Karnataka High Court
Karnataka State Financial Corporation vs Smt Vimala Kedia on 4 February, 2014
Bench: K.L.Manjunath, Ravi Malimath
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IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 4TH DAY OF FEBRUARY 2014
PRESENT
THE HON'BLE MR.JUSTICE K.L.MANJUNATH
AND
THE HON'BLE MR.JUSTICE RAVI MALIMATH
MISCELLANEOUS FIRST APPEAL NO.221 OF 2012(SFC)
BETWEEN:
Karnataka State Financial Corporation
Branch Office, S.P.S.Complex
Vaniyar Street, Chamarajanagar
Represented by its
Branch Manager. ...APPELLANT
(By Sri Gururaj Joshi, Advocate)
AND:
1. Smt.Vimala Kedia
W/o late Ramothar Kedia
Aged about 60 years
R/at No.5/2, 2nd Cross
Nanjappa Road,
Shanthi Nagar,
Bangalore - 560 027.
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2. Smt.Renu Kejriwala
D/o late Ramothar Kedia
Aged about 35 years
R/o No.Z-202,
Siddartha Apartments
M.P.Enclave
New Delhi - 110 001.
3. Smt.Neethu Tibriwala
D/o late Ramothar Kedia
Aged about 33 years
R/at No.15, Thilak Mandir Road,
Valley Parle East,
Mumbai - 500 057.
4. Sri Ashish Kedia
S/o late Ramothar Kedia
Aged about 29 years
R/at No.5/2, 2nd Cross
Nanjappa Road,
Shanthi Nagar
Bangalore - 560 027.
5. Sri Venkateshalu
Age: Major
S/o late Venkatappa
No.12/2, Stephen's Road,
Frazer Town,
Bangalore City - 560 005.
6. Sri Suresh T Jain
S/o Tarachand
Aged about 55 years
R/at No.5/3, Old No.28/1
2nd Cross, Swathi Main Road,
Nanjappa Road,
Shanthi Nagar,
Bangalore - 560 027. ...RESPONDENTS
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This MFA filed under Section 32(9) of the State
Financial Corporations Act 1951, against the orders dated
15.11.2011 passed in Civil Misc.Petition No.2/2006 on the
file of District and Sessions Judge, Chamarajanagar,
dismissing the petition filed under Section 31(1)(AA) of
K.S.F.C. Act 1951.
This MFA coming on for admission this day,
K.L.Manjunath J., delivered the following:-
JUDGMENT
Being aggrieved by the order passed by the learned District & Sessions Judge, Chamarajnagar, on 15th November, 2011, in Civil Misc.Petition No.2/2006 the present appeal is filed.
2. Heard Mr.Gururaj Joshi, the learned counsel appearing for the appellant. The facts leading to this appeal are as hereunder:-
The appellant KSFC filed a petition under Section 31(A)(A) of the State Financial Corporation Act, 1951 requesting the Court to grant a decree for recovery of the loan against the respondents. The respondents are 4 sureties or guarantors. They had given personal guarantee to the principal borrower. In the petition an application came to be filed by the respondent requesting the Court to dismiss the petition as barred by limitation on the ground that the petition is filed beyond the period of 3 years from the date of cause of action.
3. The appellant filed objections stating that the application filed by respondent No.5 to dismiss the petition on the ground of limitation is filed at a later stage and not maintainable. The trial Court after considering the fact that the loan of sum of Rs.25,00,000/- was advanced by the KSFC on 17-3-1997, on account of non-payment of dues by the principal borrower a demand notice was issued by the appellant on 15-10-1998. The appellant recalled the disbursement of the balance loan amount on 3-1-1999. In other words, the entire sanctioned amount was not released in favour of the principal borrower and 5 only a part of the loan was released in favour of the principal borrower.
4. On 15-3-2002 primary assets of the principal borrower were sold for a sum of Rs.4,70,000/- by the KSFC. In the year 2006 the appellant has discharged the liability of the 6th respondent who was one of the guarantors. The petition was filed before the District Judge, Chamarajanagara for recovery of the amount from the remaining guarantors, on 23-2-2006. An application was filed by the respondent to dismiss the petition on the ground that the same was barred by time. The contention of the appellant was that the application was filed by the respondent at a belated stage and therefore the question of limitation need not be considered by the Court.
5. The trial Court after considering the application filed by the respondent and the objections came to the conclusion that the suit filed by the petitioner against the 6 respondent was barred by limitation in view of Article 137 of the Limitation Act. Challenging the same the present appeal is filed.
6. We have heard Mr.Gururaj Joshi, the learned counsel appearing for the appellant. According to him, the trial Court has committed an error in dismissing the petition as barred by limitation. According to him, the guarantee executed by the respondent is a continued guarantee and the liability would run along with the liability of the principal borrower. Therefore he contends that the recovery proceedings filed by the appellant against the respondent was not barred by limitation. He further submits that the trial Court was required to dispose of the application along with the main petition since evidence was recorded on merits.
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7. Having heard the learned counsel for the appellant we do not see any merit in this appeal for the following reasons:-
a) Admittedly the loan was granted on 17-3-1997. On account of non-payment of the amount by the principal borrower a demand notice for repayment was got issued by the appellant on 15-10-1998. When there is failure on the part of the principal borrower in not paying the dues as per the terms & conditions of the agreement the cause of action for the appellant would accrue to proceed against the principal borrower on 15-10-1998 when a demand notice was issued and thereafter on 13-1-1999, the balance of sanctioned loan amount was not disbursed and the same was recalled on account of the principal borrower not discharging the loan.
b) It is also an admitted fact that the primary assets were sold by the appellant on 15-3-2002. Atleast 8 when the primary assets were sold the appellant was required to consider it as a cause of action to proceed against the principal borrower or against the guarantor. It is also admitted that for the reasons best known to the appellant, the appellant has not proceeded to recover any money from the principal borrower. It is nodoubt true that the appellant KSFC is entitled to proceed either against the principal borrower or against the surety. The date of filing the petition is 23-2-2006. The period of limitation is only 3 years for recovery of money from the date of cause of action. According to us the date of selling the primary assets has to be considered as the date of cause of action in the absence of any acknowledgement of debt by the respondents on subsequent dates. Therefore the appellant could not have proceeded against the principal borrower after 14-3-2005 onwards. Therefore we are of the view that when the appellant cannot proceed against the principal borrower, the appellant could not have filed the petition for recovery of dues from the guarantors 9 beyond 3 years from the date of cause of action. In the circumstances we are of the view that no error is committed by the trial Judge in dismissing the petition. In the result, the petition is dismissed.
Sd/-
JUDGE Sd/-
JUDGE Rsk/-