TaxTMI 
TaxTMI 
2017 (7) TMI 1330
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....covery Tribunal-1, Kolkata. The Civil Suit was also transferred to the Debts Recovery Tribunal-1. Both the proceedings are pending adjudication. The bank has, thereafter, issued the impugned notice dated March 3, 2016 purportedly under the Act of 2002. The petitioner had replied thereto by a writing dated March 21, 2016. The bank is now proceeding wrongfully under the Act of 2002 as on the date of issuance of the notice under Section 13(2) of the Act of 2002, the claim of the bank was barred by the laws of limitation. He has referred to Section 36 of the Act of 2002 and submitted that, the claim of the bank has to be within the period of limitation at the time of initiation of the proceedings under the Act of 2002. He has submitted that, the mortgage of the immovable property concerned was created in 1995. In terms of the provisions of the Limitation Act, 1963, a suit for mortgage could have been instituted by 2007. The petitioner had paid the last installment in respect of the loan account in October 1995. Taking such fact into consideration the notice under the provisions of the Act of 2002 cannot be said to be within the period of limitation. In support of his contention that, w....
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....uthorized Officer of the bank, therefore, did not act irregularly or without jurisdiction in invoking the provisions of the Act of 2002. He has referred to the word "claim" as used in Section 36 of the Act of 2002 and has submitted that, such word is not defined under the Act of 2002. He refers to the word "financial asset" used in Section 36 of the Act of 2002. He has submitted that, the word 'financial asset" is defined in Section 2(l) of the Act of 2002. He has referred to the definition of the word "debt" as defined in Section 2(ha) of the Act of 2002 and the definition of the word 'debt" used in Section 2(g) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. He has submitted that, the proceedings under Section 19 of the Act of 1993 are yet to attain finality. Once such proceedings culminate into a certificate, the bank would have a period of 12 years to execute such certificate. That being the position, and more particularly in view of the fact that the Section 19 proceedings are yet to be disposed of, it cannot be said that, the bank has acted beyond jurisdiction or beyond the period of limitation for invoking the provisions of the Act of 2002....
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....suit being Money Suit No. 120 of 2000 against the bank before the learned City Civil Court for recovery of the loss and damages suffered by him. The bank had filed a proceeding under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 being O.A. No. 137 of 2001 before the Debts Recovery Tribunal, Kolkata. The Civil Suit was transferred to the Debts Recovery Tribunal for adjudication. Both the proceedings are pending. The parties had taken various steps against each other in several other proceedings. The bank had issued a notice under Section 13(2) of the Act of 2002 on February 4, 2011. The petitioner had moved the High Court for quashing such notice. Such proceeding was dismissed on the ground that, the petitioner had a statutory alternative efficacious remedy. On April 13, 2011 the bank had invoked the provisions of Section 13(4) of the Act of 2002. A possession notice in respect of the residential house of the petitioner was published on April 27, 2011 and a sale notice was published on May 10, 2011. The petitioner had applied under Section 17 of the Act of 2002 before the Debts Recovery Tribunal. The bank had then taken a stand that, it wou....
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....he obligation to pay any unpaid portion of the purchase price of such asset or an obligation incurred or credit otherwise provided to enable the borrower to acquire such tangible asset; or (vb) any right, title or interest in any intangible asset or licence or assignment of such intangible asset, which secures the obligation to pay any unpaid portion of the purchase price of such intangible asset or an obligation incurred or credit otherwise extended to enable the borrower to acquire such intangible asset or obtain licence of the intangible asset; or (vi) any financial assistance." "36. Limitation.- No secured creditor shall be entitled to take all or any of the measures under subsection (4) of section 13, unless his claim in respect of the financial asset is made within the period of limitation prescribed under the Limitation Act, 1963 (36 of 1963)." 2(g). "debt" means any liability (inclusive of interest) which is claimed as due from any person by a bank of a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium....
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.... former civil proceeding was pending, the day on which that proceeding was instituted and the day on which it ended shall both be counted; (b) a plaintiff or an applicant resisting an appeal shall be deemed to be prosecuting a proceeding; (c) misjoinder of parties or of causes of action shall be deemed to be a cause of a like nature with defect of jurisdiction." "15. Exclusion of time in certain other cases.- (1) In computing the period of limitation of any suit or application for the execution of a decree, the institution or execution of which has been stayed by injunction or order, the time of the continuance of the injunction or order, the day on which it was issued or made, and the day on which it was withdrawn, shall be excluded. (2) In computing the period of limitation for any suit of which notice has been given, or for which the previous consent or sanction of the Government or any other authority is required, in accordance with the requirements of any law for the time being in force, the period of such notice or, as the case may be, the time required for obtaining such consent or sanction shall be excluded. Explanation.- In excl....
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....arises for consideration. In the facts of the present case, the petitioner has not contended that, the claim made by the secured creditor before the Debts Recovery Tribunal under Section 19 of the Act of 1993 is barred by the laws of limitation. In any event, the issue of limitation of the proceedings under Act of 1993 is an issue which is to be decided by the Debts Recovery Tribunal before which such proceedings are pending. A Writ Court in a collateral proceeding is not required to answer such an issue. Such an issue also does not fall for consideration in the present case. Rather the issue as to whether the lodging of the proceedings under Section 19 of the Act of 1993 continues the period of limitation, or in other words, stops the running of the period of limitation on and from the date of lodging of such proceedings has arisen for consideration in the present case. The issue of limitation in the context of Section 36 of the Act of 2002 was looked at and considered in Somnath Manocha (supra). The Division Bench of the Delhi High Court in Somnath Manocha (supra) has held that, "15. The requirement of Section 36 is that the claim in respect of "financial asset" is....
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....recluded from filing a mortgage suit in respect of the aforesaid property. 18. Thus, on the date of notice issued under Section 13(2) of SARFAESI Act, there was no such existing or subsisting right qua mortgage. We agree with the contention of the appellant that the remedy provided under SARFAESI Act is simply a new means of enforcing a preexisting right, i.e., one that existed before the SARFAESI Act came into existence. That remedy is the right to sell a mortgage property and recover the sum which it secures from the sale proceeds. In the present case, since right to file a suit or proceedings stood extinguished, the SARFAESI Act would not revive this extinguished claim. 19. Position would have been different if the bank had filed mortgage suit and such a suit was pending. In Ivee Injectaa Ltd. (supra), mortgage suit has already been filed and therefore, claim for enforcing mortgage rights was subsisting as it was pending adjudication. If the period of 12 years had not expired under Article 62 in the Schedule to the Limitation Act and there was still time to file the proceedings of mortgage suit, even that would have saved the right of the Bank to enforce the pr....
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....s had found that, the claim made therein was not barred by the laws of limitation. The ratio laid down therein is not attracted to the facts of the present case. Section 4 of the Limitation Act, 1963, is based on the principle that, the law does not compel a man to do that which he cannot possibly perform and an Act of Court shall prejudice no man. This section has no manner of application in the facts of the present case. The initiation of a proceeding under Section 13(2) of the Act of 2002 is an original proceeding and Section 5 of the Limitation Act, 1963 would have no manner of application at the point of initiation of the proceedings. It applies to an appeal under Section 17 of the Act of 2002. Section 14 of the Limitation Act, 1963, permits exclusion of time for proceeding bona fide in a Court without jurisdiction. Three conditions have to co-exist for Section 14 to be attracted and applied. Firstly, the plaintiff must satisfy that, he was prosecuting another civil proceeding with due diligence. Secondly, the earlier and the latter proceeding must be founded on the same cause of action. Thirdly, the Court in which the former proceeding was prosecuted suffers from defect of....
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....oceedings under the Act of 1993, has to be looked at from the perspective of whether or not such an action meets the requirement of Section 36 of the Act of 2002, when the secured creditor is proposing to take a measure under Section 13(4) of the Act of 2002. Although, a secured creditor, as held in Transcore (supra), is entitled to take a remedy or a measure as available in the Act of 2002, despite the pendency of other proceedings, including a proceeding under Section 19 of the Act of 1993, in respect of the self-same cause of action, in my view, the invocation of such independent right under the Act of 2002, has to be done within the period of limitation prescribed under the Limitation Act, 1963 in terms of Section 36 of the Act of 2002. The Act of 2002 gives an independent right to a secured creditor to proceed against its financial assets and in respect of which such asset the secured creditor has security interest. The right to proceed, however, is subject to the adherence to the provisions of limitation as enshrined in the Limitation Act, 1963. The provisions of the Limitation Act, 1963 are, therefore, attracted to a proceeding initiated under the Act of 2002. That being the....