Judgment :- K. SAMPATH, J. The parties will be referred to as per their ranks before the lower Court. 2. The first respondent herein, the Tamil Nadu Industrial Investment Corporation Ltd. (TIIC for short), filed TSFC OP NO.177 of 1992 for directing the respondents therein to pay a sum of Rs.1,74,647.47 as on 7.6.1992 with subsequent interest at 15.5% per annum till realisation by enforcing the liability personally against the respondents on the following allegations: 3. The first respondent, an industrial partnership concern, is carrying on the business of grinding, turning and drilling works on job order basis. Respondents 2 and 3 and one James Vedachalam as partners approached the petitioner for a term loan for their business. The petitioner sanctioned a term loan of Rs.62,000/- on 31.3.1982. Out of the said amount, the petitioner disbursed a sum of Rs.55,534/- to the first respondent. The loan was repayable in ten half-yearly instalments after a moratorium period of 12 months from the date of first disbursement with interest at the rate of 5.5% over the IDBI rate for refinance with a minimum of 15.5% per annum. In consideration of availing the loan, the first respondent, represented by its partners, mentioned above, executed a Deed of Hypothecation on 14.6.1982 containing the terms and conditions. Under the said instrument, all the machinery, furniture, instruments, accessories, electrical equipment, fittings and spares, etc. belonging to the first respondent stood hypothecated in favour of the petitioner. James Vedachalam, one of the partners, died on 3.1.1989 leaving behind respondents 4, 5 and 6 as his legal heirs, the fourth respondent being his widow, while respondents 5 and 6, his children. They became liable to discharge the debt from the estate of James Vedachalam. The seventh respondent was a guarantor having executed a Deed of Guarantee on 14.6.1982 in favour of the petitioner guaranteeing due repayment of the loan with interest and other charges. He had also undertaken to pay on demand to the petitioner, the entire dues and indemnify and keep the petitioner indemnified against the loss of principal, interest or other moneys secured and costs. His liability was co-extensive with that of the other respondents. The first respondent had been a chronic and systematic defaulter in repayment of the loan. The petitioner therefore foreclosed the loan by a notice, dt.21.12.1988 and exercised his right to repossess the hypothecated machinery and sell them by public auction. His liability was co-extensive with that of the other respondents. The first respondent had been a chronic and systematic defaulter in repayment of the loan. The petitioner therefore foreclosed the loan by a notice, dt.21.12.1988 and exercised his right to repossess the hypothecated machinery and sell them by public auction. When the Officers of the petitioner went to repossess the hypothecated machinery, they found some of the items of machinery, set out in the Schedule to the petition, to be missing from the business premises of the first respondent. The petitioner repossessed the rest of the machinery, and sold the same in a public auction on 7.6.1989 for a sum of Rs.43,100/-. After giving credit to the said amount, the petitioner was moving the Court for a direction to the first respondent to produce the missing machinery, so that the same could be sold. Inspite of repeated demands, the respondents having failed and neglected to repay the entire balance loan amount, the petitioner caused a legal notice, dt.2.6.1992, and the same not having produced any effect, he filed the petition for recovering the balance of the amount. Even though the petitioner sanctioned the loan on 31.3.1982 and the respondents concerned and the said James Vedachalam executed documents on 14.6.1992, the petition was not barred by limitation as the account was a running account and the loan amount was repayable in ten half yearly instalments commencing from 1.1.1984, and the hypotheca was sold in public auction on 7.6.1989, and the sale proceeds were given credit to on 17.8.1989. The petition filed within three years therefrom, i.e. on 8.6.1992 after the summer recess, was in time. 4. Respondents 2 and 7 filed a common counter stating inter alia as follows: Owing to personal reasons, respondents 2 and 3 expressed their desire to retire from the first respondent/partnership. Late James Vedachalam, who was the managing partner, agreed to this, and a release deed was executed on 6.1.1983 releasing respondents 2 & 3 from the partnership after settling their accounts. Since then, respondents 2 and 3 ceased to be partners. Consequently, the seventh respondent also opted to get released from his obligation as guarantor to the loan granted by the petitioner. Respondents 2, 3 and 7 severed all their connections with the first respondent more than six years prior to the proceedings. They had also written to the petitioner explaining all the facts. Consequently, the seventh respondent also opted to get released from his obligation as guarantor to the loan granted by the petitioner. Respondents 2, 3 and 7 severed all their connections with the first respondent more than six years prior to the proceedings. They had also written to the petitioner explaining all the facts. For over six years, they have not received any communication whatsoever from the petitioner regarding any over dues. This would show that respondents 2, 3 and 7 were not liable to the petition claim. They were under the impression that James Vedachalam had been repaying regularly. The petitioner had wantonly and wilfully added respondents 2 and 7 in the present proceedings. The petitioner having accepted the release of respondents 2 and 3 from the partnership concern and the release of the seventh respondent from the guarantee liability, had wantonly dragged them into the case with ulterior motives. The guarantee by the seventh respondent having ceased in January 1982 itself and the petitioner also having notified the same, the seventh respondent would not be liable to answer the petition claim. The liability of respondents 2 and 3 ceased from the date of their retiring from the partnership, namely 6.1.1983. The notice dt.21.12.1988 had been suitably replied. The alleged public auction was a farce. The machinery, alleged to have been taken by the petitioner, was worth more than what it had been auctioned for. The alleged missing of some of the items of machinery had to be proved by the petitioner. Under law, the respondents had to be given notice of the auction, since according to the petitioner, they were liable. The alleged auction, even assuming without admitting to be true, was illegal. Once the petitioner repossessed the machinery for which the loan was granted, the liability of the respondents ceased as per the provisions of the State Financial Corporation Act (hereinafter referred to as 'the Act'. On receipt of the notice, dt.2.6.1992, these respondents went to the petitioner and explained their stand taken as early as in 1989 in their letter dt.31.1.1989. The petitioner replied that these respondents would be exonerated. The correctness of the petition claim was not admitted. The claim was barred by limitation. The account was not a running account as alleged. The alleged promise to repay the loan in 10 half yearly instalments would not revive the limitation as alleged. The petitioner replied that these respondents would be exonerated. The correctness of the petition claim was not admitted. The claim was barred by limitation. The account was not a running account as alleged. The alleged promise to repay the loan in 10 half yearly instalments would not revive the limitation as alleged. The petitioner had slept over his claim for years together and the petition as framed was, therefore, barred by law of limitation. In any event, these respondents were not liable. The petitioner had acquiesced in their retirement and therefore estopped. 5. The fourth respondent filed a counter and the same was adopted by the sixth respondent. The first respondent concern was run only by the other two partners and not by James Vedachalam. Further, Vedachalam had not left behind him any asset whatsoever and his legal representatives had no means to pay the amount claimed in the petition. Without prejudice to the said contention, it was submitted that the claim was barred by limitation and therefore liable to be dismissed. 6. On the above pleadings, the learned Additional District Judge framed the following points for consideration: 1. Whether the petitioner/corporation is entitled for an injunction directing the first respondent to produce the hypotheca mentioned in the petition? 2. Whether the petitioner is not entitled to seek remedy against respondents 2 & 3 as they already retired from the partnership? 3. Whether the respondents are not bound to pay the amount of Rs.1,74,647.47 personally? 4. Whether the claim is barred by limitation? 5. To what relief the petitioner/corporation is entitled? 7. On the side of the petitioner, the Law Officer Tmt. Jayanthi was examined as P.W.1 and Exs.A.1 to A.6 were marked. On the side of the respondents no witness was examined nor was any document marked. 8. 4. Whether the claim is barred by limitation? 5. To what relief the petitioner/corporation is entitled? 7. On the side of the petitioner, the Law Officer Tmt. Jayanthi was examined as P.W.1 and Exs.A.1 to A.6 were marked. On the side of the respondents no witness was examined nor was any document marked. 8. The learned Additional District Judge discussed all the points together and held that respondents 2 and 3 had not established by any tangible proof that they had retired from the first respondent/partnership, that under Section 31(1) of the Act an application could not be said to be a suit, that the claim was not barred by limitation, that on a breach of an agreement by an industrial concern, the financial corporation could seek one or more of the three reliefs set out in Section 31(1) of the Act, that the petitioner/corporation got right to repossess the hypotheca and sell the same in public auction, and that the date of public auction was 7.6.1989 and within a period of three years, i.e. on 8.6.1992, the present application had been filed and therefore in time. The learned Additional District Judge further held that respondents 2 and 3 had not established that they had retired from the partnership, and that they were also liable to answer the suit claim. So holding by Order, dt.29.4.1994 the learned Additional District Judge granted the prayer. 9. It is as against that the present civil miscellaneous appeal has been filed. 10. So holding by Order, dt.29.4.1994 the learned Additional District Judge granted the prayer. 9. It is as against that the present civil miscellaneous appeal has been filed. 10. The learned counsel for the appellant submitted that under Section 31(1) of the Act, the financial institution cannot seek to recover the hypothecated machinery or recover any money, that having invoked Section 29 of the Act, it cannot resort to Section 31(1) as they were mutually exclusive, that the claim was barred by limitation, that the financial corporation could not have a different law of limitation applicable to it, that the suit ought to have been filed within three years from the date of default of each and every instalment, and the same not having been done it was barred by limitation, that the petitioner/corporation had cancelled the agreement of loan by its notice of foreclosure, dt.21.12.1988 and even on this account, when the entire amount of loan had become due, the suit should have been filed within three years from the date of fore-closure to obtain a personal decree against respondents 2, 3 & 7, that the Corporation had tampered with the records, and that on the materials available, the lower Court ought to have held that respondents 2, 3 and 7 ceased to be partners since 6.1.1983, the same having been communicated to the petitioner and in fact P.W.1 had admitted that the petitioner had been notified about the retirement of respondents 2 and 3 from the partnership. The learned counsel further submitted that the petitioner/corporation had not established by any document that they took delivery only of the machinery excluding those mentioned in the plaint. So far as the seventh respondent was concerned, he had also notified about opting out of the guarantee and the same had been accepted by the petitioner, and therefore no liability should have been fastened on him. 11. Mrs. Rita Chandrasekharan submitted that it was upto respondents 2, 3 and 7 to show by documentary proof that they had been released from the obligations under the partnership and the guarantee, and that, as pointed out by the learned Additional District Judge, their retiring from the partnership was within their exclusive knowledge and in as much as it had been found by the lower Court that they had failed to establish the same, no exception could be taken to the decision of the lower Court. 12. In the light of the above, the following points arise for consideration: 1. Whether respondents 2 and 3 were released from the partnership and obligations, and whether their retirement was recognised by the petitioner/Corporation as contended by respondents 2 and 3? 2. Whether the seventh respondent had been allowed to opt out of his obligations as a guarantor? 3. Whether the petitioner had altered the dates of repayment in their accounts and whether it would by itself absolve respondents 2 3, and 7 from their obligations if they were found to be otherwise liable? 13. One significant aspect the learned Additional District Judge has adverted to is the non-establishment of their retiring from the partnership by respondents 2 and 3. The learned Additional District Judge has observed in para 9 of the judgment as follows: "The fact that respondents 2 & 3 have retired from the business of the firm is within the personal knowledge of respondents 2 & 3. When Ex.A.1/the Dee of Hypothecation is filed and P.W.1 deposed about the issuing of foreclosure notice/Ex.A.4 and the other notice/Ex.A.6, the burden shifts upon respondents 2 & 3 to let in countervailing evidence to establish that they retired from the partnership and then the said James Vedachalam remained the sole proprietor of the first respondent firm. Mere suggestions to P.W.1 is not sufficient to establish the defence version of respondents 2 & 3. In the absence of any tangible proof for establishing that respondents 2 & 3 have retired from the first respondent/partnership, their contention is liable to be rejected." 14. P.W.1, in her cross examination, has stated as follows: " The 2nd and 3rd respondents have sought for approval regarding their retirement from the partnership firm and approval was given on 25.2.1983 subject to certain conditions. The approval was communicated to the 1st respondent Firm. There is no specific acknowledgement given by the 1st respondent firm for having received the communication regarding the approval. But the subsequent letter correspondence wherein the retiring partners and one of the Guarantors have agreed to settle the matter and they pray for time for settling the loan amount due." 15. The approval was communicated to the 1st respondent Firm. There is no specific acknowledgement given by the 1st respondent firm for having received the communication regarding the approval. But the subsequent letter correspondence wherein the retiring partners and one of the Guarantors have agreed to settle the matter and they pray for time for settling the loan amount due." 15. The learned Additional District Judge has adverted to the admission by P.W.1 that the petitioner/Corporation received the intimation regarding the retirement of respondents 2 & 3, and that the approval regarding the retirement of respondents 2 & 3 from the partnership firm was granted by the petitioner/corporation only subject to certain conditions. Having said so, the learned Additional District Judge follows the same by holding that there is no evidence on the side of respondents 2 and 3 whether they complied with the said condition imposed upon them by the petitioner/corporation. In our view, it was not proper on the part of the District Judge to have exonerated the petitioner/corporation from its obligation to produce the relevant documents, particularly when P.W.1 had in no uncertain terms admitted to the petitioner/corporation having received the communication from respondents 2 and 3 about their retiring from the partnership and their release from the partnership, subject to certain conditions. The letter correspondence also has been kept back. 16. In GOPAL KRISHNAJI KETKAR v.. MOHAMED HAJI LATIF [ AIR 1968 SC 1413 ] it has been held by the Supreme Court as follows: "Even if the burden of proof does not lie on a party the Court may draw an adverse inference if he withholds important documents in his possession which can throw light on the facts at issue. It is not, in our opinion, a sound practice for those desiring to rely upon a certain state of facts to withhold from the Court the best evidence which is in their possession which could throw light upon the issue in controversy and to rely upon the abstract doctrine of onus of proof." The Supreme Court has referred to the decision of the Privy Council in MURUGESAM PILLAI v.. GNANA SAMBANDHA PANDARA SANNADHI, AIR 1917 PC 6 : 44 Ind App 98. GNANA SAMBANDHA PANDARA SANNADHI, AIR 1917 PC 6 : 44 Ind App 98. The extracted observation of Lord SHAW is as follows: "A practice has grown up in Indian procedure of those in possession of important documents or information lying by, trusting to the abstract doctrine of the onus of proof, and failing, accordingly, to furnish to the Courts the best material for its decision. With regard to third parties, this may be right enough - they have no responsibility for the conduct of the suit, but with regard to the parties to the suit it is, in their Lordships' opinion, an inversion of sound practice for those desiring to rely upon a certain state of facts to withhold from the Court the written evidence in their possession which would throw light upon the proposition." The Supreme Court referred to the observation of SHAH, J. in BILTU RAM v.. JAINANDAN PRASAD [Civil Appeal No.941 of 1965, Dt.15.4.1968] wherein the learned Judge referred to another decision of the Privy Council in MT. BILAS KUNWAR v.. DESRAJ RANJIT SINGH [AIR 1915 PC 96 : 42 Ind App 202] - "But it is open to a litigant to refrain from producing any documents that he considers irrelevant; if the other litigant is dissatisfied it is for him to apply for an affidavit of documents and he can obtain inspection and production of all that appears to him in such affidavit to be relevant and proper. If he fails so to do, neither he nor the Court at his suggestion is entitled to draw any inference as to the contents of any such documents." and observed - "The observations of the Judicial Committee do not support the proposition that unless a party is called upon expressly to make an affidavit of documents and inspection and production of documents is demanded, the Court cannot raise an adverse inference against a party withholding evidence in his possession. Such a rule is inconsistent with illustration (g) of S.114 of the Evidence Act, and also an impressive body of authority." Having regard to this ratio of the Supreme Court, in our view, the learned Additional District Judge was in error in finding fault with respondents 2 and 3 for not establishing their claim that they had retired from the partnership and the same had been accepted by the petitioner though subject to certain conditions. Admission, it is as ancient as hills, is the best form of proof. Having admitted that the petitioner/corporation had received the intimation regarding the retirement of respondents 2 and 3, and had also granted approval for the reconstitution, subject to certain conditions, it was incumbent on the petitioner/corporation to have produced necessary materials to show that such and such were the conditions imposed by the petitioner for recognising the retirement of respondents 2 and 3, and that they had not satisfied or complied with those conditions. Having failed to do so, every adverse inference must be drawn against the petitioner/corporation. The documents had been deliberately kept back by the petitioner/corporation, as otherwise, if they were produced, they would be against their case. We have, therefore, to conclude that respondents 2 and 3 had been illegally made liable for the suit claim, after their being released. 17. One of the documents produced by the petitioner is Ex.A.5, which is a xerox copy of certain pages of the loan ledger. We notice that the dates in ten entries have been corrected. No doubt, the learned Additional District Judge has referred to these corrections, and accepted the explanation offered by P.W.1 to the effect that the dates were corrected for the reason that the interest was to be paid in March and September and therefore, adding the interest, the dates of the instalments were fixed. This explanation is hardly satisfactory. Be that as it may, on facts, we are satisfied that respondents 2 and 3 retired from the partnership, and that their retirement had been accepted by the petitioner/corporation, and equally the seventh respondent had opted out of the guarantee. 18. Even according to the petitioner, except for the first instalment paid in 1983, no further instalment was paid by the first respondent. The petitioner foreclosed the loan long after in 1988, put up the machinery for sale on 7.6.1989, and filed the suit on 8.6.1992 - on the reopening of the Courts after summer recess. According to the petitioner, the petition would be in time in view of the fact that the machinery re-possessed was sold in public auction on 7.6.1989. It is not necessary to go into the question of limitation, as we are exonerating respondents 2, 3 and 7 on other grounds. The lower Court was in error in making them liable and granting the relief against them also. It is not necessary to go into the question of limitation, as we are exonerating respondents 2, 3 and 7 on other grounds. The lower Court was in error in making them liable and granting the relief against them also. The other respondents have not filed any appeal. The appeal will stand allowed, and TSFC OP NO.177 of 1992 will stand dismissed as against the appellants/respondents 2, 3 and 7. There will, however, be no order as to costs. Consequently, CMP No.13416 of 1994 is closed.