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TMI Blog2012 (4) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... The issue as to whether action of the respondent bank invoking the provisions of SARFAESI Act by serving notice of Section 32 of the said Act is barred by limitation or not, which has arisen in the following background. 2. The respondent bank herein had given certain loans to one M/s. General Tyre House, a partnership firm in the year 1981. For securing this loan, the appellant was one of the guarantors. He also gave the security in the form of equitable mortgage in respect of house property bearing Municipal No. 32/24, Pratap Nagar, Jagdigh Colony, Rohtak (Haryana). The loan could not be paid by M/s. General Tyre House, which forced the bank to file CS (OS) No. 935 of 1984 for recovery of ₹ 7,75,283.60 against that firm as well as the appellant and other guarantors. The aforesaid proceedings are still pending adjudication and the Suit has not been decided so far. 3. The Parliament enacted SARFAESI Act which came into effect from 18.12.2002. This Act provides additional remedy to the financial institutions to recover their debts by enforcing the security. Mechanism for that is provided under this Act. The respondent bank chose to avail this additional remedy and thus, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the SARFAESI Act was intended to provide an additional remedy to a financial institution to recover its debts as the existing legal framework relating to commercial transactions has not kept pace with the changing commercial practice which has resulted in slow pace of recovery of defaulting loans and mounting levels of non-performing assets of banks and financial institutions. Section 35 of SARFAESI Act provides that: The provisions of this Ordinance shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. 7. Learned Single Judge observed that the remedy provided under the SARFAESI Act to a secured creditor for recovery of a debt owing to it, is independent of any other remedy available in law. Section 36 of SARFAESI Act requires that a claim should have been made by the lender in respect of the financial assets within the period of limitation prescribed under the Limitation Act. Section 36 does not mandate that the notice under Section 13(2) of SARFAESI Act must be issued within such period of limitation. A claim in respect of the financial asset, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remedy which is now sought to be enforced qua sale of mortgaged property was claimed in respect of the financial asset which had become time barred. It was submitted that the period for such a claim is covered by Article 62 in the Schedule to the Limitation Act and since that period has expired, provisions of Section 36 of the SARFAESI Act were attracted. The learned counsel distinguished the judgment of Gujarat High Court in Ivee Injectaa Ltd. (supra) on the ground that in that case, the bank had made claim in respect of mortgaged property within a period of 12 years. It was also argued that in any case, Ivee Injectaa Ltd. (supra) is not an authority for pendency of a civil suit being a claim under Section 36 of SARFAESI Act. Learned counsel, in the alternate, argued that even otherwise, for an altogether different reason, the proceeding under Sections 13(2) and 13(4) would be time barred. The expression claim in respect of a financial asset in Section 36 must relate to the claim made under the SARFAESI Act would depend upon claim having been made under this very Act itself. It cannot relate to other claim by way of notice or civil Suit or proceedings under another statute. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the aforesaid conditions. This remedy is in addition to ordinary remedy of civil suit, therefore, merely because bank had earlier filed a suit for recovery of an amount would not mean that it is precluded from enforcing the security under SARFAESI Act. Gujarat High Court in Ivee Injectaa Ltd. (supra) has explained this position in the following manner: The submission of the learned counsel for the appellant also overlooks the scheme of the Securitization Act which is different from the proceedings under the Code of Civil Procedure. While the Civil Procedure Code provides for two separate and distinct stages- (i) adjudication by the Court of the mortgagee's claims resulting into a decree and (ii) the subsequent stage of execution of the decree with judicial intervention; the Securitization Act confers power on the mortgagees, which are financial institutions, to enforce security without the intervention of any Court or Tribunal and notwithstanding anything contained in Sections 69 and 69A of the Transfer of Property Act, 1882. Of course, the measures for enforcement of security are to be taken after giving the borrower a notice in writing to discharge in full his liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such debt, receivables, whether such interest is existing, future, accruing, conditional or contingent. Section 2(1)(t) which defines property is also relevant. This definition reads as under: (t) property means- (i) immovable property; (ii) movable property; (iii) any debt or any right to receive payment of money, whether secured or unsecured; (iii) receivables, whether existing or future; (iv) intangible assets, being know-how, patent, copyright, trade mark, licence, franchise or any other business or commercial right of similar nature; 15. So far so good. The question is as to whether in the facts of this case, the claim had become time barred. The property in question is mortgaged with the bank. However, the bank did not file Suit for recovery under Order XXXIV of the CPC. Instead, in para 17 of the plaint, specific averment was made that it was not claiming any relief against the mortgaged immovable property in the said suit and right was reserved to proceed against the said mortgaged property as provided under provisions of Order XXXIV Rule 14 of the CPC. 16. It could not be disputed that under ordinary law, the respondent bank has lost the rem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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