Supreme Court Affirms Applicability of Section 18 of the Limitation Act to Recovery Proceedings Under the PP Act

1. Introduction

This commentary examines the Supreme Court of India’s decision in the case of New Mangalore Port Trust & Anr. v. Clifford D Souza Etc. Etc. (2025 INSC 440), decided on April 3, 2025. The appellants, New Mangalore Port Trust (NMPT), challenged the Karnataka High Court’s dismissal of their writ petitions questioning the legality of demands for revised license fees. The respondents, licensees under NMPT, resisted the payments on the grounds that the revision of license fees could not be enforced retrospectively and that the recovery proceedings were time-barred.

Central to this dispute is whether Section 18 of the Limitation Act (acknowledgment of liability) applies to proceedings carried out under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 (“PP Act”). Ultimately, the Supreme Court clarified that all provisions of the Limitation Act, including Section 18, apply to such proceedings, thereby extending the limitation period if an acknowledgment of the debt exists.

2. Summary of the Judgment

The Supreme Court set aside the High Court’s judgment, which had upheld the District Judge’s finding that the recovery proceedings were time-barred under Article 52 of the Limitation Act. The District Judge and the High Court had calculated that the limitation for recovering arrears of rent would expire on May 11, 2015, making NMPT’s notice to the licensees dated August 12, 2015 untimely.

However, the Supreme Court held that:

Once the Limitation Act is deemed applicable to PP Act proceedings, all its provisions (including Section 18 on acknowledgment of liability) must be considered.
The respondents’ letters challenging only the timing of payment, rather than the validity of the debt itself, constituted an acknowledgment sufficient to trigger a fresh period of limitation.
The matter should be decided in tandem with the pending intra-court appeals on the core issue of whether the retroactive tariff revision was lawful.
Until those appeals are resolved, the respondents remain liable for the charges if the tariff is ultimately upheld.

Consequently, the Supreme Court has remanded NMPT’s writ petitions to the High Court, directing that a final determination await the outcome of the respondents’ intra-court appeals challenging the retrospective nature of the tariff revision.

3. Analysis

A. Precedents Cited

One of the key precedents in debate was New Delhi Municipal Committee v. Kalu Ram ((1976) 3 SCC 407), where the Supreme Court held that proceedings under the PP Act are subject to the Limitation Act. Although the NMPT briefly suggested that Kalu Ram might have been incorrectly decided, the Court did not overturn it but instead applied its principles.

In particular, Kalu Ram establishes that while the PP Act does not explicitly incorporate time limits for recovery of rent or charges, the Limitation Act continues to govern by virtue of the general principle that recovery actions are subject to statutory limitation periods. This ruling, reiterated by the Supreme Court, underlies the finding that calculations under Article 52 of the Limitation Act (three-year period for suit for recovery of rent) initially apply.

B. Legal Reasoning

Applicability of Section 18 of the Limitation Act: The Court observed that if the Limitation Act applies to the PP Act, it cannot be in a selective manner only to define the limitation period. All relevant provisions, including the mechanism for extending limitation—namely Section 18—must also apply.
Acknowledgment of debt by the licensees: The respondents’ letters repeatedly stated that they opposed the timing of the NMPT’s fee revision, especially its retrospective effect. However, nowhere did they unequivocally deny the existence of the underlying liability. Instead, they requested deferral of payment pending the outcome of their appeals. Under Explanation (a) of Section 18, an acknowledgment can arise even if it is “accompanied by a refusal to pay” or if the debtor insists “the time for payment has not yet come.” Thus, the Court held the respondents had provided a valid acknowledgment in writing within the three-year period, extending the limitation timeline to at least February 3, 2018.
Retrospective application and pending appeals: The Court noted that the prospective or retrospective validity of the tariff revision (dated July 23, 2010) was still sub judice. Having lost before the Single Judge, the respondents appealed to the Division Bench and obtained no stay. Thus, as matters stood, the valid tariff included the revised schedule, and the respondents’ only defense in the PP Act proceedings was that they were awaiting the outcome of the larger question. The Supreme Court reasoned that if the respondents ultimately lose their appeals on the retrospective validity, they must pay the requisitioned fees with interest. Otherwise, the demands would cease to apply for the disputed period.

C. Impact

The Court’s decision clarifies a crucial procedural point:

Recovery Enforcement: Public authorities seeking to recover dues under the PP Act should be aware that they must act within limitation and may use acknowledgments of liability from the occupant/licensee to extend the limitation period under Section 18.
Clarity on Dues Collection: Where occupants lodge incomplete or conditional objections to payment, those stand as acknowledgment sufficient to reset limitation. This may close potential loopholes previously exploited by parties seeking to evade timely payment.
Heightened Importance of Drafting Replies: Users of public premises must draft replies to demand notices with caution. Even statements requesting or insisting on a delay can qualify as acknowledgment of liability if the underlying debt itself is not explicitly disputed.
Deference to Pending Appeals: The judgment also highlights that, when issues central to the very legal basis for the demand are being litigated in appeals, courts might consider postponing final rulings until those appeals are decided—unless stayed by higher courts.

4. Complex Concepts Simplified

PP Act: The “Public Premises (Eviction of Unauthorised Occupants) Act, 1971” allows public authorities to evict unauthorized occupants and recover dues (like rent or license fees).
Limitation Period: Under the Limitation Act, certain claims must be brought within a fixed time frame—commonly three years for rent recovery (Article 52).
Section 18 (Limitation Act) – Acknowledgment of Liability: If a debtor acknowledges the liability in writing and signed, it restarts the clock, granting a fresh limitation period beginning the date of such acknowledgment.
Retrospective Revision: A rule or tariff is said to operate “retrospectively” when it imposes rates or requirements that are effective from a date before it was formally announced or enacted.

5. Conclusion

The Supreme Court’s ruling in New Mangalore Port Trust & Anr. v. Clifford D Souza Etc. Etc. (2025 INSC 440) confirms that an occupant’s written acknowledgment can extend the time available to a public authority to recover dues under the PP Act. By refusing to adopt a fragmented approach to the application of the Limitation Act, the Court has underscored that all its provisions, including Section 18, apply to recovery proceedings under the PP Act.

The Supreme Court also emphasized that the question of paying license fees—and whether the tariff was validly revised with retrospective effect—cannot be finally disposed of until the respondents’ intra-court appeals on that topic are resolved. This prudential approach ensures that the underlying legality of the revised tariff is decided on its merits, while the interests of the public authority are protected through continued validity of the limitation window if the fees are ultimately affirmed.

In practice, this judgment serves as a reminder to both public authorities and licensees alike to be diligent and transparent in their contractual and legal communications. Attempts to postpone or condition payments without outright refusal may now be deemed acknowledgments that reset the statutory clock, thereby strengthening the hand of authorities seeking to recover arrears.