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High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE VINOD K. SHARMA
First
Versus
Second
O.P.No.35 of 2011
Decided On :Decided on : 25-11-2011
State Financial Corporation Act - Recovery of Loan - Sections 31(a), 31(1)(aa) r/w 32 - The court discussed the provisions of the State Financial Corporation Act, 1951, particularly focusing on the limitation for recovery of loan and possession of mortgaged property. The court highlighted the limitation period for recovery from the principal or guarantor and the relief for possession and sale of mortgage property.
Fact of the Case:
The petitioner, a financial institution, sought recovery of a loan amount from the respondents, supported by evidence of default and mortgage of the schedule property.
Finding of the Court:
The court found that the suit for recovery of the loan was barred by limitation under the Limitation Act, but granted relief for possession and sale of the mortgaged property within the limitation period.
Issues: The key issue was whether the petitioner was entitled to a decree for recovery of the loan and possession of the mortgaged property.
Ratio Decidendi: The court held that while the suit for recovery of the loan was barred by limitation, the relief for possession and sale of the mortgaged property was within the limitation period.
Final Decision: The court ordered the defendant to pay the loan amount with future interest and costs by a specified date, failing which the mortgaged property would be sold to recover the dues.
VINOD K. SHARMA,J.
1. This petition, under Sections 31(a), 31(1)(aa) r/w 32 of the State Financial Corporation Act, 1951, has been moved by Tamilnadu Industrial Investment Corporation Limited, for recovery of a sum of Rs.1,91,71,016/-(Rupees One Crore Ninety One Lakhs Seventy One Thousand and Sixteen only).
2. The petitioner is a financial institution under the State Financial Corporation Act, 1951, it advanced a term loan of Rs.11,80,000/-(Rupees Eleven Lakhs Eighty Thousand only) to the first respondent, a proprietary concern of respondent no.2. The respondent no.1, besides hypothecating the machinery, also executed a personal irrevocable guarantee, in favour of the petitioner. The loan amount was also secured by way of collateral security of immovable property of respondent no.3, who stood surety for the loan.
3. The schedule mortgage property is detailed as under:
"SCHEDULE-A
ITEM 1: All that pieces and parcel of land situated at Thirumazhisai Village, Sriperumpudur Taluk, Chengai Mgr District bearing Plot No.113, comprised in S.No.106 measuring to an extent of North by 106 feet, South by 98 feet, East by 58 feet and West by 53 feet in total 5661 sq.ft bounded on the North by vacant land South by Plot No.115 East by 30 feet main Road and West by Sivakumars Vacant land The above said property is situated within the registration district of South Madras and Sub Registration District of Poonamallee.
ITEM 1: All that pieces and parcel of land situated at Thirumazhisai Village, Sriperumpudur Taluk, Chengai Mgr District bearing Plot No.114, comprised in S.No.106
measuring to an extent of North by 98 feet, South by 95 feet, East by 30 feet and West by 30 feet in total 2895 sq.ft bounded on the North by Plot No.113 South by Plot No.115
East by 30 feet main Road and West by Sivakumars Vacant land The above said property is situated within the registration district of South Madras and Sub Registration District of Poonamallee."
4. The respondent no.3 had mortgaged the property by way of equitable mortgage, by
depositing the following documents:
"SCHEDULE-B
LIST OF TITLE DEEDS
1. Registered Sale Deed dt.19/01/95, Doc.No.31/95
2. Duplicate copies of the sale deed dt.19.01.95 Doc.No.31/95
3. Patta bearing No.344
4. Attested copies of General Power of Attorney dt.24.06.93
5. Attested copies of Partition Deed dt.07.02.69
6. Chitta and Adangal Extract
7. Kist Receipt No.866283
8. Encumbrance Certificate bearing No.2102 & 2103/96, 2207 & 2208/96"
The deposit of title deeds was thereafter confirmed, by respondent no.3 vide letter dated 07.06.1996.
5. It is pleaded case of the petitioner that respondent no.1 defaulted in repayment of loan and removed the hypothecated machinery beyond the react of the petitioner.
6. The petitioner, in exercise of power conferred under Section 29 of the State Financial Corporation Act, 1951, took constructive possession, of the schedule property A to recover the amount in the year 2001.
7. It seems that the petitioner, thereafter did not take any action to dispose of the property, and approached this Court only in the year 2011 by invoking Section 31 of the State Financial Corporation Act, to recover the due amount from the respondents.
8. In support of the petition, Mr.D.Devaraj appeared as P.W.1, who deposed in support of the averments in the petition, and also produced the following documentary evidence:
Ex.P1 – Terms and conditions of sanctioned order dated 07.05.1996 to the 1st
respondent.
Ex.P2 – Deed of Hypothecation dated 06.06.1996 executed between the petitioner and the 1st respondent
Ex.P3 – Deed of Guarantee dated 06.06.1996 executed between the petitioner and the 2nd respondent Ex.P4 – Confirmation letter dated 07.06.1996 deposit of title deeds of the 3rd
respondent
Ex.P5 – Original Registered Sale Deed dated 19.01.1995 executed in favour of the 3rd
respondent through Power of Attorney Mr.Shankar
Ex.P6 – Original patta stands in the name of the 3rd respondent.
Ex.P7 – Orig
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