JUDGMENT By the Court.—Present writ petition has been filed claiming for following reliefs : “(i) Issue a writ of certiorari or a writ, order or direction in the nature of certiorari quashing the impugned order dated 23.12.2008 passed by opp. Party No. 3 as contained in annexure No. 1 to this writ petition. (ii) Issue a writ of mandamus or a writ, order or direction in the nature of mandamus directing the opposite parties to release the matured amount of L.I.C. Policy No. 210453978 of the petitioner debited by Insurance Company along with interest. (iii) Issue a writ of mandamus or a writ, order or direction in the nature of mandamus directing the opposite parties not to take coercive methods against the petitioner for recovery of loan amount of Shri Prabal Kumar Tiwari. (iv) Issue a writ of mandamus or a writ, order or direction in the nature of mandamus directing the opposite parties to recover amount of loan as per directions of Hon’ble Supreme Court in case of Pawan Kumar Jain v. Pradeshiya Industrial and Investment Corporation of U.P. Ltd. and others, (2004) 6 SCC 758 . (v) Issue any other suitable writ, order or direction which this Hon’ble Court may deem fit, just and proper in the circumstances of the case as also in the interest of justice. (vi) Allow the writ petition with costs in favour of the petitioner.” 2. Brief background the case as disclosed by the petitioner in the writ petition is that his real brother Prabal Kumar Tiwari had applied for loan of Rs. 40,000/- under the scheme run by opposite Party No. 1. It has been stated that the loan application of Prabal Kumar Tiwari was forwarded by opposite party No. 1, and thereafter loan amount was disbursed to him after mortgaging L.I.C. Policy Bond No. 210453978 of the petitioner. It has been stated that the said Prabal Kumar Tiwari deposited some instalments and thereafter he suffered loss in the business and was unable to pay the remaining instalments of loan amount. It has been stated that said Prabal Kumar Tiwari also moved application praying that interest be not taken and remaining amount may be recovered from him in easy instalments. The petitioner is guarantor and states that despite availability of the original loanee, respondent Nos. 2 and 3 have initiated recovery proceedings against him from the L.I.C. Policy bond. It has been stated that said Prabal Kumar Tiwari also moved application praying that interest be not taken and remaining amount may be recovered from him in easy instalments. The petitioner is guarantor and states that despite availability of the original loanee, respondent Nos. 2 and 3 have initiated recovery proceedings against him from the L.I.C. Policy bond. In this direction letter was sent on 27.7.2005 addressed to the petitioner. On 4.2.2008 again letter was sent asking the petitioner to ensure the payment, failing which security is there, and the same would be encashed. Petitioner, thereafter represented the matter before opposite party No. 3 on 7.3.2008 and requested that the amount may not be recovered from him, as the real and original debtor is available and the amount may be recovered from him. Petitioner has contended that he had preferred writ petition No. 3006 (MB) of 2008 before this Court, and this Court on 4.11.2008 had asked the authority concerned to consider the petitioner’s representation, in accordance with law by passing reasoned order. Thereafter decision has been taken on 23.12.2008, and said order is subject matter of challenge in the instant writ petition. 3. Counter affidavit has been filed, and therein categorical plea has been taken that for the loan ion question, the petitioner and one Raj Kumar were guarantor by submitting their L.I.C. Policy Bonds, and once it is not disputed that Prabal Kumar is unable to repay the loan amount, then the notices have been issued to the petitioner for payment of outstanding loan, and as far as Prabal Kumar Tiwari is concerned, he is unable to pay the debt of the bank and has become willful defaulter, has removed all his belongings and his whereabout is not known. It has been further stated that the Bank has every legal right to recover the loan amount from the F.D.Rs. of the guarantor, which were surrendered in favour of the Bank and have been kept by the Bank, as the guarantor owns co-extensive liability as provided under Section 128 of the Contract Act. It has been further stated that objective consideration has been made, and the present writ petition has no substance and deserves to be dismissed. 4. After pleadings mentioned above have been exchanged, present writ petition has been taken up for final hearing and disposal with the consent of the parties. 5. It has been further stated that objective consideration has been made, and the present writ petition has no substance and deserves to be dismissed. 4. After pleadings mentioned above have been exchanged, present writ petition has been taken up for final hearing and disposal with the consent of the parties. 5. Learned counsel for the petitioner contended with vehemence that in the facts of the case the amount of loan could not have been realised from the security furnished by the petitioner without undertaking action first for realisation of the amount from the original debtor, and as such the entire proceedings initiated by the respondents against the petitioner are unjust and cannot be subscribed in law, as such writ petition deserves to be allowed. 6. Countering the said submission, it has been contended from the side of respondents that the action taken is strictly in accordance with law and as per terms and conditions of the guarantee deed, a copy of which has been annexed as Annexure-C.A.-1 to counter-affidavit, which was in addition to other remedies provided for, as such no interference is required. 7. After respective arguments have been advanced, factual position which emerges, and to which there is no dispute, is that real brother of the petitioner Sri Prabal Kumar Tiwari had taken loan under the scheme run by opposite party No. 1. For the purposes of release of the said loan amount, petitioner and one Raj Kumar had taken guarantee by submitting their L.I.C. Policy bonds. This is accepted position that Prabal Kumar Tiwari has not paid the loan of the bank and has become willful defaulter and his account has been declared as NPA account as on 31.3.2002 and against his name outstanding amount has been shown. It has been categorically mentioned that the Bank on several times issued notice to said Prabal Kumar Tiwari for repayment of the outstanding dues, but since he has removed all his belongings and his whereabout is not known, the Bank proceeded against the petitioner, who is a guarantor, for recovery of the debt. 8. The question is as to whether the loan amount can be recovered from the petitioner, in the facts of the present case. Annexure-C.A.-1 is guarantee form duly signed by the petitioner and Raj Kumar. 8. The question is as to whether the loan amount can be recovered from the petitioner, in the facts of the present case. Annexure-C.A.-1 is guarantee form duly signed by the petitioner and Raj Kumar. Said form provides the agreement made by the petitioner and the guarantee furnished to the Bank for the due payment and discharge on demand of all amounts advanced to the Principal or paid for on account of the Principal by the Bank at any time in respect of the said credit accommodations or facilities and of all amounts payable under the guarantees bearing the Principal’s signature together with interest banking and other charges. Categorical mention has been made that the creditor shall be indemnified against all losses damages claims proceedings costs charges and expenses arising out of any failure on the part of the Principal to the Bank any sum as and when the same should be paid. In addition to it, the guarantor has also agreed to 19 other conditions, which cover the whole field. It has also been provided therein that the provisions contained are in addition to and not by way of limitation of or substitution of any former or other guarantee or guarantees. It further proceeds to mention that the guarantee which has been furnished is without any prejudice to any other securities negotiable or otherwise in respect of any money intended to be hereby secured or any other funds or assets in favour of the creditors, qua the same they have absolute discretion for satisfying the payment in full or part. Thus the terms and conditions of guarantee are clear and categorical. 9. Reliance has been placed on the judgment of Hon’ble Apex Court in the case of Ashok Mahajan v. State of U.P. and others, 2006 AIR SCW 4925, for the proposition that action against the guarantor cannot be taken until and unless the property of Principal debtor is first sold. In the said case before the Hon’ble Apex Court, the provisions of the U.P. Public Money (Recovery of Dues) Act, 1972 were subject matter of consideration, and then keeping in view the provisions U.P. Act, view was taken that action against the guarantor cannot be taken until and unless the property of Principal debtor is first sold. In the said case before the Hon’ble Apex Court, the provisions of the U.P. Public Money (Recovery of Dues) Act, 1972 were subject matter of consideration, and then keeping in view the provisions U.P. Act, view was taken that action against the guarantor cannot be taken until and unless the property of Principal debtor is first sold. Relevant extract of the said judgment is being extracted below : “At this juncture it would be appropriate to take note of the following observations of this Court in Pawan Kumar Jain v. Pradeshiya Industrial and Investment Corpn. of U.P. Limited, ( 2004 (6) SCC 758 ). “5. Mr. Mohta then relied upon Sections 3 and 4 of the U.P. Act, which read as follows : 3. of U.P. Limited, ( 2004 (6) SCC 758 ). “5. Mr. Mohta then relied upon Sections 3 and 4 of the U.P. Act, which read as follows : 3. Recovery of certain dues as arrears of land revenue.—(1) Where any person is party— (a) to any agreement relating to a loan, advance or grant given to him or relating to credit in respect of, or relating to hirepurchase of goods sold to him by the State Government or the Corporation, by way of financial assistance; or (b) to any agreement relating to a loan, advance or grant given to him or relating to credit in respect of, or relating to hirepurchase of goods sold to him, by a banking company or a Government company, as the case may be, under a State-sponsored scheme; or (c) to any agreement relating to a guarantee given by the State Government or the Corporation in respect of a loan raised by an industrial concern; or (d) to any agreement providing that any money payable thereunder to the State Government shall be recoverable as arrears of land revenue; and such person— (i) makes any default in repayment of the loan or advance or any instalment thereof; or (ii) having become liable under the conditions of the grant to refund the grant or any portion thereof, makes any default in the refund of such grant or portion or any instalment thereof; or (iii) otherwise fails to comply with the terms of the agreement,- then, in the case of State Government, such officer as may be authorized in that behalf by the State Government by notification in the official Gazette, and in the case of the Corporation or a Government company the Managing Director thereof, and in the case of a banking company, the local agent thereof, by whatever name called, may send a certificate to the Collector, mentioning the sum due from such person and requesting that such sum together with costs of the proceedings be recovered as if it were an arrear of land revenue. (2) The Collector on receiving the certificate shall proceed to recover the amount stated therein as an arrear of land revenue. (3) No suit for the recovery of any sum due as aforesaid shall lie in the civil Court against any person referred to in sub-section (1). 4. (2) The Collector on receiving the certificate shall proceed to recover the amount stated therein as an arrear of land revenue. (3) No suit for the recovery of any sum due as aforesaid shall lie in the civil Court against any person referred to in sub-section (1). 4. Savings.—(1) Nothing in section 3, shall— (a) affect any interest of the State Government, the Corporation, a Government company or any banking company, in any property created by any mortgage, charge, pledge or other encumbrance; or (b) bar a suit or affect any other right or remedy against any person other than a person referred to in that section, in respect of a contract of indemnity or guarantee entered into a relation to an agreement referred to in that section or in respect of any interest referred to in clause (a). (2) Where the property of any person referred to in Section 3 is subject to any mortgage, charge, pledge or other encumbrance in favour of the State Government, the Corporation, a Government company or banking company, then— (a) in every case of a pledge of goods, proceedings shall first be taken for sale of the thing pledged, and if the proceeds of such sale are less than the sum due, then proceedings shall be taken for recovery of the balance as if it were an arrear of land revenue : Provided that where the State Government is of opinion that it is necessary so to do for safeguarding the recovery of the sum due to it or to the Corporation, Government company or banking company, as the case may be, it may for reasons to be recorded, direct proceedings to be taken for recovery of the sum due, as if it were an arrear of land revenue before or at the same time as proceedings are taken for sale of the thing pledged; (b) in every case of a mortgage, charge or other encumbrance on immovable property, such property or, as the case may be, the interest of the defaulter therein, shall first be sold in proceedings for recovery of the sum due from that person as if it were an arrear of land revenue, and any other proceeding may be taken thereafter only if the Collector certifies that there is no prospect of realization of the entire sum due through the first mentioned process within a reasonable time.” 6. He submitted that by virtue of these provisions, the 1st Respondent cannot proceed against the Appellant/guarantor until the 1st Respondent has first sold the property of the principaldebtor which had been mortgaged in their favour. He points out that on 22nd July, 1996 action under Section 29 of the State Financial Corporation Act, 1951 had been initiated and physical possession taken. He points out that thereafter on 12.02.1996 a One Time Settlement was arrived at by the 1st Respondent with the 4th Respondent. He points out that thereafter the property was handed back to the 1st Respondent. He submits that, therefore, the 1st Respondent is not entitled to proceed against the Appellant. 7. Mr. Bhalla admits the above mentioned facts. He, however, submits that the company committed defaults and, therefore, the One Time Settlement failed. He submitted that earlier attempts to sell the properties of the 4th Respondent Company yielded no result as no offers were received. He submitted that action under Section 29 has again been initiated against the 4th Respondent Company. He submitted that as the 4th Respondent Company has committed defaults and it has not been possible to recovery by sale of property, action has been taken against the guarantor for recovery of the amount. 8. In our view, the above set out provisions of the U.P. Act are very clear. Action against the guarantor cannot be taken until the property of the principal-debtor is firs sold off. As the Appellant has not sold the property of the principal-debtor, the action against the Appellant cannot be sustained. We, therefore, set aside the Recovery Notice.” 10. At this juncture, view point of Hon’ble Apex Court in the case of Punjab National Bank and others v. Surendra Prasad Sinha, AIR 1992 SC 1815 , is being looked into. In the said case the Principal debtor did not repay the debt and the Bank as creditor adjusted the same at the maturity of the F.D.Rs in terms of the contract. The Hon’ble Apex Court has held as under : “The security bond, admittedly, executed by the respondent reads the material parts thus : “We Confirm having handed over to you by way to security against your branch office Katni F.D. Account No. 77/83 dated November 1, 1983 for Rs. The Hon’ble Apex Court has held as under : “The security bond, admittedly, executed by the respondent reads the material parts thus : “We Confirm having handed over to you by way to security against your branch office Katni F.D. Account No. 77/83 dated November 1, 1983 for Rs. 24,000 in the event of renewal of the said Fixed Deposit Receipt as security for the above loan.” “We Confirm...the F.D.R. will continue to remain with the bank as security here”. “The amount due and other charges, if any, be adjusted and appropriated by you from the proceeds of the said F.D.R. at any time before, on or its maturity at your discretion, unless the loan is otherwise fully adjusted from the dues on demand in writing made by you....” “We give the bank right to credit the balance to our saving banks account or any other amount and adjust the amount due from the borrowers out of the same”. “We authorise you and confirm that the F.D.R. pledged a security for the said loan shall also be security including the surplus proceeds thereof for any other liability and the obligation of person and further in favour of the bank and the bank shall be entitled to retain/realise/utilise/appropriate the same without reference to us.” 4. Admittedly, as the principal debtor did not repay the debt, the bank as creditor adjusted at maturity of the F.D.R., the outstanding debt due to the bank in terms of the contract and the balance sum was credited to the Saving Banks account of the respondent. The rules of limitation are not meant to destroy the rights of the parties. Section 3 of the Limitation Act 36 of 1963, for short “the Act” only bars the remedy, but does not destroy the right which the remedy relates to. The right to the debt continues to exist notwithstanding the remedy is barred by the limitation. Only exception in which the remedy also becomes barred by limitation is that right itself is destroyed. For example under Section 27 of the Act a suit for possession of any property becoming barred by limitation, the right to property itself is destroyed. Except in such cases which are specially provided under the right to which remedy relates in other case the right subsists. For example under Section 27 of the Act a suit for possession of any property becoming barred by limitation, the right to property itself is destroyed. Except in such cases which are specially provided under the right to which remedy relates in other case the right subsists. Though the right to enforce the debt by judicial process is barred under Section 3 read with the relevant Article in the schedule, the right to debt remains. The time barred debt does not cease to exist by reasons of Section 3. That right can be exercised in any other manner than by means of a suit. The debt is not extinguished, but the remedy to enforce the liability is destroyed. What Section 3 refers is only to the remedy but not to the right of the creditors. Such debt continues to subsists so long as it is not paid. It is not obligatory to file a suit to recover the debt. It is settled law that the creditor would be entitled 533 to adjust, from the payment of a sum by a debtor, towards the time barred debt. It is also equally settled law that the creditor when he is in possession of an adequate security, the debt due could be adjusted from the security in his possession and custody. Undoubtedly the respondent and his wife stood guarantors to the principal debtor, jointly executed the security bond and entrusted the F.D.R. as security to adjust the outstanding debt from it at maturity. Therefore, though the remedy to recover the debt from the principal debtor is barred by limitation, the liability still subsists. In terms of the contract the bank is entitled to appropriate the debt due and credit the balance amount to the saving bank account of the respondent. Thereby the appellant did not act in violation of any law, nor converted the amount entrusted to them dishonestly for any purpose. Action in terms of the contract expressly or implied is a negation of criminal breach of trust defined in Section 405 and punishable under Section 409, I.P.C. It is neither dishonest, nor misappropriation. The bank had in its possession the fixed deposit receipt as guarantee for due payment of the debt and the bank appropriated the amount towards the debt due and payable by the principal debtor. The bank had in its possession the fixed deposit receipt as guarantee for due payment of the debt and the bank appropriated the amount towards the debt due and payable by the principal debtor. Further, the F.D.R. was not entrusted during the course of the business of the first appellant as a Banker of the respondent but in the capacity as guarantor. The complaint does not make out any case much less prima facie case, a condition precedent to set criminal law in motion. The Magistrate without adverting whether the allegation in the complaint prima facie makes out an offence charged for, obviously, in a mechanical manner, issued the process against all the appellants. The High Court committed grave error in declining to quash the complaint on the finding that the Bank acted prima facie high handedly.” 11. On the parameters as set out in the aforesaid judgments, in the present case the provisions of U.P. Public Money (Recovery of Dues) Act are not at all applicable or attracted, as such it cannot be said that the amount in question cannot be recovered from the security furnished by the guarantor as per terms and conditions of the guarantee. Under Section 128 of the Contract Act liability of guarantor is co-extensive, and once as per terms and conditions of the guarantee, the Principal having failed to repay the loan amount, there was no legal impediment in the way of the Bank to have realised the amount in question by encashing the security, which had been furnished, inasmuch the very purpose of the security was that the the amount which had been advanced was secured and the same did not become a bad debt. The petitioner stood guarantor jointly, executed security bond and entrusted his L.I.C. Policy as security to the outstanding debt on its maturity. Therefore, in this background, in terms of the contract, the Bank is fully entitled to appropriate the debt due and credit the balance amount. The action taken by the Bank in no way has flouted any law, rather the same is strictly in accordance with the terms and conditions of guarantee. 12. Consequently, writ petition fails and the same is dismissed. 13. No order as to costs. ————