Madras High Court
The Tamil Nadu Industrial Investment vs M/S. Jamal Bran Oil Mills Pvt. Ltd on 2 September, 2024
Author: P.Velmurugan
Bench: P.Velmurugan
C.M.A(MD).No.964 of 2016
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 02.09.2024
CORAM:
THE HON'BLE Mr. JUSTICE P.VELMURUGAN
AND
THE HON'BLE Mr. JUSTICE K.K.RAMAKRISHNAN
C.M.A.(MD). No.964 of 2016
The Tamil Nadu Industrial Investment
Corporation Limited
rep. Through its
Branch Manager ... Appellant
Vs.
1.M/S. Jamal Bran Oil Mills Pvt. Ltd.,
Rep by its Director having its Registered]
Office at No.4/1 B.SHahul Manzil,
Railway Station Road, Ukkadai Ariyamangalam,
Tiruchirapalli-10.
2.S.Jamal Mohammed
3.S.S.Raja Mohammed
4.M.Mohammed Amanullah
5.S.S.Shajahan ... Respondents
Prayer : Civil Miscellaneous Petition filed under Section 32 of State
1
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C.M.A(MD).No.964 of 2016
Finance Corporation Act, 1951, praying to set aside the Judgment and
Decree dated 06.01.2016 passed in S.F.C.O.P.No.5 of 2009 on the file of the
first Additional District Judge (PCR), Tiruchirappali, and consequently
direct the respondents herein to pay the dues to the tune of Rs.
23,80,85,90.55/- along with interest at the rate of 27.75% till the date of
realisation.
For Appellant : Mr.G.Murugan
For Respondents : Mr.K.Govindaraja
for R4 & R5
: No appearance of R1 to R3
JUDGMENT
[Order of the Court was made by K.K.RAMAKRISHNAN, J.]
This Civil Miscellaneous Appeal has been filed by the Tamil Nadu
Industrial Investment Corporation Limited against the Judgment and
Decree dated 06.01.2016 passed in S.F.C.O.P.No.5 of 2009 on the file of the
first Additional District Judge (PCR), Tiruchirappali.
2.The petitioner is a Public Limited Company incorporated under the
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Indian Companies Act, 1956. The first respondent herein approached the
petitioner Corporation for granting a loan to the tune of Rs.84,60,000/-
(Rupees Eighty Four Lakhs and Sixty Thousand Only). Thereby, they
sanctioned loan to the respondents for a sum of Rs.84,60,000/- on
19.11.1991 for construction of building and purchase and installation of
machineries. Thereafter, the respondents availed loan to the tune of
Rs.76,40,000/-. The first respondent entered into a term loan agreement on
10.01.1992 for Rs.84,60,000/-. Out of this amount, a sum of Rs.76,40,000/-
was disbursed to the first respondent on different dates and the first
respondent agreed to repay the said principal amount of Rs.76,40,000/- in
fourteen half yearly instalments and the interest thereon every six months.
The respondent herein had agreed that in case the IDBI refinanced the rate
of interest for the loan will be 4% per annum over and the above, the IDBI
interest rate for refinanced amount with minimum of 19% per annum. The
above rate is inclusive of interest rate and taxes also. However, in case of
default, an additional interest of 5% per annum will be charged on the
defaulted amount for the defaulted period and the same was agreed by the
respondents. The first respondent through its Director had also executed a
Registered Deed of Mortgage dated 11.03.1992 and a Deed of
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Hypothecation of the building and the machineries also, as per the deed
dated 11.03.1992. The respondents 2 to 5 along with others executed a deed
of Guarantee on 11.03.1992 and 22.05.1992 for prompt repayment of the
amount borrowed by the first respondent and thereby, they undertook
personal liability for the amount due to the petitioner corporation. Now,
some of the guarantors passed away and they are not added as parties to this
case. The respondents committed default in payment of instalments of
interest and principal due under the above said transaction on the due dates.
Hence, the petitioner sent a notice to the respondents to pay the entire
amount due to be paid by the respondents. Thereafter, the respondents did
not pay the amount due to be paid by them to the petitioner corporation.
Thereafter, the petitioner issued foreclosure notice on 05.07.1995 and issued
a seven days notice on 25.07.1995 and 10.08.1996. As per the State
Financial Corporation Act, the petitioner has power to take possession of
the property and thereby, the petitioner took possession of the property
mortgaged to the petitioner on 05.09.1996. Thereafter, the property was
brought for auction. On 11.08.2003, the said property was sold in auction
for a sum of Rs.52,00,000/-. The auction purchaser has become absolute
owner of the said property, which belonged to the first respondent. After
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auction of the above said properties, a huge amount was still due and
payable by the respondents to the petitioner. Hence, further notice of
demand for the balance due had been issued to the respondents. Despite the
notice, they failed to pay the amount due. Hence, the petitioner filed a
petition under Article 112 of the Limitation Act. Instead of paying the
amount due, the respondents filed a suit in O.S.No.238 of 2004 before the
learned District Munsif, Thuraiyur, challenging the auction held on
11.08.2003 and consequential relief for permanent injunction.
3.The petition filed by the appellant corporation was dismissed on the
ground that the claim of the appellant corporation was barred by limitation.
Aggrieved over the same, the appellant corporation have preferred this
appeal before this Court.
4.Submissions of the learned counsel for the appellant:
4.1.The learned counsel for the appellant submitted that there is no
limitation to file the petition under Section 31 of the State Financial
Corporation Act, 1951, against the surety. The corporation has independent
right of enforcement against the surety and to enforce the same no period of
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limitation is prescribed in the Act.
4.2.He further submits that the limitation act has no application to the
enforcement against the surety under Section 31 of the State Financial
Corporation Act, 1951. Therefore, the learned trial Judge has committed
error in dismissing the application filed under Section 31 as if it was barred
by limitation.
4.3.The learned trial Judge erroneously invoked Article 137 of the4
Limitation Act.
5.Submissions of the learned counsel for the respondents:
The learned counsel for the respondents submitted that the
corporation conducted the auction and sold the property of the Principal
borrower for a sum of Rs.52,00,000/- on 11.08.2003. Many of the
Guarantors died and the petition was filed only against the respondents.
There was no reason assigned to initiate action under Section 31 of the
Limitation Act, after the lapse of many years. Therefore, the learned trial
Judge has correctly dismissed the petition as barred by limitation. The
Hon'ble Supreme Court in various decisions has applied both Articles 137
and 55. By applying both the articles, the claim of the petitioner is barred by
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limitation. Therefore, the learned trial Judge correctly dismissed the
petition.
6.This Court considered the rival submissions made by the learned
counsel appearing for the appellant corporation and the learned counsel
appearing for the respondents and perused the materials available on record
and precedents relied by them.
7.Now the questions to be decided in this civil miscellaneous appeal
are as follows:
(I).Whether the contention of the appellant corporation that
Limitation Act is not applicable to file the application under Section 31 of
the State Financial Corporation Act, 1951, legally acceptable or not?
(II)Whether the case of the appellant that the claim was within the
period of limitation under Article 112 of the Limitation Act is acceptable?
(III)Whether the claim of the appellant corporation to initiate the
action under Section 31 of the State Financial Corporation Act, against the
Guarantor after lapse of many years from the date of the sale of the property
of principal borrower ie., on 11.08.2003 is barred by limitation either under
Article 137 or under Article 55 of the Limitation Act?
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8.Applicability of Limitation Act:
In the State Financial Corporation Act, there is no reference either to
application of the Limitation Act or non application of the Limitation Act.
Section 31 of the State Financial Corporation Act reads as follows:
“Where an industrial concern, in breach of any
agreement, makes any default in repayment of any loan or
advance or any instalment thereof [or in meeting its
obligations in relation to any guarantee given by the
Corporation] or otherwise fails to comply with the terms of its
agreement with the Financial Corporation or where the
Financial Corporation requires an industrial concern to make
immediate repayment of any loan or advance under section 30
and the industrial concern fails to make such repayment,
[then, without prejudice to the provisions of section 29 of this
Act and of section 69 of the Transfer of Property Act, 1882 (4
of 1882)] [Inserted by Act 56 of 1956, Section 15 (w.e.f.
1-10-1956).], any officer of the Financial Corporation,
generally or specially authorized by the Board in this behalf,
may apply to the District Judge within the limits of whose
jurisdiction the industrial concern carries on the whole or a
substantial part of its business for one or more of the
following reliefs, namely:-
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(a)for an order for the sale of property pledged,
mortgaged, hypothecated or assigned to the [Financial
Corporation] [ Substituted by Act 56 of 1956, Section 15, for
" Corporation" (w.e.f. 1-10-1956).] as security for the loan or
advance; or(aa)[ for enforcing the liability of any surety;
or] [ Inserted by Act 43 of 1985, Section 19 (w.e.f.
21-8-1985).]
(b)for transferring the management of the industrial
concern to the Financial Corporation; or
(c)for an ad interim injunction restraining the
industrial concern from transferring or removing its
machinery or plant or equipment from the premises of the
industrial concern without the permission of the Board, where
such removal is apprehended.”
8.1.Unless and until, there is a specific reference about the non
applicability of the Limitation Act, 1963, the provision of limitation Act is
made applicable to decide the Limitation. In similar circumstances, the
Hon'ble Supreme Court while interpreting the provision of the land
acquisition Act in the case of Addl. Spl. Land Acquisition Officer v.
Thakoredas, Major, reported (1997) 11 SCC 412 at page 414, has held as
follows:
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3. Admittedly, the cause of action for seeking a reference
had arisen on the date of service of the award under
Section 12(2) of the Act. Within 90 days from the date of
the service of the notice, the respondents made the
application requesting the Deputy Commissioner to refer
the cases to the civil court under Section 18. Under the
amended sub-section 3(a) of the Act, the Deputy
Commissioner shall, within 90 days from 1-9-1970 make
reference under Section 18 to the civil court which he
failed to do. Consequently by operation of sub-section
3(b) with the expiry of the aforestated 90 days, the cause
of action had accrued to the respondents to make an
application to the civil court with a prayer to direct the
Deputy Commissioner to make a reference. There is no
period of limitation prescribed in sub-section 3(b) to
make that application but it should be done within
limitation prescribed by the Schedule to the Limitation
Act. Since no article expressly prescribed the limitation
to make such application, the residuary article under
Article 137 of the Schedule to the Limitation Act gets
attracted. Thus, it could be seen that in the absence of
any special period of limitation prescribed by clause (b)
of sub-section (3) of Section 18 of the Act, the
application should have been made within three years
from the date of expiry of 90 days prescribed in Section
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18(3)(b) i.e. the date on which cause of action had
accrued to the respondent-claimant. Since the
applications had been admittedly made beyond three
years, it was clearly barred by limitation. Since, the
High Court relied upon the case in Municipal
Council [(1969) 1 SCC 873 : (1970) 1 SCR 51] which
has stood overruled, the order of the High Court is
unsustainable. The appeals are accordingly allowed, and
the application made to the Court by the respondent
stands rejected.
8.2.The same was further demonstrated by the Hon'ble Supreme
Court in the following judgments by applying the various Articles.
JUDGMENT of the RATIO LAID DOWN Facts of the case
APEX COURT
2006 9 SCC 617 The Hon'ble Supreme Court The application filed against
has applied the Article 137 of the principal borrower on
the Limitation Act, 1963, and 25.10.1983. The application
has held that the application for the enforcement of liability
filed under Section 31 of the against the surety filed on
State Financial Corporation 02.01.1992. The Hon'ble
Act, 1951, is barred by Supreme Court has held that
limitation. the same was barred by
limitation.
2015 5 SCC 518 The Hon'ble Supreme Court The right to sue on the
has applied the Article 55 of contract of indemnity arose
the Limitation Act, 1963, and after the assets were sold.
has held that the application Action taken under Section 29
filed under Section 31 of the of the SFC Act, 1951, and sold
State Financial Corporation on 29.03.1984. The suit filed
Act, 1951, is barred by on 26.12.1996.
limitation.
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2015 5 SCC 617 The Hon'ble Supreme Court The period of 12 years as in
has applied the Article 55 of the case of mortgage suit.
the Limitation Act, 1963, and
has held that the application
filed under Section 31 of the
State Financial Corporation
Act, 1951, is barred by
limitation.
8.3.From the above, it is clear that the Supreme Court applied the
limitation act, to decide the issue of limitation When petitions were filed
under Section 31 of the SFC Act, 1951. Therefore, there is no express
prohibition to the application of the Limitation Act and hence, the
contention of the appellant that Limitation Act is not applicable cannot be
accepted. Accordingly, the question No.(I) answered against the appellant.
9.In this case, the following dates and events are relevant to decide
the issue of limitation.
DATES EVENTS
19.11.1991 The appellant corporation sanctioned the loan of Rs.
84,60,000/- for construction of the building and purchase
erection of the machineries.
10.01.1992 Out of the said amount, Rs.76,40,000/- was disbursed.
The first respondent company has entered into an
agreement with the appellant corporation with
undertaking to repay the said amount of Rs.76,40,000/- in
fourteen half yearly instalments and interest thereon
every six months.
11.03.1992 The deed of hypothecation of the building and
machineries was executed.
11.03.1992 The respondents No.2 to 4 along with other executed the
deed of guarantee.
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22.05.1992 The fifth respondent also executed a deed of guarantee.
05.07.1995 The appellant corporation issued foreclosure notice.
05.09.1996 The appellant had taken the possession of the property.
06.01.1997 The first auction notice for the value of Rs.40,00,000/-.
28.02.1997 The second auction notice stayed by the Court.
23.07.1997 The third auction notice- no bidder.
22.12.1997 The fourth auction notice-no bidder.
11.05.1998 The fifth auction notice-no bidder.
21.05.2000 The sixth auction notice-no bidder.
11.08.2003 The seventh auction held and the property sold for the
value of Rs.54,00,000/-
30.12.2003 The proceeds of the sale was credited to the loan account.
07.12.2009 The present petition has filed under Section 31 of the
SFC Act, 1951, after the nearly 6 years from the date of
the auction.
10.Applicability of Article 112
According to the appellant the receipt of the foreclosure notice dated
05.07.1995 on 07.07.1995 amounts to the acknowledgment of the debt.
Therefore, as per its pleadings, the claim petition is within the time frame as
per Article 112 of the Act. While considering this submission, it is seen that
Article 112, reads as follows:
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Any suit (except a suit Thirty years. When the period of
before the Supreme limitation would begin
Court in the exercise of to run under this Act
its original jurisdiction) against a like suit by a
by or on behalf of the private person.
Central Government or
any State Government,
including the
Government of the State
of Jammu and Kashmir.
10.1. The said Article is not applicable to the present case. As per
Section 2(l) of the Limitation Act, application is not a suit Section 2(l) reads
as follows:
“Suit does not include an appeal or an application”
According to the Hon'ble Supreme Court, the proceedings either under
Section 29 of the State Financial Corporation Act, or the claim under
Section 31 of the State Financial Corporation Act, is not a suit. It is a claim
application to recover the remaining due amount of the Principal borrower
from the guarantor on the basis of the contract of guarantee.
10.2.The same was considered by the Hon'ble Three Judges Bench of
the Supreme Court in the case of Gujarat State Finance Corporation.
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V.Natson Mfg.Co (P) Ltd., reported in 1979 1 SCC 193 and it has held as
follows:
“The substantive relief in an application under
Section 31(1) is something akin to an application for
attachment of property in execution of a decree at a stage
posterior to the passing of the decree”.
Therefore, the contention of the appellant corporation that the claim made
under Section 31 amounts to a suit and hence, the claim was not barred by
limitation cannot be accepted.
11.Applicability of Article 136:
Article 136 is as follows :
“Description of suit Period of Time from which period
limitation begins to run
136 For the execution of Twelve years When the decree or order
any decree (other becomes enforceable or
than a decree granting where the decree or any
a mandatory subsequent order directs
injunction) or order any payment of money or
of any civil court. the delivery of any property
to be made at a certain date
or at recurring periods
when default in making the
payment of delivery in
respect of which execution
is sought, takes place:
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Provided that an
application for the
enforcement or execution
of a decree granting a
perpetual injunction shall
not be subject to any period
of limitation.”
The said issue of applicability of article 136 has elaborately
considered by the Hon'ble supreme Court in the case of Maharashtra State
Financial Corpn. v. Ashok K. Agarwal reported in (2006) 9 SCC 617 and
held that the article 136 has no application and article 137 alone applicable
and the relevant paragraph as follows :
5. Section 31 of the Act contains special provisions for
enforcement of claims by the State Financial Corporations. It
is by way of a legal fiction that the procedure akin to execution
of decrees under the Code of Civil Procedure has been
permitted to be invoked. But one cannot lose sight of the fact
that there is no decree or order of a civil court when we are
dealing with applications under Section 31 of the Act. The
legal fiction at best refers to a procedure to be followed. It
does not mean that a decree or order of a civil court is being
executed, which is a sine qua non for invoking Article 136. The
proposition set out in Gujarat State Financial Corpn. [(1979) 1
SCC 193 : (1979) 1 SCR 372] found support in Everest
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Industrial Corpn. v. Gujarat State Financial Corpn. [(1987) 3
SCC 597] Again in Maganlal v. Jaiswal Industries [(1989) 4
SCC 344 : (1989) 3 SCR 696] this Court noticed that an order
under Section 32 is not a decree stricto sensu as defined in
Section 2(2) of the Code of Civil Procedure, the Financial
Corporation could not be said to be a decree-holder. This
makes it clear that while dealing with an application under
Sections 31 and 32 of the Act there is no decree or order of a
civil court being executed. It was only on the basis of a legal
fiction that the proceedings under Section 31 are treated as
akin to execution proceedings. In fact this Court has observed
that there is no decree to be executed nor is there any decree-
holder or judgment-debtor and therefore in a strict sense it
cannot be said to be a case of execution of a decree. Article
136 of the Limitation Act has no application in the facts of the
present case. Article 136 specifically uses the words “decree or
order of any civil court”. The application under Sections 31
and 32 of the State Financial Corporation Act is not by way of
execution of a decree or order of any civil court.
11.1. In this case, as per the deed of guarantee, it is the duty of the
appellant corporation to make a “demand” and the relevant portion of the
guarantee deed is as follows:
“If at any time default shall be made by the company in
the payment of the principal, interest or any other monies for
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the time being due to the Corporation upon the Security of the
mortgage “the Guarantor will on demand pay to the
Corporation whole of such principal, interest and other
monies” which then be due to the Corporation as aforesaid
and will indemnify any keep the Corporation indemnified
against all loss of principal interest or other monies secured by
the Mortgage and all costs, charges and expenses whatsoever
which the Corporation may incur by reason of any default on
the part of the Company its successors or assigns.”
11.2. Further, as per the evidence of P.W.1, they have demanded the
same, by issuing the foreclosure notice on 05.07.1995. There was no further
demand notice issued before filing the claim application under Section 31 of
the Act. Even the guarantors are not a party to the suit filed by the principal
borrower in A.S.No.238 of 2004 questioning the auction for under valuation
and the same was admitted by P.W.1. Therefore, even though Article 136 is
not applicable to the application under Section 31 of the Act as per the law
laid down by the Hon'ble Supreme Court as the application is not the
execution of the decree, the claim is hopelessly barred in these
circumstances also for the reason that they have filed the present claim
application only on 07.12.2009 long after 12 years from 05.07.1995.
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12.Applicability of Article 137:
12.1.The Hon'ble Supreme Court in the case of Gujarat State
Finance Corporation. V.Natson Mfg.Co (P) Ltd., reported in 1979 1 SCC
193 has held that the District Judge exercising power under Section 32
while considering the application under Section 31 of the Act is not a
Persona Designata, but a Civil court of Ordinary jurisdiction. Therefore,
Article 137 of the Limitation Act, is applicable to decide whether the claim
made by the appellant corporation is within time. The same was considered
by the Hon'ble Supreme Court in the case of Kerala State Electricity Board
v. T.P. Kunhaliumma, reported in (1976) 4 SCC 634 at page 639 and the
relevant paragraph is as follows:
22. The conclusion we reach is that Article 137 of the
1963 Limitation Act will apply to any petition or application
filed under any Act to a civil court. With respect we differ
from the view taken by the two-judge bench of this Court
in Athani Municipal Council case [(1969) 1 SCC 873 :
(1970) 1 SCR 51] and hold that Article 137 of the 1963
Limitation Act is not confined to applications contemplated
by or under the Code of Civil Procedure. The petition in the
present case was to the District Judge as a court. The
petition was one contemplated by the Telegraph Act for
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judicial decision. The petition is an application falling
within the scope of Article 137 of the 1963 Limitation Act.
12.2.To decide the claim of the appellant is within a time as per Article
137, it is relevant to extract the following article:
137 Any other application for Three When the right to apply
which no period of years accrues.
limitation is provided
elsewhere in the Division.
12.3.The Hon'ble Suprem Court in the case of Maharashtra State
Financial Corpn. Vs. Ashok K.Agarwal reported in 2006 9 SCC 617 has
held that three years period commences from the date of sale of property of
principal borrowers. Applying the said principle, the claim of the appellant
corporation is also barred under Article 137 of the Limitation Act for the
reason that they have not made the claim within three years either from the
date of the sale that took place on 11.08.2003 or from the date of the
appropriation of sale amount in the account of the principal borrower on
30.12.2003.
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13.Applicability of Article 55
Article 55 is extracted hereunder for discussion:
Article “Description of Suit Period of Time from which period
No. limitation begins to run
55. For compensation for the Three When the contract is broken
breach of any contract, years or (where there are
express or implied, not successive breaches) when
herein specially provided the breach in respect of
for. which the suit is instituted
occurs or (where the breach
is continuing) when it
ceases.
13.1.The applicability article 55 has elaborately considered by the
Hon'ble Supreme Court in the following cases and held that the period of
limitation starts from the date of the sale of the principal debtor and the
relevant portion is as follows:
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Deepak Bhandari v. H.P. State Industrial H.P. Financial Corpn. v. Pawna, (2015) 5
Development Corpn. Ltd., (2015) 5 SCC SCC 617 :
28. The mortgage may have come to an end, 10... The right to sue on the contract of
but the contract of indemnity, which was an indemnity arose only after the assets were sold
independent contract, did not. The right to claim off. It is only at that stage that the balance due
for the balance arose, under the contract of became ascertained. It is at that stage only that a
indemnity, only when the sale proceeds were suit for recovery of the balance could have been
found to be insufficient. The right to sue on the filed. Merely because the Corporation acted
contract of indemnity arose after the assets were under Section 29 of the Financial Corporations
sold. The present case would fall under Article 55 Act did not mean that the contract of indemnity
of the Limitation Act, 1963 which corresponds to came to an end. Section 29 merely enabled the
old Articles 115 and 116 of the old Limitation Corporation to take possession and sell the assets
Act, 1908. The right to sue on a contract of for recovery of the dues under the main contract.
indemnity/guarantee would arise when the It may be that on the Corporation taking action
contract is broken. under Section 29 and on their taking possession
they became deemed owners. The mortgage may
have come to an end, but the contract of
indemnity, which was an independent contract,
did not. The right to claim for the balance arose,
under the contract of indemnity, only when the
sale proceeds were found to be insufficient.
13.2.In this case, the respondents executed a deed of guarantee on
22.05.1992. The principal borrower had committed default in the year 1995.
Therefore, liability has occurred and foreclosure notice under Ex.P.5 was
issued to the principal borrower and guarantors on 05.07.1995. According
to the appellant corporation, they have served the said foreclosure notice
and the said acknowledgment card alone marked under Ex.P.6 series. The
same was served upon the guarantor on 07.07.1995. Further, the notice of
demand has not been issued before initiating the claim proceedings under
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Section 31 of the State Financial Corporation Act. According to P.W.1, no
notice was issued apart from the foreclosure notice dated 05.07.1995. The
guarantor has not repaid the amount mentioned in the foreclosure notice.
13.3. According to the appellant corporation, the guarantors
acknowledged the debt upon receipt of the foreclosure notice dated
05.07.1995. This Court perused the records and finds no material to
substantiate the said plea. Further, P.W.1 also admitted that they have not
produced any documents to prove the acknowledgment of the debt and the
following relevant portion of the evidence is as follows:
4. 5 gpujpthjpfs; bghWj;jtiua[k; fld;
epYit xj;Jf;bfhz;L Mtz';fs; vGjp
bfhLj;Js;shh;fs;/ me;j Mtzj;ij ePjpkd;wj;jpy;
jhf;fy; bra;Js;nsdh vd;why; mth;fs; jdpg;gl;l
Kiwapy; vGjp bfhLj;j Mtz';fis jhf;fy;
bra;atpy;iy/ eh';fs; nfl;g[ fojj;ij
bgw;Wf;bfhz;ljw;fhd xg;g[if fojj;ij jhf;fy;
bra;Js;nshk;/ me;j m";ry; xg;g[if ml;il jhd; 4. 5
gpujpthjpfs; fld; epYit xj;Jf;bfhz;ljw;fhd
Mjhuk; vd;why; Mkhk;/
13.4.Therefore, there was a breach of contract and contract also was
broken. Hence, as per Article 55 of the Limitation Act, the appellant
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corporation ought to have filed the claim application within a period of
three years from 09.07.1995.
14.Applicability of “ vigilantibus et non dormientibus jura
subveniunt”:
On 05.09.1996, the appellant corporation had taken possession of the
property of the principal borrower on the basis of the foreclosure notice
dated 05.07.1995. Thereafter, they had conducted seven public auctions on
various dates as stated above. Finally, on 11.08.2003, the property was sold
and on 30.12.2003, proceeds of the sale was credited to the loan account.
The sale price was Rs.52,00,000/- and the liability of the guarantor still
persisted on the date of the sale i.e., 11.08.2003. In the said circumstances,
the appellant corporation has filed claim application dated 07.12.2009 under
Section 31 of the State Financial Corporation Act, to recover the due
amount of Rs.23,80,85,905/- by calculating the interest up to the period of
30.11.2009. P.W.1 who was examined on the side of the appellant
corporation has not explained the delay and he stated that there was a delay
in conducting auction of the property and hence, there was a delay in filing
the application in the year 2009 for the debt of the year 1992 and the
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relevant evidence is as follows:
1992y; tH';fg;gl;l flDf;F 2009y; tHf;F
nghLtjw;F fhuzk; cs;sjh vd;why; Vyk;
tpLtjw;F jhkjk; Mfptpl;lJ/
Apart from that, the corporation has claimed interest at the rate of 27.75%
till the realization. In this case, as per the case of the principal borrower,
original sanctioned loan amount is Rs.84,60,000/-. The corporation only
disbursed Rs.76,40,000/-. The corporation in all fairness is duty bound to
disburse the remaining capital amount of Rs.8,20,000/- and the principal
borrower is also entitled to Rs.20,00,000/- capital subsidy for the reason that
the industry is in the most backward area. The moratorium period also is 2
years from the first disbursement of loan. The repayment of principal
amount of Rs.76,40,000/- is to be done in 14 half yearly instalments
commencing from 01.01.1995 to 01.07.2001. Due to the non-disbursement
of the remaining capital amount and the capital subsidy there was a delay.
Apart from that, there was delay in getting the license from the Government
and hence, they started production in Octorber 1994 and continued
production upto 31.05.1995. The appellant corporation declined to sanction
over run costs of Rs.25,00,000/- the corporation is duty bound to disburse
the entire loan amount stage by stage. In this case, the same was also not
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done. But, they issued the foreclosure notice without even considering the
legitimate request of the principal borrower to sanction the over run cost
and closed the unit and sealed the unit on 05.07.1995. Therefore, the
principal borrower was unable to pay the due and settle the due. After the
closure of the unit on 05.07.1995, the sale was concluded only in the year
2003 ie., on 11.08.2003. According to the principal borrower, even the sale
amount was low and the value of the property and machineries was more
than a sum of Rs.3,56,00,000/-. In the foreclosure notice, even though they
disbursed Rs.76,40,000/-, they calculated interest for Rs.84,60,000/-.
Therefore, there is no bonafides in the entire proceedings of the appellant
Corporation in all aspect. The authorities slept over from the date of the
issuance of the foreclosure notice dated 05.07.1995 onwards and further
they were not vigilant to make the claim within the reasonable time from the
date of sale on 11.08.2003. Their action is clearly hit by the theory of
intentional latches and hence, in this case, this Court finds that the
authorities were not vigilant and hence, they are not entitled to any relief as
per the legal maxim “vigilantibus et non dormientibus jura subveniunt”.
This view is fortified by the Hon'ble three Member Bench of the Supreme
Court in the case of Sagufa Ahmed v. Upper Assam Plywood Products (P)
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Ltd. reported in 2021 (2) SCC 317 and the relevant paragraph is as follows:
17. ...It is needless to point out that the law of
limitation finds its root in two Latin maxims, one of
which is vigilantibus et non dormientibus jura
subveniunt which means that the law will assist only
those who are vigilant about their rights and not those
who sleep over them.
15.In view of the above discussion in all aspect, all the questions
raised in this case are answered against the appellant and this Court finds no
reason to differ with the finding of the learned trial Judge that the claim of
the appellant made under Section 31 of the State Financial Corporation to
recover the due amounts of the principal borrower from the guarantor is
hopelessly barred by limitation.
16.Accordingly, this Civil Miscellaneous Appeal stands dismissed.
[P.V.J,] [K.K.R.K.J,]
02.09.2024
NCC : Yes/No
Index : Yes/No
Internet : Yes/No
vsg
https://www.mhc.tn.gov.in/judis
P.VELMURUGAN, J.
AND
K.K.RAMAKRISHNAN, J.
vsg
02.09.2024
https://www.mhc.tn.gov.in/judis
