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HIGH COURT OF MADRAS
Hon`ble Mr Justice RMT. TEEKAA RAMAN
M/S.V.L.V.INDUSTRIES – Appellant
Versus
THE TAMILNADU INDUSTRIAL INV – Respondent
Limitation - Liability - State Financial Corporations Act - Sections 29, 31 - The court interpreted provisions of the State Financial Corporations Act regarding the limitation period for claims made by financial corporations against sureties, ultimately ruling that the claim was time-barred and unenforceable.
Fact of the Case:
The Tamil Nadu Industrial Investment Corporation (TIIC) sought recovery of dues from an industrial concern and its guarantors under the State Financial Corporations Act, asserting that the claim was not barred by limitation. The appellants contested based on the claim being time-barred due to the long lapse since the loan transactions began.
Issues: Whether the claim made by the Tamil Nadu Industrial Investment Corporation Limited (TIIC) was barred by limitation.
Ratio Decidendi: The court held that the claim time period under the relevant provisions needed to be calculated correctly and that the extensions or issues of delay did not apply in this case, rendering the claim invalid after the designated limitation period.
Final Decision: The appeal was allowed, and the order for recovery by TIIC was set aside as the claim was dismissed due to being barred by limitation.
J U D G M E N T
The respondent / Industrial Concern in S.F.C.O.P.No.11 of 2016 is the appellant herein against the order of recovery made by the learned Principal District Judge, Namakkal, in favour of the Tamil Nadu Industrial Investment Corporation Limited (TIIC). Present appeal has been filed mainly on the ground of limitation.
2.The brief facts that are necessary for determination of this Civil Miscellaneous Appeal is as under:
2.1.The Tamil Nadu Industrial Investment Corporation Limited (TIIC)
has filed S.F.C.O.P.No.11 of 2016 for enforcing the liability against the respondents personally by directing them to pay to the petitioner, the sum of Rs.1,31,48,598.10 (Term loan of Rs. 82,43,034.35 and working capital term loan of Rs.49,05,563.75) as on 30.09.2015 with subsequent interest from 01.10.2015 thereon at the rate of Term Loan 14.50% per annum Working Capital Term Loan 16.00% per annum till realization in respect of the above said loan and to proceed against their assets for realization of dues and Sale of the Schedule properties as mentioned under and all other personal assets of respondents.
2.2.The 1st appellant / 1st respondent M/s.VLV Industries is a Industrial concern engaged in manufacturing of Wire heads for power looms and hand looms. The 2nd respondent is the proprietor of the said 1st respondent industrial concern M/s.VLV Industries. The 3rd appellant / 3rd respondent has mortgaged the property as a Collateral security for the 1st respondent Industrial Concern.
2.3.The 3rd appellant / 3rd respondent has offered a collateral security for the above loan and created an equitable mortgage by deposit of title deeds on 8.11.1989. In respect of the properties situated at S.No. 412/14, Plo Nos. 386, 387, 388 & 389 Amani Village, Momarapalayam, Tiruchengode Taluk, Namakkal District extent of 3520 Sq.ft. owned by Thiru. V.L. Soundarajam and confirmed in favour of the Petitioner's Corporation on behalf of the 1st respondent industrial concern to secure loan and promising to repay the same with interest.
2.4.The 2nd appellant / 2nd respondent apart from being the proprietor of the 1st appellant Industrial Concern, is also guarantor and 3rd appellant / 3rd respondent is guarantor for the loan transaction of the 1st appellant industrial concern with the respondent Corporation. The 3rd appellant has executed a Deed of Guarantee on 21.11.1989 in favour of the respondent Corporation thereby securing the loan transaction of the 1st appellant Industrial Concern with respondent Corporation with his personal guarantee and also has agreed to abide by the other terms and conditions mentioned therein in the Deed of Guarantee.
2.5.The respondent Corporation to the appellants / respondents calling upon him to settle the account and inspite of the said reminders and demands the appellants failed to settle the amount due to the respondent's Corporation. The respondent Corporation has proceeded against the appellants personally in their capacity as borrower and surety and also against the mortgaged properties to recover the amount due to them under section 31(1) (a) 31(1)
(aa) of the SFC Act.
2.6.Even though the loan was sanctioned on 07.10.1989 the loan documents were executed on 07.11.1989, since the loan amount is repayable in installments this petition is not barred by limitation. As per the said accounts, the amounts due from the respondents as on 30.09.2015 is Rs.1,31,48,598.10 inclusive of interest and other dues. Hence this petition.
3.In the counter, the 2nd respondent filed a written statement assessing that she is not responsible to discharge the loan amount borrowed by the 1st respondent Company. The 3rd respondent in the counter could state that the claim made by the petitioner Corporation is time barred.
4.During the trial, on behalf of the plaintiff, one witness was examined as P.W.1 and marked Exs.P1 to P6. The defendants examined D.W.1 and marked Exs.R1 to R3.
5.Based upon the plaintiff side documents, the Principal District Judge, N
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