to be reckoned from the date of payment and not from the date of endorsement of such payment.

Sant Lal Vs. Kamla Prasad (AIR 1951 SC 447)

In this case a mortgage bond was dated 8.4.1927, with due date of 6.3.1928. The defendants made several payments towards satisfaction of debt, the last payment was made on 15.05.1936. A suit was filed by the plaintiff on 4.3.1940. The position was that if the suit could be treated as a mortgage suit pure and simple for enforcement of a charge on immovable property, the suit was within time (a 60-year limitation period for such suit). But if the suit is one for obtaining a personal money decree against the debtor, then the suit would become barred (a 6-year limitation period for such suit), unless saved by the payments made under Sec. 19. However, the contention of the appellants is that as there is no acknowledgment in the handwriting of, or in any writing signed by the payer in respect of any of payments, they could be no avail in giving a fresh start to the period of limitation.

The Court found that none of the payments was endorsed on the bond itself and there was no acknowledgment either in the handwriting of or signed by the debtors prior to the institution of the suit. However, the defendants filed a signed written statement, in the present suit, which contained an admission about the several payments made. The question is whether such statement would fulfil the requirements of a signed acknowledgment as contemplated by proviso to Sec. 19.

While the Sec. 19 requires that the payment should be made within the period of limitation, it does not require that the acknowledgment should be made within that period. But while it is not necessary that the written acknowledgment should be made prior to the expiry of limitation period, it is essential that such acknowledgment whether made before or after the limitation period should be in existence prior to the institution of the suit.

Whether a suit is time barred or not has got to be determined exclusively with reference to the date on which the plaint is filed and the allegations made therein. If the plaintiff has got to allege in his plaint the facts which entitle him to exemption, obviously these facts must be in existence at or before the time when the plaint is filed, facts which came into existence after the filing of plaint cannot be called in aid to revive a right of action which was dead at the date of the suit.

Held, the suit for obtaining a money decree against the defendant is barred by limitation as there is neither any averment nor proof that any of these payments was acknowledged in writing prior to the institution of suit. The signed written statement acknowledging payments came into existence after the suit has been filed, thus of no avail.

In Ramchandra v. P.S. Patil AIR 1973 Bom. 163, also held that if a part-payment is made within the period of limitation, the mere fact that the writing evidencing the payment was made after the expiry of limitation period, would not render such hand-writing useless for the purpose of saving a claim from the limitation bar.

Comparison of Secs. 18 & 19 –

(1) Secs. 18 & 19 are not mutually exclusive and Sec. 19 does not prevent the operation of Sec. 18. These sections cannot be treated, one as a general and the other special. A payment which, owing to some defect, does not fulfil the requirement under Sec. 18, if the conditions of that section are fulfilled. As in the case of an acknowledgment (Sec. 18), the payment under Sec. 19 must have been made before the period of limitation has once fully run on.

As in the case of an acknowledgment (Sec. 18), the payment under Sec. 19 must be evidenced in writing. Signature is essential in the case of an acknowledgment (Sec. 18). In the case of payment under Sec. 19 either (a) the writing must have been signed by the person making the payment (i.e, the debtor, or his duly authorised agent), if the writing itself is in the handwriting of a different person, or (b) the writing must have been in the handwriting of the very person making the payment, in which case he need not have signed it.

(2) Acknowledgment under Sec. 18 operates only against the person against whom such property or right (in respect of which acknowledgment is made) is claimed. A payment under Sec. 19 operates against all persons liable in respect of the debt (in respect of which payment made) and not merely against the person making the payment.

(3) Acknowledgment under Sec. 18 need not be addressed to the person entitled to the property or right, but a payment under Sec. 19 must be made to the person entitled to payment.

(4) Under Sec. 18 a mere writing containing an admission of liability in respect of the property or right claimed is enough. But under Sec. 19 two things are necessary, namely, a payment and written record of such payment.

(5) Under Sec. 18, a fresh period of limitation is allowed from the date when acknowledged of liability is signed within the limitation period. But under Sec. 19 such fresh period allowed from the time when the part-payment is made and not from the date of acknowledgment of such payment. Further, acknowledgment need not be within the period of limitation under Sec. 19.

Chandradhar Goswami V. Gauhati Bank Ltd. (AIR 1967 SC 1058) –

In this case the appellant had an open, mutual and current account with the respondent bank. In March 1947, in order to pay off the due amount, a mortgage-deed was executed by the appellants in favour of the bank. In May 1948, the appellant made certain payment to the bank. And, in Nov. 1949, another payment (of Rs. 100) was made. Nothing was paid by the appellant thereafter. The bank brought a suit against the appellant for recovery of the amount in April 1953. The appellant denied the payment made in 1949, and contended that the suit is barred by limitation (the period starting from March 1947) in view of the limitation period of 6 years.

The Supreme Court held that the suit is beyond time. The entry of payment of Rs. 100 in the account book of the bank would not help the bank. That entry is of no value under Secs. 18 or 19 of the Limitation Act for neither a writing signed by the appellant nor an acknowledgment of payment in the hand-writing of the appellant has been proved nor does Article 85 of the Limitation Act, 1908 help the bank. Assuming this is a case of an open, current and mutual account, the last payment was made in Nov. 1949. Art. 85 gives limitation of three years from the close of the year in which the last item admitted or proved is entered in the accounts. The mutuality in this case came to an end in 1949, as thereafter there are only entries of interest due to the bank in the account. So the bank would get three years from the end of 1949 under Art. 85 and as the suit was filed in April, 1953, this entry will be of no help to the bank.

Question. X sent a consignment of books through Railways, but on 1-1-94, before the consignment could reach its destination, the books got destroyed in a train fire. On 1-5-94, GM replied to the notice in the words “This is to acknowledge the receipt of the notice of Mr. X by us. We are looking into this matter. Mr. X will soon be informed accordingly. On 31-10-1995, X filed a suit against Railways for damages. The defendants raised objection that the suit is barred by limitation, the prescribed period being 1 year from the date of loss of goods. Can X rely upon the letter dated 1-1-94 to claim the running afresh of the limitation period under Sec. 18 with effect from 1-11-94. Discuss.

In the case of Southern Railway v. Seyadu Beedi Co. –

The Court observed: The starting point of limitation would be the date of the loss or injury to goods, though after the goods were consigned by the consignor he would not be in a position to know the precise date on which loss or injury has occurred and the burden would be on the railway administration who want to non-suit the plaintiff on the ground of limitation to establish that the loss or injury occurred more than one year before the institution of the suit.

In this case, also held that in correspondence by the railways, where it was mentioned that the claim of plaintiff was under investigation and that he will be advised definitely on the finalisation of the claim, cannot be construed as an implied acknowledgment of liability (Sec. 18 of Limitation Act) so as to give a fresh limitation period to the plaintiff. The railways have merely acknowledged the receipt of the notice sent by the plaintiff. It was also mentioned in the letter by railways that if the plaintiff’s clients take the matter to court, they will be liable for all costs the railways incur in such a proceeding. The court observed that this also could not be considered as in implied acknowledgment of liability, on the ground that the plaintiff was invited to desist from suit on promise of settlement.

Decision of the case in question

X cannot rely upon the ‘letter’ as an acknowledgment under Sec. 18, thus his suit is time-barred.

Illustration – On the 10th September, 1983, A advanced to B, a sum of Rs. 5000/- and B executed a promissory note in favour of A. On 5th August 1984, B paid to A a sum of Rs. 500 in cash. On 15th September, 1986, B paid a further sum of Rs. 1,500 to A by cheque. On 1st May, 1987, A filed a suit against B to recover the balance of Rs. 3,000/- . B contends that the claim is time-barred. Will A succeed in obtaining a decree against B?

In this case, B’s payment of Rs. 500, in cash, towards the debt, though made before the expiration of the prescribed period does not appear in the handwriting of or in a writing signed by B. Therefore, a fresh period of limitation cannot be computed from 5th August 1985. The further payment of Rs. 1,500/- by cheque is made after the expiration of the prescribed period and therefore a fresh period of limitation cannot be computed from 15th September, 1986.

Illustration – A advances Rs. 5,000/- to B on a demand pro-note on 1st January 1984. On 1st June 1986 B repays Rs. 1,000/- and obtains A’s receipt for the same. On 30th December 1986, A rings up B and demands payment of the balance. B promises to pay up the amount and says that he would be making arrangement for repayment. On 3rd January 1987, B writes to A regretting his failure and promising to pay by the end of next month.

On 1st March 1987, A files a suit on the pro[1]note to recover the balance and relies on B’s part[1]payment and his promises (both on telephone and in his letter of 3rd January 1987) as acknowledgments to save the bar of limitation which B has set up in defence.

For a suit on a pro-note, the period of limitation is three years from the date of the pro[1]note. A’s suit, which is filed beyond three years from the date of the pro-note is prima facie barred by limitation, unless B’s part-payment and promises save the bar of limitation.

The part payment of Rs. 1,000/- is before the expiration of the period of limitation. But as it does not appear in the handwriting of, or in writing signed by, B, it cannot save the bar of limitation. The fact that B obtains A’s receipt for the same will not help to save limitation.

B’s promise on the phone, though it is before the expiration of the prescribed period of limitation, has not been made in writing signed by B. Therefore, it will not save the bar of limitation. The acknowledgment in B’s letter of 3rd January 1987, though in a writing signed by him, is made after the expiration of the period prescribed for the suit; therefore, it will not save the bar of limitation.

The letter of 3rd January, 1987 promising to pay the barred debt constitutes a new contract under Sec. 25(3) of the Contract Act. A would, thus, be better advised to base his suit on this new cause of action, instead of on the pro-note of 1st January 1984, in order to meet successfully the defence of the bar of limitation.