Part Payment of Debt: Sections 19 and 20, Limitation Act

A debtor who pays part of a debt is, by his conduct, admitting the rest. Section 19 of the Limitation Act treats such a payment, made before the period expires, as starting a fresh period of limitation. The idea is the same as section 18, but the mechanism differs: under section 18 the writing is the admission, while under section 19 the payment is the admission and writing is required only to prove it. This note covers the text, the proviso, the Explanation, the role of section 20, and a worked example.

1. The Provision

Figure 1: Essentials of section 19

• Text, s.19. 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 or his agent duly authorised, a fresh period is computed from the time the payment was made.
• Proviso. Except for payments of interest made before 1 January 1928, an acknowledgment of the payment must appear in the handwriting of, or in a writing signed by, the person making the payment.
• Principal or interest. A payment of either principal or interest qualifies, so long as it is made on account of the debt in question.
• Only debts and legacies. Section 19 does not extend limitation for other kinds of claims, such as claims for possession of property; for those, a written acknowledgment under s.18 is needed.

2. The Proviso: Proof in Writing

• Why writing. The proviso guards against false claims of oral payment made to save a time-barred suit.
• Whose writing. The writing must be that of the payer, not the creditor. An entry in the creditor's own books or a receipt signed only by the creditor does not satisfy it.
• Cheques and transfers. A cheque signed by the debtor and drawn on account of the debt is commonly treated as a writing signed by the payer. Bank records of an electronic transfer are more doubtful and depend on the evidence.
• Payment and writing. The payment must be made before expiry; the written acknowledgment of it need not be made at the same moment, but it must exist when the suit is filed.

3. The Explanation

Figure 2: Two deeming rules

• Mortgagee in possession. Where the mortgagee holds the mortgaged land, his receipt of rent or produce is deemed a payment, so the mortgage debt is kept alive.
• Decree debts. Money payable under a decree or order is not a 'debt' for s.19. A part payment by a judgment-debtor therefore does not extend the period for execution under Article 136.

4. Sections 18 and 19 Compared

Figure 3: Acknowledgment and part payment

• Section 20. Both sections are subject to s.20: a guardian may pay for a person under disability; a payment by one joint contractor, partner, executor or mortgagee does not by that alone bind the others; a payment by the Karta binds the joint family (Topic 15)
• Appropriation. Under ss.59 to 61 of the Contract Act, a debtor may direct how a payment is applied. If he does not, the creditor may apply it to any lawful debt, even one that is time-barred. A payment appropriated to a different debt does not save the debt in suit.
• Insolvency. Section 19 applies to applications under the IBC through s.238A, so a part payment before expiry gives the creditor a fresh period.

5. Worked Example

• Loan. A lends B money on 1 April 2021. Under Article 19, the period ends on 1 April 2024.
• Payment. On 15 March 2024 B pays part of the loan by a cheque he signs, drawn on account of the loan. A fresh three years runs to 15 March 2027.
• Cash without writing. If B had paid in cash and A gave only a receipt signed by A, the proviso would not be met and the suit would be barred after 1 April 2024.
• Late payment. A payment made on 10 April 2024, after expiry, gives nothing under s.19. The debt can be revived only by a written promise under s.25(3) of the Contract Act (Topic 17)

6. Frequently Asked Questions

Does an oral part payment extend limitation?

No, unless there is written evidence of it from the payer. The proviso to s.19 requires an acknowledgment of the payment in the handwriting of, or in a writing signed by, the person making it. A receipt signed only by the creditor is not enough.

Does part payment of a decree extend the time for execution?

No. Explanation (b) to s.19 provides that 'debt' does not include money payable under a decree or order of a court, so a part payment by the judgment-debtor does not give a fresh period for execution.

7. Related Topics

• Topic 15: Acknowledgment of Liability, Sections 18 and 20. The written route to a fresh period.
• Topic 17: Acknowledgment and Revival of Time-Barred Debts. What can be done after expiry.