K.P. KHEMKA AND ORS. Vs. HARYANA STATE INDUSTRIAL AND INFRASTRUCTURE DEVELOPMENT CORPORATION LTD. AND ORS.

JUDGEMENT

(1.) THIS order shall dispose of aforementioned two writ petitions i.e. CWP No. 15983 of 2013, challenging an order dated 15.11.2012 passed by respondent No. 1 -Haryana State Industrial and Infrastructure Development Corporation Ltd. under Section 3(1)(b) of the Haryana Public Moneys (Recovery of Dues) Act, 1979 (for short 'the Act') as well as CWP No. 26452 of 2014 challenging an order passed by the Authority under Section 32G of the State Financial Corporation Act, 1951 (for short 'the SFC Act'). Since identical arguments in law have been raised, both the writ petitions are taken up for decision together. However, for facility of reference, the facts are being taken from CWP No. 15983 of 2013.

(2.) THE petitioners claimed to be the guarantors for the term loan obtained under the Equipment Finance Scheme by M/s. Khemka Ispat Ltd. -respondent No. 3 from Haryana State Industrial and Infrastructure Development Corporation Ltd. -respondent No. 1. Respondent No. 3 (now in liquidation), suffered heavy losses from the year 2004 onwards and sought intervention of the Board of Industrial and Financial Reconstruction constituted under Section 15 of the Sick Industrial Companies Act, 1985 on 17.06.2005. In April, 2007, a winding up petition was filed against the Company, in which Delhi High Court ordered provisional winding up on 25.09.2007. On 28.04.2009, the Company was ordered to be wound up. It is pointed out that loan account of respondent No. 3 became inoperative on 31.07.2004 in the records of respondent No. 1 -Corporation and that a default notice dated 19.08.2004 (Annexure P -4) was issued to respondent No. 3 -Company, to show cause as to why the Corporation should not initiate action against the Company for recovery of loan with interest including action under Section 29 of the SFC Act. It is further pointed out that the Corporation was represented before the Delhi High Court in proceedings for sale of assets of the Company (in liquidation). It is, thereafter, a show cause notice dated 10.01.2012 was issued to the petitioners for recovery of Rs. 213.19 lacs, which was not received. However, subsequently, an ex parte determination order was passed under the provisions of the Act on 01.02.2012. The petitioners submitted objections to the said order raising a plea that it is a time barred debt and cannot be adjudicated upon under the provisions of the Act. It was the said objections, which were rejected vide order dated 15.11.2012 (Annexure P -15), subject matter of challenge in the present writ petition.

(3.) BEFORE this Court, learned counsel for the petitioners has vehemently argued that the proceedings against the principal borrower are barred by time, therefore, even proceedings against the guarantors cannot be initiated. It is argued that time barred debt cannot be recovered under the provisions of the Act. It is argued that even though there is no period of limitation prescribed under the Act, but the proceedings for recovery have to be initiated within a reasonable period of the date, when the debts become due and not at any point of time. He strongly relies upon the Hon'ble Supreme Court judgment in State of Kerala & others Vs. V.R. Kalliyanikutty & another : AIR 1999 SC 1305 as well as an order passed by a Division Bench of this Court on 28.04.2014 in CWP No. 8891 of 2007 titled 'Labh Singh Vs. State of Punjab & others', wherein the following issues were referred for the opinion of the larger Bench: