Limitation under SARFAESI cannot be saved by pending debt recovery proceedings; time-barred securitisation measures were quashed.

A secured creditor cannot treat the pendency of a proceeding under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 as suspending or extending limitation for an independent invocation of Section 13 of the SARFAESI Act, 2002. Section 36 requires that action under Section 13(4) be based on a claim still within the Limitation Act, 1963 on the date of invocation, and Sections 4, 14 and 15 do not convert a parallel recovery proceeding into excluded time for SARFAESI purposes. On that basis, the Calcutta HC held the securitisation action time-barred and quashed the Section 13(2) notice and consequential measures.

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Issues: Whether the filing of a proceeding under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 stops the running of limitation so as to permit a secured creditor to invoke Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in respect of the same claim.

Analysis: Section 36 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 permits measures under Section 13(4) only if the claim in respect of the financial asset is made within the period of limitation prescribed by the Limitation Act, 1963. The pendency of proceedings under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 does not by itself suspend or extend limitation for an independent action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Sections 4, 14 and 15 of the Limitation Act, 1963 do not assist a secured creditor in treating a parallel proceeding under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 as an exclusion of time for the purpose of invoking the securitisation . The right to proceed under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 must therefore be tested on the date of its invocation, and if barred on that date, the subsequent measures cannot be sustained.

Conclusion: The invocation of the securitisation proceedings was barred by limitation, and the notice under Section 13(2) together with all consequential measures were quashed.

Ratio Decidendi: A secured creditor cannot rely on the mere pendency of a proceeding under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 to save limitation for an independent proceeding under Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; compliance with Section 36 must exist on the date of invocation.

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