The main legal point established in the judgment is that the enforceability of liabilities against guarantors, acknowledgment of debt, and the applicability of the Limitation Act are crucial factors in cases governed by the SFC Act.

1. Heard Mr. Pangam, learned Counsel appearing on behalf of the petitioner and Mr. Menezes, learned Counsel appearing on behalf of respondents no. 2 to 4. None present for respondent no.1.

2. In terms of order dated 24/9/2013 passed by this court, respondents were already notified that the petition may be heard and disposed of finally at the admission stage.

3. Rule. Rule is made returnable forthwith. Mr. Menezes waives service of notice on behalf of the respondents no. 2 to 4. By consent heard forthwith.

4. By this petition, the petitioner has challenged the order dated 21/09/2011 passed by the learned Principal District Judge, North Goa, Panaji ('trial Court' for short) in Civil Miscellaneous Application No.143/2008.

5. The petitioner, which is a deemed “Financial Corporation” under Section 2(b) of the State Financial Corporations Act, 1951 (SFC Act, for short) and to which the provisions of Sections 29, 30 and 31 of SFC Act apply, in view of Government of India Notification dated 4/1/1993, had sanctioned and disbursed an aggregate term loan of Rs.63,35,000/- to respondent no.1, and the respondents no. 2 to 4 gave continuing guarantees for repayment of the said loan liability. The loan was sanctioned in the year 1987-1988 and the guarantees were also furnished in or about the same year. Since respondent no.1 defaulted in repayment of the loan in terms of the schedule, a recall notice dated 28/02/2001 was issued to respondent no.1 giving time upto 29/03/2001 to repay the outstanding dues of Rs.3,98,46,513/-. Respondent no.1, however, did not comply with the recall notice. The petitioner, therefore, invoked the provisions of Section 29 of the SFC Act, and on 03/04/2001, took over the assets of respondent no.1. Out of the auction of the said assets, the petitioner could recover an amount of Rs.1,36,00,000/- and thereafter, the petitioner on 15/06/2005 issued notice to respondents no. 2 to 4 to pay the dues of Rs.5,77,76,866.70, which was outstanding from respondent no.1. The said respondents were also called upon to pay penal interest. Since respondents no. 2 to 4 failed to comply with the said notice dated 15/06/2005, the petitioner filed a petition under Section 31 of SFC Act before the learned trial Court and that came to be numbered as Civil Miscellaneous Application No.143/2008.

6. In the said Civil Miscellaneous Application, respondents no. 2 to 4 filed an application dated 17/11/2008 raising objections to the maintainability of the application under Section 31(1)(aa) of SFC Act, on the ground of limitation. The petitioner filed reply dated 29/10/2010. Vide order dated 21/09/2011, impugned in this petition, the learned trial Court upheld the objections and held that the proceedings are barred by limitation. The trial Court, therefore, dismissed the proceedings. The trial Court observed that the recall notice was issued on 28/2/2001, almost 13 years after the respondents no. 2 to 4 had executed deeds of guarantees. The trial court held that there were no pleadings whatsoever about the repayment by the principal borrower as spelt out in the reply filed by the petitioner. The trial Court relied upon the judgment of the Apex Court in the case of “Syndicate Bank Vs. Channaveerappa Beleri and others” [(2006) 11 SCC 506]. The trial Court observed that the applicant (petitioner) had amended its pleadings to incorporate that the principal borrower had admitted as late as February 2002 i.e. almost more than 13 years after the loan, to repay the loan and with no concurrence whatsoever of respondents no. 2 to 4. The trial court held that respondent no.1, for all purposes and effects, is a legal entity separate and distinct from respondents no. 2 to 4, who were the guarantors to the loan. According to the trial Court, the applicant (petitioner) could not show that there was any acknowledgment of the liability by any of the respondents no. 2 to 4 and hence, even assuming without admitting that respondent no.1 had agreed on the fres