Banking · SARFAESI Act and Limitation Act
A secured creditor, Delta Bank, initiated action under the SARFAESI Act, 2002 against M/s. Excel Group for default on a Term Loan. The timeline is as follows: Testbook - 30 June 2021: Loan account declared NPA. - 1 October 2024: Bank issued Demand Notice under Section 13(2) of the SARFAESI Act. - 5 December 2024: Borrower filed a writ petition claiming proceedings are time-barred. Under the Limitation Act, 1963, what is the limitation period for enforcing the security interest, and what is the likely outcome?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Limitation Period: 3 years; Outcome: Claim will fail because the Limitation Act does not apply to SARFAESI proceedings.
- 2Limitation Period: 6 years; Outcome: Claim will fail as the notice was issued before 6 years.
- 3Limitation Period: 3 years; Outcome: Claim will likely succeed as the Section 13(2) notice was issued after the 3-year limitation period for the recovery of debt expired, making the action time-barred.✓
- 4Limitation Period: 12 years; Outcome: Claim will fail as 12 years have not passed.
Correct answer
Limitation Period: 3 years; Outcome: Claim will likely succeed as the Section 13(2) notice was issued after the 3-year limitation period for the recovery of debt expired, making the action time-barred.
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