COMMON ORDER :- These two writ petitions can be disposed of by a common order as they came to be filed with a similar factual background and raise similar questions for consideration. In 1988 Andhra Pradesh State Financial Corporation Limited (SFC) sanctioned term loan and soft loan in a sum of Rs. 11,60,000/- to M/s. Nagaijuna Cable Industries Private Limited. Petitioners are sureties for the due payment of the loan. As there was default on the part of the borrower to pay the loan amount, in 1992 assets of the company were seized and sold in accordance with Section 29 of the State Financial Corporations Act, 1951 (the Act, for brevity). It is alleged that the sale-cum-recall notice under Section 29 of the Act was not issued to the petitioners. In August 2005 third respondent sent a communication dated 8.8.2005 to the second petitioner in W.P. No.26014 of 2005 informing that an amount of Rs.87.20 lakhs is due from the borrower. The petitioners were asked to pay the said amount failing which action under the Andhra Pradesh Revenue Recovery Act, 1864 (RR Act, for brevity) would be initiated against them. Aggrieved by the said notice letter these writ petitions are filed. The petitioners seek a direction to respondents to forbear from enforcing the debt of the borrower against them.

2. The Branch Manager of SFC, Ranga Reddy (West) Branch, filed counter-affidavit opposing the writ petition. It is stated that the loan sanctioned by SFC was duly secured by equitable mortgage of land to an extent of 1483.03 square metres and the building bearing shed No.B/58 situated at IDA, Phase IV, Jeedimetla, that the petitioners executed personal guaranties jointly and severally guarantying repayment of loan availed by the company, and that as the borrower failed to discharge the loan, after completing formalities under Section 29 of the Act, the Unit was sold in auction to Mis. S.S. Industries. Unit was duly handed over on 11.1.1995. Even after realizing the sale proceeds the debt could not be discharged. Therefore, SFC made efforts to locate petitioners for recovering balance dues payable by petitioners. They failed to respond to the notices issued by the Corporation, and therefore, SFC initiated action by resorting to the provisions of the RR Act.

3. The main contention of the petitioners' Counsel is that in purported exercise of power under Section 52-A of RR Act SFC cannot enforce: a time barred debt. Reliance is placed on the leading decision on the point in State of Kerala v. V.R. Kalliyanikutty. AIR 1999 SC 1305 =1999 (3) ALD (SCSN) 10 and a decision of this Court in N.A. Radha v. State of Andhra Pradesh, 2000 (2) ALD 560. Opposing the case, the learned Standing Counsel for SFC made two submissions. First, he contends that the debt sought to be enforced in accordance with Section 52-A of RR Act is not time barred debt. According to the learned Counsel on 5.10.1999 SFC issued notices to the petitioners calling upon them to pay a sum of Rs.7,20,000/- failing which action was proposed under Section 52-A of RR Act. Secondly, he submits that when action is initiated subsequent to the enforcement of debt under Section 29 of the Act for recovery of balance dues, the ratio in Kalliyanikutty's case (supra), has no application. He placed reliance on a recent judgment of this Court in Kumar Chemicals and Fertilizers (P) Limited v. Andhra Pradesh Industrial Development Corporation Limited, 2008 (3) ALD 168 = AIR 2008 AP 101.

4. The short point that arises for consideration is whether the action impugned is not sustainable. The Act is a legislation for establishment of State Financial Corporations. It regulates the sanction of loans to Small and Medium Scale Industries/Enterprises (SMEs). Before 1985 the Act contained two different procedures for recovery of loans advanced to SMEs. First procedure is contained in Section 29 of the Act, which enables SFC to takeover the management or possession of industrial units of the borrower and lease/sell the prope

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