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2014 DIGILAW 481 (ORI)

Gajendra Prasad Das v. Orissa State

2014-08-08

R.DASH

body2014
ORDER This Appeal is against the order dated 8.12.1995 passed by the learned District Judge, Ganjam-Gajapati, Berhampur in M.J.C. No.29 of 1987 allowing the application under Section 31 of the State Financial Corporations Act, 1951 (for short, the Act). 2. R-1, Orissa State Financial Corporation (for short, the Corporation), is the applicant before the learned District Judge. Case of the Corporation is that on the application of the present appellant (O.P.No.1 before the learned District Judge), the Corporation sanctioned a loan of Rs.1,92,000/-on 16.7.1980. The appellant as the borrower executed a deed of hypothecation in respect of the vehicle for the purchase of which the loan was sanctioned. Deceased-Respondent No.2, who is O.P. No.2 before the learned District Judge, stood as the guarantor for the appellant-borrower. When the borrower failed to repay the loan in terms of the loan agreement, the Corporation took steps under Section 29 of the Act and seized the vehicle and then sold it on 5.11.1983 for a price of Rs.1,70,000/-. Even then a sum of Rs.76,186.72 remained unrealized. So, the Corporation filed the application under Section 31 of the Act. The application was once dismissed on 8.1.1989 but on appeal preferred by the Corporation (Misc. Appeal No.79/90) this Court vide order dated 16.7.1993 set aside the order of dismissal and directed the learned District Judge for re-disposal of the application in accordance with law. Learned District Judge heard the parties, considered the materials on record and passed the impugned order allowing the application and holding both the borrower and the surety liable to pay the unrealized amount to the Corporation with interest payable on contractual rate. 3. During pendency of this appeal the surety (R-2) passed away. His L.Rs. were not substituted and thereby the appeal is allowed to abate as against R-2. 4. Impugned order is challenged on the ground that an application under Section 31 would not apply after exhausting remedy under Section 29 of the Act. Another ground is that with the sale of the vehicle on 5.11.1983 for a price which fell short of the amount realizable under the terms of the loan agreement, the last date of cause of action for an action under Section 31 of the Act can be said to have arisen on 5.11.1983, Therefore, initiation of the proceeding under Section 31 of the Act in 1987 is barred by limitation. 5. 5. While submitting on behalf of the appellant learned counsel confines his argument to the second ground, i.e., the ground on limitation. Relying on a decision in Maharashtra State Financial Corporation V. Ashok Kuamr Agarwal and others, reported in AIR 2006 SC 1584 , learned counsel for the appellant submits that Article 137 of the Limitation Act is applicable to an application under Section 31 of the Act. Article 137 of the Limitation Act prescribes the period of limitation as three years and the same starts to run when the right to apply accrues. It is rightly submitted by the learned counsel for the appellant that the right to make the application under Section 31 of the Act accrued latest by the date on which the vehicle was sold. Before the learned District Judge, the appellant so also the deceased (R-2) had taken the ground of limitation contending that the period of limitation started running from the date when the realization of the balance amount for which the application was made became due. Learned District Judge did not deal with the limitation matter. 6. It is not shown by the Corporation that within three years from the date of filing of the application under Section 31 of the Act, the borrower had either acknowledged his liability for the outstanding amount or had paid any amount to the Corporation towards repayment of the outstanding amount. In the application under Section 31 of the Act it is stated, inter alia, that the cause of action arose on different dates when repayments as reflected in the statement of account were made by the borrower. Ext.17 is the statement of account which does not reflect repayment of any outstanding amount made to the Corporation by the borrower. Therefore, the application under Section 31 of the Act is barred by limitation. 7. In view of the discussion made above, the appeal is allowed but, in the facts and circumstances, without cost. The impugned order is set aside. M.J.C. No.29 of 1987 in the Court of the learned District Judge, Ganjam-Gajapati, Berhampur is dismissed on the ground of limitation.