GULHATI Vs. KARNATAKA STATE FINANCIAL CORPORATION

JUDGEMENT

(1.) THIS Miscellaneous First Appeal filed by the appellant -guarantor under Section 32 (9) of the State Financial Corporation act is directed against the order dated 17-3-2001 of the II Addl. District and Sessions judge, Bangalore Rural District, Bangalore, in miscellaneous No. 61/1993, whereby the Learned district Judge has allowed the petition filed by the 1st respondent Corporation (KSFC)under Section 31 (1) (aa) of the State Financial Corporation Act in part holding that the appellant and the respondents 2 to 5 shall be jointly and severally liable to pay a sum of Rs. 1,11,91,338/- with interest at 12% per annum from the date of filing the petition, until actual payment. They have been directed to pay the amount within three months from the date of the order.

(2.) THE 1st respondent Corporation filed a petition under Section 31 (1 ) (aa) of the State Financial Corporation act for directing the appellant and the Respondents 2 to 5 to pay rs. 1,11,91,338/-with interest at 16. 5% from 20-9-1993. In the petition filed before the district Judge, the 1st respondent Corporation contended inter alia that at the request of M/s Vioryl India (P) Limited, it had sanctioned a term loan of Rs. 30,00,000/- for the establishment of industrial unit to be engaged in the manufacture of perfumery and aromatic compounds. The loan was sanctioned on 28-9-1993 and the same was communicated to the Company on 21-10-1983. The same was accepted by the Company. The Company had mortagaged its properties by a deed of mortage dated 7-2-1984. That at the request of the said Company and also in consideration of the loan advanced by the Corporation in favour of the Company, the appellant alongwith the other respondents (respondents 2 to 4 in the Court below) had executed a Deed of Guarantee con 7-2-1984 for a sum of rs. 30,00,000/- undertaking to pay the amount in case the Company has failed to pay the amount. The said deed of guarantee was filed at annexure-A. The Respondent No. 5 had also executed a Deed of guarantee at the request of the Company and in consideration of the loan advanced by the Corporation, thereby undertaking to pay to the corporation with interest and other charges in case the Company has failed to pay the amount. That the 1st respondent corporation had issued notice on 18-1 -1989 to the Company marking copies to all the guarantors to see that the Company pays the amount to the corporation. It was also informed in the notice that in case the company fails to pay the amount, the 1st respondent corporation would proceed to invoke the deeds of guarantee executed by the guarantors in favour ofthe Corporation. That the 1st respondent corporation had clearly indicated in the notice dated 18-1-1989 at annexure-C that the guarantors shall evince interest to see that the company pays the amount. Inspite off such notice, the appellant and the other respondents did not evince any interest to see that the amount is paid by the Company to the 1st respondent corporation. That the company failed to pay the amount inspite of demands made and hence the 1st respondent Corporation has invoked the Deeds of Guarantee executed by the appellant and the other respondents in favour of the 1std respondent Corporation dated 7-2-1984 undertaking to pay the amount in case the Company fails to pay the amount under a notice dated 14-5-1993 as per Annexure-D. Inspite of issue of such notice dated 14-5-1993 invoking the Deeds of Guarantee executed by the appellant and the other respondents, they did not pay the amount and hence the 1st respondent Corporation filed the petition under Section 31 (1) (aa) of the State Financial Corporation Act with a prayer for directing the appellant and the other respondents to pay jointly and severally a sum of Rs. 1,11,91,338/- with interest at 16. 5% from 20-9-1993 on the footing of compound interest at quarterly rest besis till the date of realization.

(3.) EXCEPT the appellant herein, no other respondents contested or resisted the claim of the 1st respondent corporation. The appellant-guarantor who resisted the claim of the 1st respondent -Corporation by filing the statement of objections has contended inter alia that he did not receive any notice dated 18-1-1989 informing to him that deed of guarantee would be invoked on the failure of the Company to pay the outstanding amount and that even otherwise, the claim made by the 1st respondent -Corporation appears to be barred by limitation having been brought more than three years after the date of the alleged recall of the loan. He contended that the notice if issued on 18-1 -1989, the suit ought to have been brought by January 1992 and the suit having been filed before; the District judge as on 22-11-1993, long after the period of limitation of three years, it is barred by time. It also stated that he ceased to be a Director of the Company w. e. f. 16-2-1984, much prior to the disbursement of any loan and since then, he had nothing to do with the running of the Company or its business or affairs. He would however admit the fact that the 1st respondent Corporation had sanctioned a term loan of Rs. 30,00,000/ for the establishment of an industrial unit and the loan might have been sanctioned on 28-9-1983. But he has no knowledge whether the loan amount had been disbursed to the Company. He further contended that he did not execute any Deed of Guarantee and as such the terms enumerated therein have been fabricated by the corporation for the purpose of this case. He also contended that the 1st respondent -Corporation did not disclose as to what steps it had taken to preserve the security furnished by the Company and unless it is shown that the Corporation has diligently taken all steps to preserve the security taken over under Section 29 of the state Financial corporation Act, the petition filed against him is liable to be dismissed. He further contended in the alternative that assuming that all such notices were issued and duly served on the parties, the suit of the 1st respondent -Corporation is barred by time as there is not even an averment as to any acknowledgment of debt by the appellant. As such, the claim if any is barred by the law of limitation. The petition has been filed after a lapse of more than three years after recalling of the loan by the alleged notice dated 18-1-1989 and secondly the alleged notice dated 14-5-1993 was issued more than three years after the recall of the loan. The cause of action could have arisen only on 18-1-1989 and not thereafter. That the cause of action arose by virtue of the alleged notice dated 14-5--1993 is denied by putting the 1st respondent -Corporation to strict proof of the same. On these and other averments made in the statement of objections, the appellant prayed for dismissal of the petition filed by the 1st respondent -Corporation before the Learned District Judge.