JUDGMENT :

1. Against the order of the Principal Subordinate Judge Anantapur in C.F. No. 2613/dated 9-6-81 O.S. Nil/81 rejecting the plaint on the ground that the plaintiff's claim for ecovery of Rs. 93,120/- from the defendant is “hopelessly barred by limitation”, this appeal was brought.

2. M/s. Pioneer Fire and General Insurance Company, Coimbattoor the predcessor in interest of the plaintiff, M/s. United India Insurance Company, a nationalised Insurance company, deposited by way of fixed deposit a sum of Rs. 45,500/- with Anantapur Cotton Mills on 1-1-71 the deposit was repayable after 12 months, the due date being 1-1-72. The defendant, the Managing Director of Anantapur Cotton Mills have a latter of guarantee on 26-1-71 in favour of M/s. Pioneer Fire and General Insurance Company guaranteeing to pay the amount with interest “in the event of M/s. Anantapur Cotton Mills not meeting the same when due for repayment.” After the nationalization of insurance business M/s. Pioneer Fire and General Insurance Company was merged with the United India Insurance Company, the plaintiff. The Anantapur Cotton Mills, due to financial difficulties became a sick industry and was notified under Central Act 58/74, Sick Textile Undertakings (Nationalisation) Act, herein after referred to as the Act, as a consequence of which, the Central Government had taken over all the assets of the mills rejecting its liabilities. The plaintiff as successor of M/s. Pioneer Fire and General Insurance Company preferred a claim before the Commissioner appointed under the Act and the same was rejected by the Commissioner under Sec. 22(2) on the ground of want of funds. The plaintiff, therefore, instituted the suit for recovery of Rs. 93,120/- in the court of the Subordinate Judge, Anantapur avering that the defendant as a guarantor was bound to repay the amount as his liability is independent of the loan of the principal debtor. As guarantor he was personally liable to discharge the debt by virtue of the letter of guarantee executed on 26-1-71 at Tadpatri. It was pleased in the plaint by para 7 that the liability of the defendant to repay the amount arose after 2-2-79 when the claim was rejected by the Commissioner and, therefore, the suit was with time. The plaint was presented on 28-5-81. The learned Subordinate Judge rejected the plaint on the ground that the deposit amount was repayable on 1-1-72 and the period of limitation of three years reckoned from that date, the rejection of the claim by the Commissioner would not sure the limitation, since “the claim itself appears to have been made in April, 1977 i.e., long after the claim became band by limitation.” As the three year period came to an end by 1-1-75, the learned judge expressed the view “that the claim is hopelessly barred by limitation.” Shri Suryanarayana Murthy, learned counsel for the appellant relying upon the ruling of the Supreme Court in Punjab National Bank v. B.C. Mills, (1970) 1 SCC 60 : AIR 1970 SC 1973 contends that the contract of guarantee is independent of the liability of the principal devor, the letter of guarantee clearly shows that the liability of the defendant would arise only in the event of failure of M/s. Ananiapur Cotton Mills to repay the amount, the rejection of the plaintiff's claim by the Commissioner under Sec. 22(2) of the Act was not on the ground of limitation but the amount at the disposal of the Commissioner “for discharging the liabilities of the owner is exhausted.” In any event, the learned counsel contends that the limitation question has to be tried as an issue and a decision will have to be arrived at only after the defendant filed written statement and issues are struck.

3. On the other hand, Shri B.V. Subbayya, learned counsel for the respondent-defendant, relying upon the rulings of Supreme Court in Mohd. Suhanttddin v. Mohd. Dastagir, AIR 1960 AP 210. Inderjit v. B.K. Bhatt, (1974) 4 SCC 313 : AIR 1974 SC 1183 and Gopial v. Trac. Industries and Components,