An Analysis of Article 62 of the Limitation Act, 1963: Enforcing Monetary Claims Secured by Immovable Property in India

Introduction

The Limitation Act, 1963 (hereinafter "the Act") is a cornerstone of Indian procedural law, prescribing time limits within which legal remedies can be sought. Its primary objective is to ensure that disputes are brought before courts within a reasonable timeframe, preventing stale claims and fostering diligence in asserting rights. Among its various provisions, Article 62 of the Schedule to the Act holds particular significance in the realm of property and financial law.

Article 62 of the Limitation Act, 1963, provides as follows:

Description of suit: To enforce payment of money secured by a mortgage or otherwise charged upon immovable property.
Period of limitation: Twelve years.
Time from which period begins to run: When the money sued for becomes due.

This provision is critical for lenders, financial institutions, and individuals seeking to recover debts that are secured by mortgages or charges on immovable property. The twelve-year limitation period is substantially longer than that for unsecured debts, reflecting the nature of the security involved.

It is pertinent to note at the outset that Article 62 of the Limitation Act, 1908 (the predecessor to the current Act) had a different scope. The erstwhile Article 62 prescribed a three-year limitation period "For money payable by the defendant to the plaintiff for money received by the defendant for the plaintiff's use." This subject matter is now largely covered by Article 24 of the Limitation Act, 1963. Several older judicial pronouncements cited in the reference materials pertain to this historical Article 62 of the 1908 Act. This article will primarily focus on the current Article 62 of the Limitation Act, 1963, while also providing a brief historical context to clarify the scope of older precedents.

Scope and Ambit of Article 62 of the Limitation Act, 1963

Article 62 applies to suits for the enforcement of payment of money where such payment is secured, either by a mortgage or by a charge upon immovable property. The twin conditions for its applicability are: (i) the suit must be for payment of money, and (ii) such payment must be secured by a mortgage or a charge on immovable property.

"Money Secured by a Mortgage"

The term "mortgage" is defined under Section 58 of the Transfer of Property Act, 1882, as the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. Article 62 encompasses suits to enforce payment of money secured by various forms of mortgages, including simple mortgages, equitable mortgages, and usufructuary mortgages where a personal covenant to pay exists and is sought to be enforced.

The Orissa High Court in Indumati Pattanaik v. Chief Manager And Authorised Officer, Bank Of India, Bhubaneswar Branch, Bbsr Opp. Party (2005 SCC ONLINE ORI 137) explicitly noted that "Article 62 of the Limitation Act, 1963 prescribes the limitation for enforcing the right of a mortgagee where immovable property is offered as co-lateral security by way of mortgage for a loan advanced. The period prescribed under the said Article is twelve years." This case affirmed that if the underlying right to enforce the mortgage is time-barred under Article 62, actions under special statutes like the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, would also be barred by virtue of Section 36 of that Act.

The Madras High Court in SYED ABDUL HALEEM v. RAJARATHINAM CONSTRUCTIN PVT (2021), clarified the distinction, stating, "Article 62 of the Limitation Act relates to the suit on mortgage. Whereas the present suit is available for recovery of money. Therefore, the said provision is nothing to do with the present suit..." This underscores that a mere suit for money recovery, without the element of mortgage security, would not fall under Article 62.

The Supreme Court's decision in S. Nazeer Ahmed v. State Bank Of Mysore And Others (2007 SCC 11 75), while primarily dealing with Order 2 Rule 2 of the Code of Civil Procedure (CPC), touched upon the enforcement of equitable mortgages. It highlighted that Order 34 Rule 14 of the CPC allows a mortgagee to institute a suit for sale in enforcement of the mortgage, which is the type of suit governed by the limitation period under Article 62.

"Or Otherwise Charged Upon Immovable Property"

A "charge" is defined under Section 100 of the Transfer of Property Act, 1882. Where immovable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property. Article 62 extends its twelve-year limitation period to suits for enforcing payment of money secured by such charges.

The National Company Law Appellate Tribunal (NCLAT) in Sunil Kumar Aggarwal v. New Okhla Industrial Development Authority And Others (2019 SCC ONLINE NCLAT 1000) held that where a piece of land allotted by NOIDA was under a first charge, the provisions of Article 62 of the Limitation Act, 1963, which provide for a 12-year period of limitation, would apply, and not the residuary Article 137.

In AHAMMEDKUTTY BRAN, v. SUKUMARAN. (2024 SCC ONLINE KER 910), one of the points for determination framed by the Kerala High Court was: "Relief having been claimed for money charged on immovable property is not Article 62 of the Limitation Act applicable ?" This indicates the direct applicability of Article 62 when a charge on immovable property is sought to be enforced for monetary claims.

The Madras High Court in M/S.POTHYS v. S.A.KUMAR (2024) dealt with a case where the trial court had applied Article 62 to a suit involving a buyer's statutory charge under Section 55(6)(b) of the Transfer of Property Act, 1882. The appellate court was tasked with examining whether the suit was indeed for the enforcement of such a charge, thereby falling under Article 62.

"When the Money Sued For Becomes Due"

The starting point for the twelve-year limitation period under Article 62 is "when the money sued for becomes due." This is a question of fact and depends on the terms of the mortgage deed or the instrument creating the charge, or the nature of the obligation. It could be a specific date mentioned in the contract, the date of default in payment of principal or interest, or upon the happening of a contingency stipulated in the agreement.

In Gaurav Hargovindbhai Dave v. Asset Reconstruction Company (India) Limited And Another (2019 SCC 10 572), a case concerning an application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, the National Company Law Tribunal (NCLT) initially applied Article 62. The date of default, when the account was declared a Non-Performing Asset (NPA), was taken as the point "when the money sued for becomes due." While the Supreme Court ultimately discussed the applicability of Article 137 in the specific context of IBC applications, the NCLT's initial reasoning reflects a common understanding of when secured money becomes due.

The Delhi High Court in Lakhmi Chand v. Municipal Corporation Of Delhi (1987) also affirmed the applicability of "Article 62 of the new Limitation Act" to the demand in question, though the specific facts regarding when the money became due are not detailed in the provided extract.

Judicial Interpretation and Application

Interplay with Other Laws

Article 62 of the Limitation Act, 1963, frequently interacts with other substantive and procedural laws.

• Insolvency and Bankruptcy Code, 2016 (IBC): As seen in Gaurav Hargovindbhai Dave (2019 SCC 10 572) and Sunil Kumar Aggarwal (2019 SCC ONLINE NCLAT 1000), Article 62 is often invoked in IBC proceedings where financial debts are secured by mortgages or charges. The determination of whether a claim by a secured creditor is within the limitation period prescribed by Article 62 can be crucial for the admissibility of such claims.
• SARFAESI Act, 2002: The Orissa High Court in Indumati Pattanaik (2005 SCC ONLINE ORI 137) clearly established that Section 36 of the SARFAESI Act makes the Limitation Act, 1963, applicable to actions taken by secured creditors. Therefore, a bank cannot initiate action under Section 13(4) of the SARFAESI Act if its claim to enforce the mortgage is already time-barred under Article 62 of the Limitation Act.

Distinction from Other Articles

It is important to distinguish Article 62 from other articles of the Limitation Act. As previously mentioned, its scope is distinct from the erstwhile Article 62 of the 1908 Act (now Article 24 of the 1963 Act), which dealt with suits "for money payable by the defendant to the plaintiff for money received by the defendant for the plaintiff's use." Cases such as A. Venkata Subbarao v. State Of A.P. (Supreme Court Of India, 1964), discussing refund of illegally collected taxes, and State Of Rajasthan v. Rao Raja Kalyan Singh (Dead By His Lrs) (1972 SCC 4 165), concerning recovery of cesses by a District Board, were decided under the old Article 62.

Similarly, Article 137, the residuary article providing a three-year limitation period for applications for which no period of limitation is provided elsewhere, is distinct. While considered in Gaurav Hargovindbhai Dave for IBC applications, Article 62 specifically governs suits for enforcing payment of money secured by mortgage or charge.

The Historical Context: Article 62 of the Limitation Act, 1908

To understand some of the provided reference materials, a brief discussion of Article 62 of the Limitation Act, 1908, is necessary. This article prescribed a limitation period of three years for suits "For money payable by the defendant to the plaintiff for money received by the defendant for the plaintiff's use." The time from which the period began to run was "When the money is received."

Several High Court judgments referenced pertain to this older provision. For instance, in Johari Lal And Another v. The Bihar State Co-Operative Bank Ltd., Patna . (Patna High Court, 1959), it was observed that Article 62 of the (old) Limitation Act was strictly construed and contemplated cases like payments to servants and agents, or where money payable to the plaintiff was paid to the defendant. The Supreme Court in A. Venkata Subbarao v. State Of A.P. (1964) noted that the language of the old Article 62 was borrowed from the English common law count for money had and received. Similarly, Rajputana Malwa Railway Co-Operative Stores, Limited v. Ajmere Municipal Board (Allahabad High Court, 1910), The T.S.H.W Co-Operative Society Ltd. v. S. Sundaram Mudaliar . (Kerala High Court, 1955), Smt. Ambika Bhawani Devi v. Chandrika Singh . (Patna High Court, 1973), and The State Of Andhra Pradesh v. Isukapalli Suri Satyam And Others (Andhra Pradesh High Court, 1963) all dealt with claims (like refund of taxes or duties) under the ambit of the erstwhile Article 62. These interpretations are now relevant primarily to Article 24 of the Limitation Act, 1963.

Effect of Acknowledgment and Part-Payment

The limitation period prescribed under Article 62 can be extended by a valid acknowledgment of liability under Section 18 of the Limitation Act, 1963, or by part-payment of the debt under Section 19 of the Act.

In Tilak Ram And Others v. Nathu And Others (1967 AIR SC 935), the Supreme Court, while interpreting Section 19 of the Limitation Act, 1908 (analogous to Section 18 of the 1963 Act concerning acknowledgment), laid down stringent criteria for a statement to qualify as a valid acknowledgment capable of resetting the limitation period. The acknowledgment must be in writing, signed by the party against whom the right is claimed, and made before the expiration of the prescribed period. It must also relate to the specific liability in respect of the property or right in question. These principles are equally applicable to acknowledgments concerning debts secured by mortgages or charges under Article 62 of the current Act. The reference material Mamraj Singh v. B.H.E.L. (Uttarakhand High Court, 2015) also alludes to Section 18 of the Limitation Act, 1963, in the context of extending limitation.

Conclusion

Article 62 of the Limitation Act, 1963, plays a vital role in the enforcement of monetary claims secured by immovable property in India. By providing a twelve-year limitation period from the date the money becomes due, it offers a substantial window for secured creditors to pursue their legal remedies. The interpretation of "money secured by a mortgage or otherwise charged upon immovable property" and "when the money sued for becomes due" has been shaped by numerous judicial pronouncements, adapting to various factual matrices and legislative contexts, including modern statutes like the IBC and SARFAESI Act.

A clear understanding of Article 62, distinct from its historical namesake in the 1908 Act, is essential for legal practitioners and litigants involved in property disputes and debt recovery. The consistent application of this provision, coupled with the principles of acknowledgment and part-payment, ensures a balance between the rights of creditors to recover secured debts and the need for timely adjudication of claims, thereby upholding the objectives of the Limitation Act.