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Allahabad High Court · body

2013 DIGILAW 2725 (ALL)

Seelak Ram Balhara v. Bank of Baroda

2013-10-31

R.K.GUPTA

body2013
JUDGMENT : R.K. GUPTA, J. (CHAIRPERSON) 1. The present appeal is preferred by the appellants under Section 20 of the RDDBFI Act, 1993 challenging the order passed by the Tribunal on 28th February, 2013 in original application No. 178/2009 by which the application filed by the Bank under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 has been allowed by directing to issue Recovery Certificate for a sum of Rs. 19,25,555/- with interest at 12.5% p.a. with monthly rests from 1st October, 2009 till the date of realization from defendant Nos. 1 to 3 who are jointly and severally liable to pay the same with costs. The relevant facts for adjudication of the present case are that the deceased appellant No. 1 was borrower and the appellant No. 2 was the guarantor who is also wife of the appellant No. 1. An application was moved during the pendency of the appeal that the appellant No. 1 has expired therefore, it was prayed that the name of the appellant No. 1 be deleted The appellant No. 2 survives and the appeal was pressed by the appellant No. 2 who was a guarantor. 2. There is no dispute in the present case that the deceased appellant No. 1 was granted loan facility by the Bank which was defaulted, therefore, the account was declared as NPA on 31st March, 1993. It was a case of continuing guarantee executed by the surviving appellant. The demand notice was served on 2nd March, 1994 and the original application was preferred by the Bank on 1st October, 2009. 3. It was the case where for the purpose of limitation under Section 18 of the Limitation Act, 1963 was relied upon as well as Article 62 of the Limitation Act, 1963 which provides twelve years period of limitation for recovery of dues from the date when the money sued for becomes due and the time is to run from the date when the demand notice is issued and the same is not honoured. 4. The Bank issued a notice of demand claiming the said amount from the borrower as well as guarantor and the said notice was issued on 2nd March, 1994. The said notice was not honoured and the amount as such was neither paid by the borrower nor by the guarantor. 5. 4. The Bank issued a notice of demand claiming the said amount from the borrower as well as guarantor and the said notice was issued on 2nd March, 1994. The said notice was not honoured and the amount as such was neither paid by the borrower nor by the guarantor. 5. The borrower from time-to-time issued certain acknowledgement on various dates i.e. 3rd April, 1990, 31st March, 1993, 30th March 1995 18th October, 1997, 14th October, 2000, 11th October, 2003 and lastly on 3rd October, 2006. Before the Tribunal a joint written statement by the borrower and the guarantor was filed being defendants. In the said written statement it was submitted by the appellants that the original application was barred by time as according to the defendants the original application was not filed within a period of 12 years and thus, the original application was barred by time. 6. It was the claim of the Bank before the Tribunal that since various acknowledgements from time-to-time were issued by the borrower, therefore, on the basis of the different acknowledgements the original application is not barred by time and is within limitation. The Tribunal decided the said controversy on the ground that as the defendant No. 1 borrower has extended the period of limitation as per Section 18 of the Limitation Act, 1963 by issuing acknowledgements and an the basis of the same the Tribunal held that the original application preferred by the Bank under Section 19 of the RDDBFI Act, 1993 is not barred by limitation. On the basis of the aforesaid this is to be seen that there is no dispute in the present case that since various acknowledgements from time-to-time were issued by the borrower acknowledging his liability to repay the dues therefore, so far as the borrower is concerned the Suit against him was not barred by time. 7. It was contended on behalf of the surviving appellant i.e. the guarantor that in the absence of any liability as per Section 18 of the Limitation Act the original application is barred by time so far as the guarantor is concerned. For the purpose of appreciating issues, it will be appropriate to first discuss with regard to the starting point of limitation, as per Article 62 of the Indian Limitation Act. For the purpose of appreciating issues, it will be appropriate to first discuss with regard to the starting point of limitation, as per Article 62 of the Indian Limitation Act. The guarantee deed which has been placed on record which was executed by the guarantor in fact is in the nature of continuing Bank Guarantee and Clause 10 of the aforesaid guarantee states that a demand in writing shall be deemed to have been duly given to me or assigns by leaving the same at my last known address hereunder written and shall be effectual notwithstanding any change of address or notwithstanding notice thereof to the Bank and such demand if sent by post shall be deemed to be received by me. In the present case, there is no dispute that the Bank Guarantee was not a continuing Bank guarantee. The Bank Guarantee if is a continuing Bank Guarantee then what will be the period of commencement of period of limitation as per Article 62 of the Limitation Act. As per Article 62 of the Limitation Act, the period starts running from the date where the money becomes due. In case of continuing Bank guarantee when a notice was issued by the Bank to the borrower and guarantor on 2nd March, 1994 and in case the said notice was not honoured then the period starts running and that will be the period of commencement of the period for the purpose of filing the Suit within a period of 12 years. 8. In this reference, the judgment passed by the Apex Court in Syndicate Bank v. Channaveerappa Beleri, III (2006) SLT 518 : II (2006) BC 579 (SC) : AIR 2006 SC 1874 , has dealt with the question and the relevant paragraph from the said judgment are as under: 9. A guarantor's liability depends upon the terms of his contract. A 'continuing guarantee' is different from an ordinary guarantee. There is also a difference between a guarantee which stipulates that the guarantor is liable to pay only on a demand by the creditor, and a guarantee which does not contain such a condition. Further, depending on the terms of guarantee, the liability of a guarantor may be limited to a particular sum, instead of the liability being to the same extent as that of the principal debtor. Further, depending on the terms of guarantee, the liability of a guarantor may be limited to a particular sum, instead of the liability being to the same extent as that of the principal debtor. The liability to pay may arise, on the principal debtor and guarantor, at the same time or at different points of time. A claim may be even time-barred against the principal debtor, but still enforceable against the guarantor. The parties may agree that the liability of a guarantor shall arise at a later point of time than that of the principal debtor. We have referred to these aspects only to underline the fact that the extent of liability under a guarantee as also the question as to when the liability of guarantor will arise, would depend purely on the terms of the contract. 10. Samuel (supra), no doubt, dealt with a continuing guarantee. But the continuing guarantee considered by it, did not provide that the guarantor shall make payment on demand by the Bank. The continuing guarantee considered by it merely recited that the surety guaranteed to the Bank, the repayment of all money which shall at any time be due to the Bank from the borrower on the general balance of their accounts with the Bank, and that the guarantee shall be a continuing guarantee to an extent of Rs. 10 lacs. Interpreting the said continuing guarantee, this Court held that so long as the account is a live account in the sense that it is not settled and there is no refusal on the part of the guarantor to carry out the obligation, the period of limitation could not be said to have commenced running. 11. But in the case on hand, the guarantee deeds specifically state that the guarantors agree to pay and satisfy the Bank on demand and interest will be payable by the guarantors only from the date of demand. In a case where the guarantee is payable on demand, as held in the case of Bradford (supra) and Hartland (supra), the limitation begins to run when the demand is made and the guarantor commits breach by not complying with the demand. 12. We will examine the meaning of the words 'on demand'. In a case where the guarantee is payable on demand, as held in the case of Bradford (supra) and Hartland (supra), the limitation begins to run when the demand is made and the guarantor commits breach by not complying with the demand. 12. We will examine the meaning of the words 'on demand'. As noticed above, the High Court was of the view that the words 'on demand' in law have a special meaning and when an agreement states that an amount is payable on demand, it implies that it is always payable, that is payable forthwith and a demand is not a condition precedent for the amount to become payable. The meaning attached to the expression 'on demand' as always payable' or 'payable forthwith without demand' is not one of universal application. The said meaning applies only in certain circumstances. The said meaning is normally applied to promissory notes or bills of exchange payable on demand. We may refer to Articles 21 and 22 in this behalf. Article 21 provides that for money lent under an agreement that it shall be payable on demand, the period of limitation (3 years) begins to run when the loan is made. On the other hand, the very same words 'payable on demand' have a different meaning in Article 22 which provides that for money deposited under an agreement that it shall be payable on demand, the period of limitation (3 years) will begin to run when the demand is made. Thus, the words 'payable on demand' have been given different meaning when applied with reference to 'money lent' and 'money deposited'. In the context of Article 21, the meaning and effect of those words is 'always payable' or payable from the moment when the loan is made, whereas in the context of Article 22, the meaning is 'payable when actually a demand for payment is made'. 13. What then is the meaning of the said words used in the guarantee bonds in question? The guarantee bond states that the guarantors agree to pay and satisfy the Bank on demand. It specifically provides that the liability to pay interest would arise upon the guarantor only from the date of demand by the Bank for payment. It also provides that the guarantee shall be a continuing guarantee for payment of the ultimate balance to become due to the Bank by the Borrower. It specifically provides that the liability to pay interest would arise upon the guarantor only from the date of demand by the Bank for payment. It also provides that the guarantee shall be a continuing guarantee for payment of the ultimate balance to become due to the Bank by the Borrower. The term of guarantee, thus, make it clear that the liability to pay would arise on the guarantors only when a demand is made. Article 55 provides that the time will begin to run when the contract is 'broken'. Even if Article 113 is to be applied, the time begins to run only when the right to sue accrues. In this case, the contract was broken and the right to sue accrued only when a demand for payment was made by the Bank and it was refused by the guarantors. When a demand is made requiring payment within a stipulated period, say 15 days, the breach occurs or right to sue accrues, if payment is not made or is refused within 15 days. If while making the demand for payment, no period is stipulated within which the payment should be made, the breach occurs or right to sue accrues, when the demand is served on the guarantor. 14. We have to, however, enter a caveat here. When the demand is made by the creditor on the guarantee, under a guarantee, which requires a demand, as a condition precedent for the liability of the guarantor, such demand should be for payment of sum which is legally due and recoverable from the principal debtor. If the debt had already become time barred against the principal debtor, the question of creditor demanding payment thereafter, for the first time, against the guarantor would not arise. When the demand is made against the guarantor, if the claim is a live claim (that is, a claim which is not barred) against the principal debtor, limitation in respect of the guarantor will run from the date of such demand and refusal/non-compliance. Where guarantor becomes liable in pursuance of a demand validly made in time, the creditor can sue the guarantor within three years, even if the claim against the principal debtor gets subsequently time barred. To clarify the above, the following illustration may be useful. 15. Where guarantor becomes liable in pursuance of a demand validly made in time, the creditor can sue the guarantor within three years, even if the claim against the principal debtor gets subsequently time barred. To clarify the above, the following illustration may be useful. 15. Let us say that a creditor makes some advances to a borrower between 10th April, 1991 and 1st June, 1991 and the repayment thereof is guaranteed by the guarantor undertaking to pay on demand by the creditor, under a continuing guarantee dated 1st April, 1991. Let us further say a demand is made by the creditor against the guarantor for payment on 1st March, 1993. Though the limitation against the principal debt or may expire on 1st June, 1994, as the demand was made on 1st March, 1993 when the claim was 'live' against the principal debtor, the limitation as against the guarantor would be 3 years from 1st March, 1993. On the other hand, if the creditor does not make a demand at all against the guarantor till 1st June, 1994 when the claims against the principal debtor get time barred, any demand against the guarantor made thereafter say on 15th September, 1994 would not be valid or enforceable. 16. In view of the above, we hold that the time began to run not when the operations ceased in the accounts in mid-1986, but on the expiry of 15 days from 12th October, 1987 when the demand was made by the Bank and there was refusal to pay by the guarantors. The Suit filed within three years therefrom is, therefore, in time. 9. On the basis of the judgment passed by the Apex Court now the position is clear which reveals that in cases of continuing Bank guarantee also the commencement of the period of limitation would be the date when the notice is given and the said notice is not honoured by depositing the amount. 10. The next question now arises with regard to the acknowledgements issued by the borrower on different dates. In the present case admittedly, there are no acknowledgements by the guarantor but all/ oil those acknowledgements have been issued by the borrower only. Those facts leave to the question whether the said acknowledgements would bind the guarantor also. 10. The next question now arises with regard to the acknowledgements issued by the borrower on different dates. In the present case admittedly, there are no acknowledgements by the guarantor but all/ oil those acknowledgements have been issued by the borrower only. Those facts leave to the question whether the said acknowledgements would bind the guarantor also. The learned Counsel, appearing for the Bank relied upon the judgment of the Division Bench of Madhya Pradesh High Court in the case of Punjab and Sind Bank v. Laxman Singh, IV (2005) BC 49 (DB), and submitted that since the liability of the guarantor is co-extensive with the liability of the principal debtor therefore, the guarantor would also be liable towards the acknowledgements issued by the borrower. In this reference, this is to be seen that the facts before the Hon'ble High Court in Punjab & Sind Bank (supra) had been that the Suit against the guarantors was not barred by limitation as the guarantors entered into agreement and acknowledged their liability and also signed agreement that their liability will be joint and several with the borrower. The next judgment relied upon is in the case of SICOM Ltd. v. Harjindersingh, IV (2004) BC 350 : AIR 2004 Bom. 337 , wherein it is held that in cases of continuing Bank guarantee the Suit for recovery of loan against the guarantors cannot be held to be barred by time but this judgment is not in conformity of the judgment passed by the Apex Court in Syndicate Bank (supra) wherein it is held that even in the cases of continuing Bank guarantee the starting point of limitation would be the date when the demand notice is issued and the same is not honoured which is not in the present case. 11. 11. In this reference Clause 10 of the guarantee is also relevant which is quoted as under: A demand in writing shall be deemed to have been duly given to me/us or my/our heirs or assigns by leaving the same at my/our last known address hereunder written and shall be effectual notwithstanding any change of address or notwithstanding notice thereof to the Bank, and such demand if sent by post shall be deemed to be received by me/us or my/our, heirs, assigns 24 hours after posting thereof and shall be sufficient if signed by any officer of the Bank and in proving such service it shall be sufficient to prove that the letter containing the demand was properly addressed and put into the post. 12. On the basis of the same the Demand notice if was made and that has not been honoured and when the notice was given by the Bank on 2nd March, 1994 then this date would be the starting point of limitation. 13. The another question which is relevant in the present case is that there is no acknowledgement obtained by the Bank from the guarantor and if the acknowledgement was issued only by the borrower whether the same would be sufficient to extend the period of limitation against the guarantor also. 14. The learned Counsel appearing for the Bank relied upon the judgment passed in Punjab and Sind Bank v. Laxman Singh (supra) to hold that the acknowledgements of the borrower would have the effect of extending the period of limitation against the guarantor and for the said preposition the judgment passed in Om Prakash v. UCO Bank, III (2007) BC 143 : AIR 2005 MP 234 , is also relied upon for the same preposition. The respondents also relied upon Keshari Engineering Works v. Bank of India, I (1992) BC 59, but infact, this judgment will not have application in the present case for the reason that on principal debtor admitting and acknowledging the liability to repay dues and one of the partners admitted the liability of the firm who was the borrower. The respondents also relied upon Keshari Engineering Works v. Bank of India, I (1992) BC 59, but infact, this judgment will not have application in the present case for the reason that on principal debtor admitting and acknowledging the liability to repay dues and one of the partners admitted the liability of the firm who was the borrower. Similarly, the judgment passed in State Bank of India v. Meghraj Contractor, I (2013) BC 17 : AIR 2012 Chhattisgarh 149, was also relied upon and the facts of the said case were also different as the guarantee was a continuing and the acknowledgement was made by the principal debtor said to be binding upon the borrower. 15. In all the aforesaid cases on which the reliance was placed for the purpose of adjudication of the controversy, in none of the cases the effect of Section 18 of the Limitation Act, 1963 was not considered and it was also not considered as to who can give the acknowledgement before the expiration of the period of limitation. For the purpose of clarity, Section 18 of the Limitation Act, 1963 is being Quoted hereinbelow: 18. Affect of acknowledgement in writing.--(1) Where, before the expiration of the prescribed period for a Suit or application in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgement was so signed. (2) Where the writing containing the acknowledgement is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872, oral, evidence of its contents shall not be received. 16. (2) Where the writing containing the acknowledgement is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872, oral, evidence of its contents shall not be received. 16. The reading of Sub-section (1) of Section 18 itself indicates that before the expiration of the prescribed period for a Suit or application in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by an person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgement was so signed. It will be also necessary to make it clear as to who can give acknowledgement so that it may be stated that the same is against the Bank or in favour of the Bank as Sub-section (1) of Section 18 states that an acknowledgement of liability in respect of such property or right has been made and signed by the party against whom such property or right is claimed, or by an person through whom he derives his title or liability then it implies that the borrower since had not been debtor therefore, the acknowledgement of liability may not bind the guarantor because the guarantors property which was mortgaged when the Suit was filed to recover the amount of debt from the property mortgaged then the borrower since has not mortgaged his property he may not have any right or interest over the property of the guarantor and on the basis of the same the debt has been acknowledged for extending the period of limitation by the guarantor also cannot be accepted. 17. In this reference, the judgment passed by the Nagpur High Court in Jiwanlal Champalal v. Ramrao Vithoba, AIR 38 1951 Nagpur 240 (C.N. 60), wherein after relying upon the earlier judgments states that an acknowledgement of liability or right pre-supposes an acknowledgement by a person possessed of some interest which can be bound by the acknowledgement. If the person making the acknowledgement has no interest whatsoever, then such acknowledgement would not have the legal quality of any acknowledgement and can, therefore, be of no consequence and the paragraph Nos. If the person making the acknowledgement has no interest whatsoever, then such acknowledgement would not have the legal quality of any acknowledgement and can, therefore, be of no consequence and the paragraph Nos. 4 and 5 of the judgment is relevant where is quoted as under: A contrary view has, however, been taken in several other decisions some of which are Mukhnarain v. Ram Lochan, 19 Pat. 938: AIR (28) 1941 Pat 147); R.H. Skinner v. Bank of Upper India Ltd., ILR (1937) Lah. 171: (AIR (24) 1937 Lah. 504); Ittappan Kuthiravattat Nayer v. Nanu Sastri, 26 Mad. 34 : (12 MLJ 101; Amarchand v. Narayan, AIR(19) 1932 Bom. 531 : (139 IC 218) and Nanak Prasad v. Suraj Baksh Singh, AIR (30) 1943 Oudh. 425 : (209 I.C. 604). It is true that in each of these cases the statement which was sought to be used as an acknowledgement was made by a person after the interest in the property with respect to which it was made, had been transferred to another. It would, however, seem that the principle underlying these decisions would also apply to the present case. This, in my opinion, is made abundantly clear by the recent decision of Their Lordships of the Privy Council in Bank of Upper India Ltd. v. R.H. Skinner, AIR (29) 1942 P.C. 67: (ILR 1942) All. 660). In that case, Their Lordships have referred to the divergence of judicial opinion in India and have accepted the view taken by Mukherji, J. in Surjiram Marwari v. Barhamdeo Prasad, 1 CLJ 337, a decision from which the Lucknow Court differed. The principle underlying this decision appears to be that an acknowledgement within the meaning of Section 19 of the Limitation Act, must be made by a person who is under a liability at the material time. 5. Indeed, an acknowledgement, when made by a mere stranger, has no efficacy, for, it would be absurd to suppose that the Legislatures meant to give any right against the debtor by the acknowledgement of a mere stranger. In other words, an acknowledgement of liability pre-supposes that the person making it had some interest which can be bound by the acknowledgement. If the person making the acknowledgement has no interest whatsoever, it would be misuse of language to call it an "acknowledgement". This is what have been stated in Vol. In other words, an acknowledgement of liability pre-supposes that the person making it had some interest which can be bound by the acknowledgement. If the person making the acknowledgement has no interest whatsoever, it would be misuse of language to call it an "acknowledgement". This is what have been stated in Vol. 1 of Rustomji's Law of Limitation (5th Edn.) at p. 350, The word "acknowledgement" simply means an admission of one's liability (Risal Singh v. Lal Singh, ILR (1939 All 728 : (AIR (26) 1939 All. 483). Therefore, it must necessarily mean that, for a statement to operate as an acknowledgement, it must be made by a person who is under a liability. In this connection, I may also refer to the following observations at p. 281 in Amir Mirza Beg v. Lachhmi Narain, 7 Luck. 270: (AIR (19) 1932 Oudh 1): An acknowledgement of liability or right pre-supposes an acknowledgement by a person possessed of some interest which can be bound by the acknowledgement. If the person making the acknowledgement has no interest whatsoever, then such acknowledgement would not have the 'legal quality of an acknowledgement and can, therefore, be of no consequence. The following observations of Lord Westbury in Chinnery v. Evans, 1964-11 HLC 115; 11-E.R. 1274), which were made with reference to a question of payment might be usefully quoted in this connection: It was said in argument that if such an interpretation be given to the statute, it would be possible for a stranger to pay the interest to the mortgagee, and thereby to keep alive the mortgage. It is hardly necessary to deal with such an improbable case as that, but the answer to it, I think, would be this: that money paid, that a money handed over, by a stranger to the contract under which it was paid to the individual entitled to receive it, would not have the characteristics and the legal quality of payment. It would be voluntary tender; a gist or donation, being made by a party not in any respect subject to liability to the individual who would not be entitled to receive from the person so rendering it any part of the money which it is supposed would be so paid. It seems to me that the better view is the one contented for the appellant and that it must prevail. Accordingly, I hold that the document Ext. It seems to me that the better view is the one contented for the appellant and that it must prevail. Accordingly, I hold that the document Ext. P-7 does not operate as an acknowledgment. In this view, the Suit must fail in its entirety. 18. In Mohammad Khan v. Mohammad Salim Khan, AIR 1951 All. 29, in Para 26 of the said judgment it is held that Acknowledgment of a liability under Section 19 of the Limitation Act, that gives a fresh start for the period of limitation must be by the person against whom the liability is sought to be enforced. Paragraph 26 of the said judgment runs as under: Another ground on which it was urged that the Suit was not barred by limitation was that there was an acknowledgement of a mortgagee in the subsequent mortgage of 1900. The acknowledgement of a liability under Section 19 of the Limitation Act, that gives a fresh start for the period of limitation must be by the person against whom the liability is sought to be enforced. In other words, in a Suit for redemption of a mortgage, the acknowledgement must be by the mortgagee. The acknowledgement in the second mortgage of 1900 was by the mortgagor, which cannot give a fresh start for the period of limitation. The application under Section 12 was, therefore, barred by time. The decision of the Court below was perfectly correct. 19. This is also to be understood that the question whether the guarantor can be treated in a position of co-debtor or co-contractor then the acknowledgement by principal debtor or one of the co-contractor may bind co-debtor. In this regard, the judgment passed by Kerala High Court in 1989 is referred and in its para No. 16 their Lordships observed that surety's contract is a separate and collateral contract for the purpose of ensuring that the principal keeps his contract. The relevant Paras 16 and 17 of the said judgment are quoted hereunder: 16. In this regard, the judgment passed by Kerala High Court in 1989 is referred and in its para No. 16 their Lordships observed that surety's contract is a separate and collateral contract for the purpose of ensuring that the principal keeps his contract. The relevant Paras 16 and 17 of the said judgment are quoted hereunder: 16. The question whether a guarantor can be treated in the position of a co-debtor or a co-contractor and if the guarantor is treated as a co-debtor, what is the effect of an acknowledgement by one of the co-debtors has been considered in certain decisions and it was held that the guarantor's liability has to be equated to the liability of co-debtor and so, the acknowledgment by a debtor in this case, the principal-debtor-may be effective as far as the co-debtor and so against the guarantors. This view has not been accepted by Ram Nayar, J., as he then was in 1961 Ker LT 434. His Lordship observed that surety's contract is a separate and collateral contract for the purpose of ensuring that the principal keeps his contract. For taking this view, His Lordships relied on ILR (1942) I Cal 11 and refused to follow ILR 44 Cal 978: (AIR 1918 Cal 707), AIR 1939 Nagpur 31 and (1934) 24 Trav. L.J. I. 17. In 1979 Ker. LT 566: AIR 1980 Ker. 190 , M.P. Memon, J. has also considered this question very elaborately and followed 1961 Ker LT. 434. M.P. Menon, J. has observed that by acknowledgement of the principal-debtor, no new contract is created different from the one, the performance of which the surety had guaranteed. So also by acknowledgement, the original contract of debt is not modified and so, the guarantors cannot rely on the fact that the original contract has undergone modification or change. Further it was made clear in the judgment that a debt barred by limitation has is not extinguished and an acknowledgement designed to place it beyond the pale of unenforceability cannot certainly alter its nature or character, or that of the contract on which it is founded so as to enable the surety to disown his obligation. This fundamental aspect has been made very clear in AIR 1979 SC 102 , by approving the judgment of J.C. Shah, J. of the Bombay High Court. It is observed thus (at p. 107). This fundamental aspect has been made very clear in AIR 1979 SC 102 , by approving the judgment of J.C. Shah, J. of the Bombay High Court. It is observed thus (at p. 107). On the plain words of the letters of guarantee it is clear that the defendant undertook to pay any amount which may be due by the Company at the foot of the general balance of its account or any other account whatever.... We are not concerned in this case with the period of limitation for the amount re-payable by the Company to the Bank. We are concerned with the period of limitation for enforcing the liability of the defendant under the surety bond. Supreme Court held that the passage extracted above from the judgment of Justice Shah is correct position of law. 20. While summing up in next para Their Lordship further held that in case there was no withdrawal of the obligation under the guarantee by the guarantors and there was no previous refusal by the guarantors before the institution of the Suit then the claim against him would be beyond the period of limitation as prescribed. 21. On the basis of the aforesaid, in the present case, though, it is not a case of withdrawal of the obligations under the guarantee by the guarantors and there was previous refusal by the guarantors before the institution of the Suit as when the notice was given on 2nd March, 1994 and the amount was not paid and there was no acknowledgement given by the guarantor and, therefore, the claim against the guarantor becomes barred and the Suit filed by the Bank against the guarantor after 12 years is barred by limitation. As per the provision of Article 62 of the Limitation Act the Suit filed after 12 years to recover the debt enforcing the mortgage is barred by limitation and the period will start running from the date when the amount becomes due. The amount became due on the date when the demand notice was served on 2nd March, 1994 which was not honoured. 22. There is no dispute that the liability of the guarantor is co-extensive with the liability of the principal debtor. The Bank will have right to sue but such right to sue is barred by limitation so far as the guarantor is concerned. Within time right to sue survives against the guarantor. 22. There is no dispute that the liability of the guarantor is co-extensive with the liability of the principal debtor. The Bank will have right to sue but such right to sue is barred by limitation so far as the guarantor is concerned. Within time right to sue survives against the guarantor. 23. The deed of guarantee is placed on record and the said deed does not stipulate that the acknowledgement obtained by the Bank from the borrower or principal debtor would also bind guarantor. As per the judgment passed by the Apex Court in Syndicate Bank (supra) for the purpose of ascertaining the liability and also to assess as to what will be the starting point of limitation for this certain clauses of the agreement between the parties would be relevant. The acknowledgement were not issued by the present appellant who is a guarantor. The judgments on which reliance by the Bank was placed with regard to the binding nature of acknowledgement issued by the principal debtor have not dealt with the question as to who can issue acknowledgement have also not been dealt with by the Debts Recovery Tribunal. 24. On plain reading of the guarantee deed, it does not stipulate any condition that the acknowledgments given by the principal debtor would bind the guarantor also. This is material issue to determine the liability of guarantor as per guarantee deed. 25. On the basis of the same the question with regard to the starting point of limitation has been decided that the period commences from the date of issuance of demand notice and the same is not honoured and if certain acknowledgement is obtained by the Bank from the borrower then in the absence of any clause in the guarantee deed such acknowledgement will not bind the guarantor at all. 26. In view of my aforesaid discussions, I hold that the Suit which was filed by the Bank against the guarantor was barred by time against the guarantor and since there has been acknowledgement issued by the principal borrower, the Suit against him is/was not barred by time. Since the present appeal survives only for guarantor, therefore, the appeal is allowed and the order passed by the Debts Recovery Tribunal on 28th February, 2013 is set aside so far as the guarantor is concerned. Since the present appeal survives only for guarantor, therefore, the appeal is allowed and the order passed by the Debts Recovery Tribunal on 28th February, 2013 is set aside so far as the guarantor is concerned. A copy of this judgment be supplied to the parties as well as to the DRT concerned, along with the original records, if summoned earlier, as per law.