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1. Appellant is the petitioner in O.P. No. 19471/2002, which was dismissed by a learned single Judge of this Court by judgment dated 1-2-2006. The issue involved in that original petition was the enforceability of a personal guarantee issued by the appellant to the Kerala Financial Corporation as the Managing Director of an industry by name Mothi Chemicals to which the Kerala Financial Corporation had advanced a loan of Rs. 30 lakhs. There was a loan agreement between the Company and the KFC mortgaging properties belonging to the Company as security for the loan. In addition to the same, a personal guarantee was also given by the appellant as Managing Director of the said Company. The Company defaulted payments of the amount of loan. Recovery proceedings were initiated. The land belonging to the Company, which was mortgaged to the KFC, was acquired by the Government. LAR No. 105/1992 was filed for enhancement of compensation before the civil Court. The sale proceeds of the movables of the defaulted Company and the compensation including enhanced compensation awarded by the civil Court amounting to Rs. 29.72 lakhs were paid over to the KFC on 11-6-1996. After receipt of the award amounts, the KFC initiated revenue recovery proceedings against the appellant on the basis of his personal guarantee on 22-5-1998 for the balance amounts due from the Company towards the loan account. Since the appellant did not pay the amount, proceedings under Section 65 of the Revenue Recovery Act were initiated by Ext. P6 notice. The appellant filed Ext. P8 reply to the same on 6-7-2002 and then filed the writ petition immediately thereafter. The main contention of the appellant in the writ petition was that the recovery of the same was barred by limitation in view of the Supreme Court decision in State of Kerala v. V.R. Kalyanikutty . The contention of the appellant-petitioner in the writ petition was that al-though the liability of the appellant as a guarantor is co-extensive with that of the principal debtor, namely, the Company, the guarantee executed by the appellant is a separate and distinct contract. In the above circumstances, the period of limitation for recovery of money on the basis of personal guarantee is three years from the date of default committed by the Company in payment of the loan amounts. According to the appellant-petitioner, in this case, the default occurred in 1986 itself and so viewed, the period of limitation ran out in 1989. He further contended that as per the loan agreement, loan was repayable in 13 half yearly instalments commencing from 10-11-1986 and ending on 10-11-1992. Therefore, the latest date on which the default could have occurred is 10-11-1992 and even going by that date, the period of limitation expired on 10-11-1995, i.e. three years from 10-11-1992. However, the learned single Judge did not accept the contentions of the appellant-petitioner. The learned single Judge held that since the personal guarantee is not an independent agreement and the liability under the agreement is directly related to the loan agreement with the Company, recovery in fairness has to be first made against the borrower though nothing bars that KFC from proceeding for recovery against the appellant after default. The learned Judge was of the view that since the last instalment of the compensation awarded for acquisition of the property of the defaulter Company was received by the KFC on 11-6-1996, revenue recovery notice issued on 22-5-1998 is perfectly within the period of limitation. Further, it was held that since the loan was covered by a mortgage executed by the borrower-Company, and the last date for payment as per the loan agreement was 10-11-1992, recovery could be initiated both under the guarantee agreement and the loan agreement in time before 10-11-2004, i.e. before the expiry of 12 years from the last date for payment under the loan agreement. There was also further directions to the revenue recovery authorities to collect the details regarding the appellant's property and the appellant was also given the liberty to raise all his objections against Section 65 proceedings under the Recovery Act, before the District Collector and the District Collector was directed to complete the proceedings for recovery against the appellant including Section 65 proceedings within three months from the date of production of copy of the judgment. Certain observations also were made directing the KFC to settle the matter by giving reduction in the rate of interest. The said judgment of the learned single Judge is under challenge in this writ appeal.

4. In answer to the contentions, the learned standing counsel for the KFC would contend that in view of Clauses 12 and 13 of Ext. R3(a), which is the personal guarantee executed by the appellant, the guarantee would remain in force and effect till the last pai due to the Corporation under the loan agreement with the borrower company remains unpaid. He would further contend that going by Clause 12 of the guarantee agreement money is payable by (he guarantor 'on demand' and therefore limitation would start to run only on the date when the KFC demands the guarantor for payment and not any time before. The standing counsel would further argue that Ext. R3(a) is a continuing guarantee and therefore, the period of limitation would start running only after the remedy against the principal debtor is exhausted. He further submits that the period of limitation would start running as against the appellant on the basis of the personal guarantee only on the date when the compensation amount for acquisition of the property of the default company is received by the KFC on 11-6-1996 and therefore, revenue recovery notice issued on 22-5-1998 is perfectly within the period of limitation. On these contentions, the standing counsel for the KFC would support the impugned judgment and seek dismissal of the writ appeal.

5. We have considered the rival contentions in detail.

6. As is clear from the pleadings and arguments advanced, the issue involved is only as to whether the enforcement of the personal guarantee executed by the appellant is barred by limitation. Counsel for the appellant, relying on two decisions of this Court in Krishna Dass Narayana Brahmananda Thirthar v. Valli Nadachi Lekshmi Nadachi ILR 1955 TC Series 1174 and Stale v. Jathavedan Namboothiripadu AIR 1959 Kerala 1 (FB) contends that the agreement between the KFC and the principal debtor is separate and distinct from the personal guarantee executed by the appellant and the period of limitation of 12 years prescribed for enforcement of the mortgage of properties of the principal debtor as per the loan agreement cannot be made applicable to the personal action for recovery of money from the appellant on the basis of the personal agreement between KFC and himself. According to counsel, the date fixed for payment of the last instalment of loan by the principal debtor is 10-11-1992 and for enforcing the personal guarantee against him the limitation period expired after three years from that date since the latest breach of contract is that date and limitation would start to run from that date. He would further submit that the date of payment of compensation by the State for acquisition of the mortgaged property to the KFC directly would not amount to an acknowledgment of liability since the same has not been with the consent of the principal debtor.

7. The law is settled that the personal guarantee agreement between the creditor and surety is distinct and separate from that between the creditor and principal debtor and for deciding the limitation period for enforcement of the personal guarantee cannot be reckoned on the basis of the security by way of the mortgage of immovable property given by the principal debtor. It is also settled law that limitation is applicable to revenue recovery proceedings also.

8. We are of opinion that the resolution of the dispute involved would essentially depend upon the answer to two questions, specifically raised by counsel for the KFC as to whether the guarantee executed by the appellant is a continuing guarantee and as to whether the limitation starts to run only when a demand is made by KFC for payment as per the guarantee and not before. Therefore, we have to first consider the nature of the guarantee executed by the appellant.