If a Bank had taken action u/s 13(4) of the SARAFAESI Act and the matter is pending before the DRT, there being 12 years of limitation prescribed for enforcement of payment of money secured by a mortgage – Sh. B. Prashanth Hegde Vs. State Bank of India – NCLAT

On ground, whether the application under Section 7 of the Code was barred by limitation and, if not, whether the claim of the Banks was barred by limitation to hold that there is no debt payable in the eyes of law? NCLAT held that for computing the period of limitation of an application under Section 7, one should refer to Article 137 of Part II of Third Division of the Schedule of Limitation Act, 1963. The right to apply under Section 7 of the Code, accrued to the Bank only since 1st December, 2016, i.e., when I&B Code came into force. From the aforesaid provision, we find that the application under Section 7 is not barred by limitation. To find out, as to whether the claim is barred by limitation or not, one should refer to Articles 61 & 62 of Part-V of First Division. It relates to mortgage of property (Article 61) and enforcement of payment of money secured by a mortgage (Article 62).

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