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IN THE HIGH COURT OF JUDICATURE AT MADRAS
G. JAYACHANDRAN
Tamil Nadu Industrial Investment Corporation Limited – Appellant
Versus
Pulsar Electronics Ltd, represented by its Director – Respondent
ORDER :
The petitioner herein, the Tamilnadu Industrial Investment Corporation Limited (hereinafter be referred as: 'TIIC' in short), is a Public Financial Institution incorporated under the Companies Act and governed by the provisions of the State Financial Corporations Act, 1951.
2. The First Respondent, M/s.Pulsar Electronics Limited (hereinafter be referred as: 'Company' in short) applied for a term loan of Rs.60 lakhs on 07/05/1987 for the purchase of land, machinery and construction of building to set up a factory for manufacturing Electronic bush Button for Telephones. The Company availed the loan from TIIC and hypothecated the machinery by way of deed of hypothecation on 04/12/1987 for a sum of Rs.60 lakhs. The respondents 2 to 8 are the guarantors. They executed deed of continuing and binding guarantee on 04/12/1987 and 17/06/1988. The title deeds of the factory site was deposited with the TIIC.
3. As per the terms and conditions, the first respondent is supposed to repay the loan with 16% interest per annum in 12 equal half-yearly instalments. Due to default in repayment, on 10/03/1994, TIIC took possession of the mortgaged land and building at Kakkalur Industrial Estate, al
The right of a Financial Corporation to recover dues from guarantors survives post-liquidation of the principal debtor, and such guarantees remain enforceable.
Post-liquidation, a financial institution retains the right to recover dues from guarantors, reaffirming that guarantees remain enforceable regardless of the principal debtor's discharge during insol....
The limitation period for recovery of money from a surety under the State Financial Corporation Act is three years, and failure to initiate proceedings within this period renders the claim barred by ....
Guarantors remain jointly and severally liable for loan defaults regardless of the principal debtor's separate legal status, as established under Sections 29 and 31 of the State Financial Corporation....
The court held that a claim for loan recovery is barred by limitation if not filed within three years of the last transaction, and proper mortgage documentation is essential for enforceability.
A decree cannot be passed under Section 31 of the State Financial Corporations Act, 1951, and any execution petition based on such a decree is not maintainable.
The remedies under Sections 29 and 31 of the State Financial Corporations Act are independent and can be pursued separately.
Guarantors are jointly and severally liable for debts owed by a principal debtor, and courts can pursue them even if the principal's assets are in the creditor’s possession.
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