The Single Judge allowed an application to reject the Original Petition filed by a Financial Corporation to invoke a personal guarantee against a guarantor.
The main Original Petition No.486 of 2016 is rejected on the ground that invoking the personal guarantee is barred by limitation.
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A.No.27 of 2022 in O.P.No.486 of 2016
A.No.27 of 2022 in O.P.No.486 of 2016
P.VELMURUGAN,J.
This application has been filed under Section 31(1) (aa) and 32(11) of the State Financial Corporation Act seeking to reject the Original Petition in O.P.No.486 of 2016.
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A.No.27 of 2022 in O.P.No.486 of 2016
properties and on 24.11.2011 released a sum of Rs.1,06,80,388/- from and out of sale proceeds to the petitioner Corporation. The learned counsel further submitted that it is to be noted that from that day i.e. 24.11.2011 within 3 years the personal guarantee should have been invoked whereas, the present petition has been filed in the year 2016 which is after the lapse of 5 years. Therefore, it is barred by limitation and he has placed reliance on the judgment of the Hon'ble Suprem Court reported in 2006(4) CTC 89 (Maharashtra State Financial Corporation vs. Ashok K.Agarwal and others) in which the Hon'ble Supreme Court held that the period of limitation for invoking personal guarantee is 3 years and as per the Article 136 and 137 of the Limitation Act,, the application to invoke personal guarantee for recovery of short fall amount is barred by limitation. The application under Section 31 and 32 of the State Financial Corporation Act, is not the way of execution of a decree or order of any civil suit. Therefore, the petition is beyond the period of limitation of 3 years and hence the main original petition has to be rejected.
there is no quarrel with reference to the proposition of law that invoking personal
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guarantee, the period of limitation is 3 years whereas, against the company, it is 12 years. Therefore, the citations referred to by the learned counsel for the applicant/2nd respondent is not applicable to the present case and the application is liable to be dismissed.
loan availed by the second respondent/1st respondent company. The first respondent/Corporation is a deemed Financial Corporation within the meaning of the Section 46(1) of the State Financial Corporations Act, 1951. Since the applicant company committed default in repaying the loan, foreclosure notice was issued and the assets of the company were also taken over by the first respondent/petitioner and handed over to M/s.TIIC. The mortgaged properties were sold by the 5th respondent/TIIC and released a sum of Rs.1,06,80,388/- on 24.11.2011 to the first respondent/petitioner. Thereafter, the first respondent filed the petition in O.P.No.486 of 2016 under Section 31(1) (aa) of the State Financial Corporation Act invoking the personal guarantee after the lapse of five years.
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A.No.27 of 2022 in O.P.No.486 of 2016
Even a bare reading of the averment in the petition itself shows that the petitioner received the pro-rata share from the sale proceeds from the M/s.TIIC on 24.11.2011 itself. The first respondent/petitioner should have filed the petition to invoke personal guarantee under section 31 (1) (aa) of the State Financial Corporations Act, 1951, within 3 years, whereas, it has been filed only in the year 2016 which is beyond limitation. Therefore the main original petition is liable to be rejected on the ground of limitation.
O.P.No.486 of 2016 is rejected.
24.03.2022
ksa-2
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A.No.27 of 2022 in O.P.No.486 of 2016
P.VELMURUGAN,J.
ksa-2
A.No.27 of 2022 in O.P.No.486 of 2016
24.03.2022
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2 issues framed by the court
Whether the petition invoking personal guarantee for loss recovery is barred by a 3-year limitation period.
Whether the petition filed in 2016, after receipt of sale proceeds on 24.11.2011, is beyond the limitation period.
Colour shows how this judgement treated each authority
Maharashtra State Financial Corporation vs. Ashok K.Agarwal and othersReferred¶10
Maharashtra State Financial Corporation vs. Ashok K.Agarwal and others
Limitation ActReferred¶10
Article 136 and 137 of the Limitation Act
1 provisions across 1 enactments
FIRST RESPONDENT/ Corporation
APPLICANT/2nd RESPONDENT
SECOND RESPONDENT/ 1st RESPONDENT Company
APP. 27/ 2022 vs A.No.486/ 2016
P.VELMURUGAN,J.
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
