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Section 36: Limitation

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 2002
Section 35 All 42 Sections of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 Section 37

Legal Commentary & Landmark Judgments: Section 36

Section 36 of the SARFAESI Act, 2002 creates an absolute statutory condition precedent prohibiting secured creditors from taking recovery measures under Section 13(4) unless the claim is made within the period of limitation prescribed under the Limitation Act, 1963.

  • Limitation as a Threshold Condition: Secured creditor cannot invoke Section 13(4) measures if the underlying debt is barred by the Limitation Act, 1963.
  • Applicability of Article 62 & Article 137: Twelve-year limitation period applies to enforce payment of money secured by mortgage (Article 62), and three-year period for simple debt defaults (Article 137).
  • Nullification of Time-Barred Enforcement: Any notice or action under Section 13(4) based on a time-barred financial asset is void ab initio and illegal.
Key Landmark Precedents:
  • B.K. Educational Services Pvt. Ltd. v. Parag Gupta & Associates (2019) 11 SCC 633: The Supreme Court reaffirmed that statutory recovery mechanisms can only be invoked for legally enforceable, non-time-barred debts, applying Limitation Act principles strictly to commercial recovery.
  • State Bank of India v. V. Ramakrishnan (2018) 17 SCC 394: The Supreme Court affirmed that statutory limitation applies strictly to creditor enforcement against principal debtors and guarantors under special recovery enactments.
  • Dr. J. Rajmohan Pillai v. Union Bank of India, 2012 SCC OnLine Mad 4514: The Madras High Court held that Section 36 is an absolute bar; if the debt became time-barred under the Limitation Act prior to issuance of Section 13(2)/13(4), the entire SARFAESI proceeding is illegal and void.
Courtroom Practice & Strategic Litigation Guidance:

Calculate limitation meticulously from the date of NPA classification, default, and last acknowledgment under Section 18 of the Limitation Act. If Section 13(4) was initiated beyond 12 years from mortgage default without valid written acknowledgment, plead Section 36 in DRT to nullify the entire SARFAESI proceeding.

Section 35 All 42 Sections of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 Section 37