Somnath Manocha vs. Punjab & Sind Bank & Ors AIR 2012 Delhi 168 (High Court).
The respondent Bank had given certain loans to one M/s. General Tyre House, a partnership firm in the year 1981. For securing the loan, the appellant was one of the guarantors. He also gave the security in the form of equitable mortgage in respect of house property
The loan could not be paid by M/s. General Tyre House, which forced the Bank to file suit for recovery of Rs. 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 had not been decided so far. The Parliament enacted SARFAESI Act which came into effect from 18-12-2002. Though no immediate action was taken, however fresh notice dated 20- 11-2004 u/s. 13(2) was served on similar lines calling upon the appellant to pay the entire outstanding liability amounting to Rs. 3,84,59,807/- together with interest with effect from 21-11-2004. The appellant replied on 07-1-2005 questioning the validity of this notice on the ground that the action was time barred in view of the provisions of Section 36 of SARFAESI Act read with Article 62 of the Schedule to the Limitation Act. The Bank, however, took the stand that notice was not time barred.
The appellant filed a petition against the aforesaid action of the Bank taking the same plea, viz., the claim of the respondent Bank was impermissible as the action was time barred.
The Hon’ble Court held that it could not be disputed that under ordinary law, the respondent Bank had lost the remedy of enforcing the aforesaid security by way of mortgage as limitation of 12 years as provided in Article 62 of the Schedule to the Limitation Act, 1963 had expired. The Bank chose to file only a suit for recovery of money and, it did not file any suit under Order XXXIV of the CPC. In terms of order XXXIV Rule 14, the Bank was entitled to bring the mortgaged property to sale by instituting a suit for sale in enforcement of the mortgage where after obtaining a decree for payment of money, in satisfaction of the claim under mortgage. However, such a suit could be filed within the period of limitation prescribed under Article 62 in the Schedule to the Limitation Act. Thus, under the ordinary law, the Bank was precluded from filing a mortgage suit in respect of the aforesaid property.
Thus, on the date of notice issued u/s. 13(2) of SARFAESI Act, there was no such existing or subsisting right qua mortgage. In the present case, since right to file a suit or proceedings stood extinguished, the SARFAESI Act would not revive this extinguished claim. Position would have been different if the Bank had filed mortgage suit and such a suit was pending. 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 provision of SARFAESI. But even that action has become time barred. It was therefore held that the claim is barred u/s. 36 of SARFAESI Act and therefore, it was not open to the Bank to proceed under this Act. The impugned notice u/s. 13(2) and 13(4) of SARFAESI Act issued by the Bank was quashed.
