Limitation Act and Acknowledgment: Supreme Court's Intervention in New Mangalore Port Trust Dispute.


03 April 2025 Civil Appeals >> Civil & Consumer Law  

The Supreme Court of India has set aside a judgment by the Karnataka High Court that had dismissed the New Mangalore Port Trust's (NMPT) attempt to recover revised license fees from several licensees. The High Court had upheld a District Judge's order, which quashed the NMPT's demand on the grounds of limitation. The Supreme Court, however, found merit in the NMPT's appeal, primarily based on the licensees' own acknowledgments of the debt while seeking deferment pending their appeal against the tariff revision.

The dispute arose after NMPT revised its license fees for loading and unloading goods, effective retrospectively from February 20, 2007, with the approval of the Tariff Authority for Major Ports (TAMP) in a notification dated July 23, 2010. NMPT subsequently raised demands for the arrears from the licensees.


 

 

The licensees challenged the retrospective application of this revised fee in writ petitions before the Karnataka High Court, which were dismissed by a single judge on June 28, 2013. The licensees then filed writ appeals before a Division Bench, which are still pending without any interim relief.

Following the single judge's order, NMPT issued demand notices, including a final notice dated January 15, 2015. In response to this notice, the licensees, in a letter dated February 4, 2015, objected to the immediate demand, arguing that it would prejudice their pending writ appeals challenging the retrospective revision. They requested NMPT to refrain from demanding the differential fee until the appeals were decided.

Subsequently, the Assistant Estate Manager of NMPT, also the designated Estate Officer under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 (PP Act), issued show-cause notices under Section 7(3) of the PP Act in August 2015, demanding payment of the arrears with interest. The licensees reiterated their earlier stance, citing the pending appeals.

The Estate Officer, finding the replies unsatisfactory, passed an order under Section 7(1) of the PP Act demanding payment. The licensees then filed appeals before the District Judge, who allowed them, holding that the recovery proceedings were time-barred. The District Judge's order was upheld by the Karnataka High Court, leading NMPT to approach the Supreme Court.

The Supreme Court acknowledged the arguments from both sides regarding the timing of raising objections. While NMPT argued that the plea of limitation was raised late by the licensees, the licensees contended that the plea of acknowledgment under Section 18 of the Limitation Act was raised for the first time by NMPT in the Supreme Court. However, given the undisputed documentary evidence, the Court decided to address the limitation issue.

The District Judge and the High Court had concluded that the recovery proceedings were barred by the three-year limitation period applicable under the Limitation Act to proceedings under the PP Act, taking the date of the tariff revision notification (July 23, 2010) as the starting point.

However, the Supreme Court focused on the licensees' letter dated February 4, 2015, responding to NMPT's demand. The Court noted that while the licensees sought deferment of payment due to the pending appeals, they did not dispute the revised tariff itself. Their challenge was solely against its retrospective application.

Referring to Section 18 of the Limitation Act, which provides for a fresh period of limitation based on acknowledgment of liability in writing, the Supreme Court highlighted Explanation (a) to this section. This explanation states that an acknowledgment can be sufficient even if the time for payment is stated not to have yet arrived. The Court found that the licensees' communication squarely fell within this explanation, as they were essentially stating that the payment was contingent on the outcome of their pending appeals.

Consequently, the Supreme Court held that the licensees' letter constituted a valid acknowledgment of the debt, extending the limitation period up to February 3, 2018. As the recovery proceedings were initiated well within this extended period, the Court found the High Court's conclusion on limitation to be incorrect.

The Supreme Court also observed that the High Court should have ideally deferred the hearing of NMPT's writ petition challenging the District Judge's order until the disposal of the licensees' intra-court appeals against the single judge's order upholding the retrospective tariff revision. The outcome of those appeals would directly impact the recovery proceedings.

In its final order, the Supreme Court allowed NMPT's appeals, set aside the High Court's judgment, and restored the writ petitions before the High Court. The High Court has been directed to hear these petitions after the final disposal of the licensees' pending intra-court appeals. The Supreme Court clarified that if the licensees succeed in their appeals, the retrospective tariff revision would be set aside, and NMPT's demands would be withdrawn. However, if the licensees fail, they would be liable to pay the arrears along with applicable interest.   


Limitation Act, 1963