Case Note & Summary
The appellant, R Venkatapathy, filed a suit (O.S. No. 8639/2006) before the City Civil Court, Bangalore, challenging the auction sale of property conducted by the Bank of India (respondents 1 and 2) under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The appellant claimed that the auction sale was illegal and sought a declaration that the sale was void. The Bank filed an application under Order 7 Rule 11(d) read with Section 151 of the Code of Civil Procedure, 1908 (CPC) seeking rejection of the plaint on the ground that the suit was barred by limitation. The trial court allowed the application and rejected the plaint. Aggrieved, the appellant filed the present appeal under Section 96 CPC before the High Court of Karnataka. The High Court heard the appeal and examined the facts. The appellant had purchased the property in an auction conducted by the Bank on 30.09.2005, and the sale was confirmed on 30.11.2005. The suit was filed on 20.11.2006, within three years from the date of confirmation of sale. The High Court held that the limitation period for challenging an auction sale is governed by Article 137 of the Limitation Act, 1963, which provides a period of three years from the date the right to sue accrues. The right to sue in this case accrued on the date of confirmation of sale, i.e., 30.11.2005. Since the suit was filed on 20.11.2006, it was within the limitation period. The High Court further held that the trial court erred in rejecting the plaint under Order 7 Rule 11(d) CPC as the suit was not manifestly barred by law. The High Court allowed the appeal, set aside the order of the trial court, and directed that the suit be restored to its original number and disposed of in accordance with law.
Headnote
A) Civil Procedure - Rejection of Plaint - Order 7 Rule 11(d) CPC - Limitation - The court considered whether the plaint could be rejected as barred by limitation when the suit was filed within three years from the date of confirmation of sale. Held that the limitation period for challenging an auction sale under Article 137 of the Limitation Act, 1963 is three years from the date the right to sue accrues, which is the date of confirmation of sale. Since the suit was filed within three years from the date of sale confirmation, the plaint cannot be rejected as barred by limitation (Paras 4-6). B) Securitization - Auction Sale - Limitation - Article 137 Limitation Act, 1963 - The court examined whether the suit challenging the auction sale conducted under the SARFAESI Act was barred by limitation. Held that the limitation period under Article 137 is three years from the date the right to sue accrues, and in this case, the right to sue accrued on the date of confirmation of sale, which was within three years of the suit filing. Therefore, the suit is not barred by limitation (Paras 4-6). C) Civil Procedure - Rejection of Plaint - Order 7 Rule 11(d) CPC - The court considered the scope of Order 7 Rule 11(d) CPC and held that the plaint can be rejected only if it is manifestly barred by law. Since the suit was filed within the limitation period, the rejection of the plaint was not justified (Paras 4-6).
Issue of Consideration
Whether the suit filed by the appellant challenging the auction sale conducted by the Bank under the SARFAESI Act is barred by limitation and whether the plaint is liable to be rejected under Order 7 Rule 11(d) CPC.
Final Decision
Appeal allowed. The order dated 22.08.2011 passed by the XXX Addl. City Civil Judge, Bangalore in O.S. No. 8639/2006 is set aside. The suit is restored to its original number and the trial court is directed to dispose of the suit in accordance with law.
Law Points
- Order 7 Rule 11(d) CPC
- Section 96 CPC
- Article 137 Limitation Act
- 1963
- Section 13(4) SARFAESI Act
- 2002
- Section 34 SARFAESI Act
