Case Note & Summary
The appellant, State Bank of India, filed a suit for recovery of Rs. 16,179.49 against the respondents, Ramkrishna and Himmatrao Sakharkar, based on a loan advanced to them. The loan was secured by a registered charge on the property of the debtors. The trial court decreed the suit, but the first appellate court reversed the decree, holding that the suit was barred by limitation under Article 19 or 37 of the Limitation Act, 1963. The appellant then filed a second appeal in the High Court. The High Court admitted the appeal on the substantial question of law: whether a suit for recovery of loan secured by creation of registered charge on the property of debtor is governed by Article 62 of the Limitation Act, 1963, if the recovery is based on the charged properties. The court analyzed the nature of the charge created by deposit of title deeds and held that it constitutes a mortgage by deposit of title deeds, which is a registered charge. The court further held that Article 62 of the Limitation Act, 1963, which provides a 12-year limitation period from the date the money becomes due, applies to such suits, and not Article 19 or 37. The court allowed the appeal, set aside the judgment of the first appellate court, and restored the decree of the trial court.
Headnote
A) Limitation Act - Article 62 - Suit for Recovery of Loan Secured by Registered Charge - Applicability - The suit for recovery of loan secured by a registered charge on the property of the debtor is governed by Article 62 of the Limitation Act, 1963, which provides a 12-year limitation period from the date the money becomes due, and not by Article 19 or 37. The court held that the charge created by deposit of title deeds is a mortgage by deposit of title deeds and is a registered charge, thus Article 62 applies. (Paras 1-18) B) Limitation Act - Article 19 - Suit for Money Payable on Demand - Inapplicability - Article 19 of the Limitation Act, 1963, which provides a 3-year limitation period for suits for money payable on demand, does not apply to suits for recovery of loans secured by a registered charge on property. The court held that the suit is not merely for money but also for enforcement of the charge, hence Article 62 applies. (Paras 10-15) C) Limitation Act - Article 37 - Suit for Money Lent - Inapplicability - Article 37 of the Limitation Act, 1963, which provides a 3-year limitation period for suits for money lent, does not apply to suits for recovery of loans secured by a registered charge on property. The court held that the suit is for enforcement of the charge and not merely for recovery of money lent. (Paras 10-15)
Issue of Consideration
Whether a suit for recovery of loan which is secured by creation of registered charge on the property of debtor is governed by Article 62 of the Limitation Act, 1963, if the recovery is based on the charged properties?
Final Decision
The High Court allowed the appeal, set aside the judgment of the first appellate court, and restored the decree of the trial court. The court held that the suit for recovery of loan secured by a registered charge on property is governed by Article 62 of the Limitation Act, 1963, and the suit was within limitation.
Law Points
- Limitation Act
- 1963
- Article 62
- Article 19
- Article 37
- registered charge
- suit for recovery of loan
- limitation period
- date when money becomes due
