Section 36: Limitation and Section 37: Application of Other Laws Not Barred

Sections 36 and 37 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) regulate the time within which secured creditors may enforce security interests and clarify how the Act operates alongside other legislation.

Section 36 of the SARFAESI Act - Limitation

Meaning: Section 36 makes limitation a legal condition for resorting to enforcement measures under Section 13(4). A secured creditor cannot rely on the SARFAESI procedure to enforce a claim that does not meet the applicable limitation requirements. The applicable period and its starting point depend on the nature of the claim, underlying documents, and legally relevant events.

How limitation is assessed

• Limitation Act, 1963: The applicable article of the Schedule determines the limitation period. For example, Article 62 provides twelve years for a suit to enforce payment secured by a mortgage or charge on immovable property, calculated from when the money sued for becomes due. Other types of claims may have different periods.
• Acknowledgment: Section 18 of the Limitation Act can provide a fresh limitation period where a valid written and signed acknowledgment of liability is made before expiry of the existing period.
• Part-payment: Section 19 may provide a fresh period where the statutory requirements for qualifying payment and acknowledgment are fulfilled before expiry.
• Dates and evidence: Loan documents, default and acceleration clauses, mortgage terms, acknowledgments, payments and other legally recognized exclusions or extensions must be examined. An NPA classification alone does not settle every limitation question.

Connection with Section 13

Section 13(2) generally requires the secured creditor to issue a written demand notice giving the borrower sixty days to discharge the liability. Where the statutory conditions are met and the borrower fails to comply, Section 13(4) permits specified enforcement measures, including taking possession of secured assets and certain measures for management or recovery. Compliance with the notice process does not dispense with Section 36.

Section 37 - Application of Other Laws Not Barred

Meaning: Section 37 states that SARFAESI remedies supplement other applicable statutory remedies rather than automatically replacing them. The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is now titled the Recovery of Debts and Bankruptcy Act, 1993. References to the Companies Act, 1956 must also be read in light of the Companies Act, 2013 and the relevant repeal, savings and transition provisions.

Relationship with Section 35 and insolvency law

Section 35 gives SARFAESI provisions overriding effect where there is inconsistency with another law. Sections 35 and 37 therefore operate together: other laws and remedies continue to apply insofar as they are compatible, but conflicting provisions require consideration of the relevant overriding and special-law rules. The Insolvency and Bankruptcy Code, 2016 (IBC), including its moratorium and priority provisions where applicable, must be considered separately; Section 37 does not authorize enforcement in disregard of a binding IBC moratorium.

Practical implications for borrowers and secured creditors

• A creditor should verify the applicable limitation period and supporting documents before initiating enforcement under Section 13(4).
• A borrower may raise a properly supported limitation objection in proceedings under Section 17 before the Debt Recovery Tribunal where the challenged measure is covered by that provision.
• The existence of a DRT recovery proceeding or another statutory remedy does not by itself remove SARFAESI requirements; each proceeding must satisfy its own legal conditions.
• Sections 36 and 37 should be read with Sections 13, 17, 34 and 35 and the applicable SARFAESI Rules.

Official legal resources

For the authoritative legislative text and amendments, consult India Code (Government of India), the Department of Financial Services, and the Insolvency and Bankruptcy Board of India. Judicial decisions can be checked through the Supreme Court of India.

Note: Limitation is fact-specific. The statutory text, subsequent amendments and binding judgments applicable to the particular transaction must be checked before taking enforcement action or filing a challenge.