The main legal principle established in the judgment is that under Section 29 of the State Financial Corporation Act, 1951, the Financial Corporation has the right to proceed against the property of the guarantor/surety for the realization of the loan borrowed by the principal borrower, and the liability of the guarantor/surety is coextensive with that of the principal debtor.

P. SATHASIVAM, J. :- The above Writ Appeal has been filed against the order of the learned single Judge dated 25-11-2004, made in Writ Petition No. 30013 of 2003 in and by which the learned Judge confirmed the auction notice for bringing the property of the appellant by way of public auction to realise the money due to Tamil Nadu Industrial Investment Corporation.

2. It is not in dispute that the third respondent borrowed a sum of Rs. 4,95 lakhs from the first respondent herein, namely, Tamil Nadu Industrial Investment Corporation (hereinafter referred to as "TIIC"), promising to repay the said sum with interest as agreed. The appellant herein stood as a guarantor along with his wife K. Banumathy, 4th respondent herein (transposed as 2nd appellant as per order dated 25-1-2005 made in WAMP No. 114/2005) and Flat, namely, C-2, Balaji Apartments, Dhande-eswarar Nagar, VI Main Road, Velachery, Chennai-42 was mortgaged by way of equitable mortgage by depositing title deeds as security for the loan amount. It is further seen that since the principal borrower, namely, third respondent herein, did not pay the amount, the TIIC initiated action against the guarantor, the 1st appellant herein and brought his property for sale by public auction. Questioning the same, the appellant herein filed Writ Petition No. 30013/2003. Before the learned single Judge, it was contended that the property sought to be brought for public auction does not belong to the principal borrower, but it belongs to the guarantor, and that therefore, the said property cannot be taken for public auction exercising their power under Section 29 of the State Financial Corporation Act, 1951 (hereinafter referred to as "the Act"). On the other hand, it is the claim of the Financial Corporation that the power under Section 29 of the Act extends to the property mortgaged by the guarantor/surety and the said provision makes it clear that the TIIC has the right to take over not only the industrial concern, but also the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation, of the surety/guarantor. The learned single Judge accepting the claim of the Financial Corporation, after holding that the guarantor is bound to pay the loan obtained by the principal borrower and the liability of the guarantor is coextensive with that of the principal borrower and the Corporation is well within their powers under Section 29 of the Act to recover the loan amount, dismissed the writ petition as devoid of merits; hence the present appeal.

3. Heard Mr. T. L. Ram Mohan, learned senior counsel for the appellants and Mr. Sampathkumar, learned senior counsel for the respondents 1 and 2 as well as Mr. S. Jaganathan, learned counsel for third respondent.

4. The only point for consideration in this writ appeal is, whether respondents 1 and 2 herein-Financial Corporation is empowered to proceed against the property of the guarantor/surety for realisation of the loan borrowed by the principal borrower, namely, the third respondent herein?

5. In view of the limited question as mentioned above, there is no need to traverse the other factual details. As said earlier, the third respondent borrowed a sum of Rs. 4.95 lakhs from the first respondent promising to pay the same with interest, for which the first appellant stood as a guarantor along with his wife and the property bearing No. C2, Balaji Apartments, Dhandeeswarar Nagar, 6th Main Road, Velachery, Chennai-42, owned by them was mortgaged by way of equitable mortgage by depositing title deeds. Mr. T. L. Ram Mohan, learned senior counsel for the appellants, by heavily relying on Section 29, particularly sub-sections (1) (4) and (5) of Section 29, and Section 31 (1) (aa) of the Act, would contend that though Section 31 covers surety, in the absence of such specific provision in Section 29, which refers to only industrial concern, the action under Section 29 for bringing the property of the 1st appellant/guarantor to publ