2011 (3) TMI 1474 - HC - Companies Law

Writ petition - default committed in repayment of a loan availed by the petitioner from the 1st respondent Bank - It is contended that no execution petition was filed within the limitation period of 12 years. According to the petitioner the proceedings under the SARFAESI Act was initiated only in December 2009, and steps as contemplated under section 13(4) was intimated through Ext.P1 notice, issued only on 17-1-2011 - limitation - claim with respect to the financial asset is made on the basis of notice under section 13(2). So the limitation can only be reckoned from the date on which that financial asset became due, which in turn can only be the date of the debt. In the case at hand the debt is only the decree debt. Hence, it should be reckoned from the date of the decree. period of limitation prescribed under section 17(1) stands expired, he is not in a position to challenge the proceedings initiated by resorting to the statutory remedy. writ petition is dismissed

Summary

Issues:
Challenge to proceedings under the SARFAESI Act on the ground of limitation.

Analysis:
The petitioner challenged the proceedings initiated under the SARFAESI Act, contending that they were barred by limitation as no execution petition was filed within the 12-year limitation period after a decree was passed in favor of the respondent bank. The petitioner argued that the proceedings were initiated in December 2009, and the notice under section 13(4) was issued only in January 2011. The respondents, on the other hand, claimed that an execution petition was filed within the limitation period and that the debt being sought to be recovered was the 'decree debt' which fell due as of the date of the decree. They argued that the notice under section 13(2) was issued well within the period of limitation stipulated under the Limitation Act.

Regarding the question of limitation, the respondents contended that the notice under section 13(2) was issued within the limitation period as the debt being sought to be recovered was the 'decree debt' which had fallen due as of the date of the decree. They argued that the limitation period starts from the date of the decree, and therefore, the notice was issued within the prescribed period. The petitioner, however, argued that for initiating proceedings under the SARFAESI Act, the debt should be classified as a non-performing asset, which was not the case with the 'decree debt'. They contended that the limitation period should be reckoned from the date on which the loan account was classified as 'NPA'.

The court analyzed the provisions of section 13(2) and concluded that the debt being the decree, the first requirement for raising a demand was satisfied. The court further interpreted the second requirement, stating that since the loan account was classified as a non-performing asset, the second requirement was also met. The court then delved into the computation of the limitation period, emphasizing that the claim with respect to the 'financial asset' should be made within the prescribed period. It concluded that the limitation for the recovery of a decree debt should be computed from the date of the decree and not from the date of declaring the loan as 'NPA'.

The petitioner also raised a contention regarding the expiry of the limitation period prescribed under section 17(1) and its impact on challenging the proceedings. The court dismissed the writ petition without prejudice to any rights available to the petitioner under the law to pursue statutory remedies against the impugned proceedings. It left open the question of invoking provisions of section 14 of the Limitation Act for the petitioner to agitate before the Tribunal if a statutory appeal is filed.