Introduction
The Supreme Court of India, in the case of New Mangalore Port Trust & Anr. Versus Clifford D Souza Etc., has delivered a significant judgment clarifying the applicability of Section 18 of the Limitation Act, 1963 (Limitation Act) to proceedings under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 (PP Act).
The decision upholds the applicability of Section 18 of the Limitation Act in case of Demand Notices issued under the PP Act. Despite the Appellant's failure to raise the plea at earlier stages, building on admitted facts and undisputed communications, the Court held that acknowledgment of liability resulted in extension of the limitation period, i.e., limitation would be computed from the date of acknowledgment of a liability. The judgment clarifies the scope of limitation in proceedings under the PP Act, and reinforces the judiciary's approach towards balancing technicalities with substantive justice.
Limitation is a foundational concept in law, ensuring conclusiveness to litigation, and precluding stale claims from congesting the judicial system. At the same time, the law also recognizes that certain conduct can merit a fresh computation of the limitation period, thereby reinstating the claimant's right to seek relief.
Factual Background
The genesis of the dispute lies in the allotment of land by New Mangalore Port Trust (NMPT) (Appellant) to licensees (Respondents) back in 2003, which were governed by agreements specifying the payment of license fees. These agreements were subject to periodic revisions approved by the Tariff Authority for Major Ports (TAMP).
The dispute between NMPT and the licensees arose in 2005, when TAMP revised the license fees vide notification dated June 20, 2005, which came into effect from February 2002, followed by another revision notification dated July 23, 2010, effective from February 20, 2007. Thereafter, NMPT, acting on this notification, raised demands for realising the arrears of licence fee corresponding to the period between February 20, 2007 to July 23, 2010, which was met with resistance from the licensees, who challenged the retrospective application of the revised fees before the Karnataka High Court. While the Single Judge dismissed their writ petition, upholding the notification dated July 23, 2010 and holding that the licence fee could be revised retrospectively, intra-court appeals were filed before the Division Bench of the Karnataka High Court which remained pending and undecided without interim relief.
Meanwhile, as no interim order had been passed in the intra-court appeal, the Court passed an order under Section 7(1) of the PP Act granting one month's time to the licensee for payment, failing which the amount was to be recovered as land revenue, and initiated proceedings under the PP Act to recover the arrears arising from the revised tariff notification dated July 23, 2010.
The Respondents, in their reply, never disputed the demands on merit but only insisted that it defer enforcement of the claims till the final disposal of the intra-court appeal before the High Court. This communication became crucial in the later proceedings.
However, both the District Court and the High Court quashed these proceedings on the ground that they were barred by limitation. Banking on Article 52 to the Schedule of the Limitation Act, that prescribes a three-year period for suits for arrears of rent, the courts held that the cause of action had accrued on the date of the notification i.e. July 23, 2010. Consequently, the limitation period, after accounting for an interim stay operating in the connected writ petition, expired on May 11, 2015. Since the first notice under the PP Act was issued only on August 12, 2015, which is beyond the three-year threshold, the proceedings were declared to be time-barred.
Dissatisfied with the same, NMPT approached the Supreme Court.
Issues
The Supreme Court was called upon to decide:
- Whether the Limitation Act, 1963, applies to proceedings under the PP Act;
- Whether an acknowledgment of liability had been made by the respondents within the limitation period.
- Whether the Appellant could claim the benefit of Section 18 of the Limitation Act despite not pleading it before the lower forums.
Court's Decision
The Supreme Court, while acknowledging that the PP Act does not contain an express limitation provision for initiation of proceedings under Section 7 of the PP Act, reaffirmed and maintained the stance it took in New Delhi Municipal Committee v. Kalu Ram (AIR 1976 SC 1637), wherein it was held that the provisions of the Limitation Act would apply to the PP Act. Further, the Court rejected the fragmentary application of the Limitation Act. The Court held that, once the Limitation Act applies, all its provisions will be applicable to the proceedings under the PP Act.
The Supreme Court applied Section 18 of the Limitation Act and granted benefit of extension of limitation to the lessor, noting that there was acknowledgement of liability by the licensee within the limitation period of 3 years. The Court observed, that the Respondent could not have argued that only Section 3 of the Limitation Act along with the limitation provided under Article 52 of the Schedule of the Limitation Act would be applicable, and not Section 18 of the same Act. Once the Limitation Act applies, all its provisions will be applicable to the proceedings under the PP Act.
It was held that acknowledgment under Section 18 of the Limitation Act need not involve a direct admission of liability. It would be sufficient to prove acknowledgement even if it states that the time for payment has not yet come or is accompanied by a refusal to pay.
With regards to the Respondents' objection pertaining to the Appellant not raising the plea of acknowledgment as referred to under Section 18, before any of the lower forums including the Estate Officer, District Judge, or High Court, nor any of the pleadings before the Supreme Court, the Court held that the letter dated February 4, 2015, forming the fundamental part of the Appellant's claim for extension, was exchanged in the course of official business, acknowledged by both parties and was never challenged on merit, and therefore the limitation would extend to February 3, 2018.
Further, the Court observed that the Respondents, despite failing before the Single Bench of the High Court, had been resisting the demand on account of pendency of the intra-court appeals. The Court opined that this objection was taken only to delay payment, and as such, they should not have benefitted on said basis. The Respondent explicitly stated only about the pending appeal and sought deferment of the enforcement of the liability but not a denial of the liability. The Court held, that in such circumstances, strict procedural construction should not overthrow substantive justice, and thus, considered the plea of limitation and the acknowledgment of liability.
The Court ultimately allowed the appeals, by setting aside the High Court's order, and being cognizant of the fact that the Division Bench's verdict on retrospective application of the notification would have a conclusive bearing on the Appellant's claim. The Court restored the Appellant's writ petition before the High Court. It further directed that the writ petition be heard only after disposal of the Respondents' intra-court appeals.
Our Analysis
The judgment reinforces that proceedings under special statutes like the PP Act are not insulated or exempt from the general laws of limitation.
An important aspect of the judgment involves the Court's treatment of the Respondents' objection, pertaining to the Appellant not raising the plea of acknowledgment under Section 18 before any of the lower forums including the Estate Officer, District Judge, or High Court, nor in the pleadings before the Supreme Court.
Generally, a mixed question of law and fact must be specifically pleaded and backed by evidence, which means that the party must not only present the issue in its pleadings but also substantiate it with evidence.
In the instant case, however, the Court made an important departure from rigid procedural technicality in order to safeguard substantive justice. In a judicial system often carped for its formalism, this judgement is a welcome affirmation that strict procedure must be adhered to as long as it aids justice, not impedes it.
From a business and commercial standpoint, this judgment brings much-needed clarity for lessors, infrastructure developers, and those working under public-private partnerships or concession frameworks. By allowing acknowledgments to extend the limitation period, it helps protect high-value claims that might otherwise be lost to technical deadlines. This adds an extra layer of commercial security to long-term agreements, helping ensure financial responsibility and stability in complex, long-duration projects.
Ultimately, the decision serves as a clear guidance for future disputes governed by special statutes, reaffirming that law does not operate in a vacuum, it responds to the evolving needs of justice and commerce.
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