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2011 DIGILAW 4631 (MAD)

First v. Second

2011-11-25

VINOD K.SHARMA

body2011
Judgment : 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. 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 – Original Chitta and Adangal extract in respect of the property belongs to the 3rd respondent. Ex.P8 – Original Kist receipt in respect of 3rd respondent. Ex.P9 – Encumbrance Certificate bearing No.2102 and 2103/1996 in respect of the property belongs to the 3rd respondent. Ex.P10 – Certified copy of the letter dated 18.05.1999 written by the 1st respondent to the petitioner. Ex.P11 – Office copy of the notice dated 08.09.1999 issued to the 1st respondent to the petitioner along with returned cover. Ex.P12 – Office copy of the legal notice dated 17.11.1999 issued to the 1st respondent to the petitioner. Ex.P10 – Certified copy of the letter dated 18.05.1999 written by the 1st respondent to the petitioner. Ex.P11 – Office copy of the notice dated 08.09.1999 issued to the 1st respondent to the petitioner along with returned cover. Ex.P12 – Office copy of the legal notice dated 17.11.1999 issued to the 1st respondent to the petitioner. Ex.P13 – Series (3 Nos) – Acknowledgement cards Ex.P14 – Office copy of the notice dated 14.05.2001 issued to the 2nd respondent to the petitioner. Ex.P15 – Acknowledgement of Ex.P14. Ex.P16 – Returned cover sent by the petitioner to the 2nd respondent. Ex.P17 – Office copy of the notice dated 01.07.2010 issued to the 2nd and 3rd respondent by the petitioner. Ex.P18 – Returned covers in respect of Ex.P17 sent to 1st and 2nd respondent Ex.P19 – Acknowledgment card in respect of Ex.P19 sent to 3rd respondent. Ex.P20 – Certified copy of the account sheets issued by the petitioner in respect of the 1st respondent." 9. The petitioner has been successful to prove the grant of loan, as also default of respondent no.1. It is also proved that the loan amount was secured by equitable mortgage by respondent no.3. 10. In view of the admitted position explained herein above, the question to be determined is as to whether the petitioner is entitled to decree as prayed for. 11. The answer is in negative. 12. The limitation for recovery of loan from the principal or guarantor in individual capacity, is three years under the Limitation Act, therefore, the suit, having not been filed for recovery within the prescribed period of limitation, is barred. The petitioner is not entitled to decree under Section 31(aa) of the State Financial Corporation Act. 13. However, keeping in view the fact that the petitioner is a mortgagee, limitation for possession of mortgaged property is 12 years, therefore, relief for possession and sale of mortgage property, is within the limitation. 14. The petitioner has succeeded in proving the amount due against the mortgage of the schedule property. It is ordered that the defendant no.3 shall pay to the petitioner a sum of Rs.1,91,71,016/- (Rupees One Crore Ninety One Lakhs Seventy One Thousand and Sixteen only) with future interest at agreed rate and also cost of the suit by 31.12.2011, and in default, the mortgaged property be sold, and the proceeds be adjusted towards payment of the principal and cost. 15. 15. However, it is made clear that there shall be no personal liablity, of the defendant no.3 beyond the mortgaged property.