JUDGMENT : B.M. SHYAM PRASAD, J. 1. The appellants, who have executed separate Deeds of Guarantee in favour of the Karnataka State Financial Corporation (for short 'Financial Corporation') have filed this appeal impugning the order dated 25.03.2010 in Misc. Petition No.57 of 2005 on the file of the II Addl. District Judge, Mysore (for short, 'the learned District Judge'). 2. The learned District Judge has allowed the petition filed by the Financial Corporation in Misc. Petition No.57 of 2005 under Section 31(1)(aa) of the State Financial Corporations Act, 1951 (for short 'the Act') against the appellants declaring that the Financial Corporation is entitled to enforce the respective Deeds of Guarantee executed by the appellants in favour of the Financial Corporation in the following terms. (i) The Financial Corporation is entitled to enforce the liability of respondent No. 2 and 3 under the Deeds of Guarantee executed by them on 13.3.1985 and 27.3.1986 for the Term Loan of Rs. 30,00,000/- and the accrued contractual interest thereon, (ii) The Financial Corporation is entitled to enforce the liability of respondent Nos. 4 to 6 under the Deeds of Guarantee executed by them on 31.3.1985 for the term loan of Rs. 30,00,000/- with the accrued contractual interest thereon, (iii) The Financial Corporation is entitled to enforce the liability of respondent Nos.2, 4 and 5 under the Deeds of Guarantee executed by them on 1.9.1986 for the term loan of Rs. 16,55,000/- and Rs. 3,45,000/- and the accrued contractual interest thereon, and (iv) The Financial Corporation is also entitled to enforce the liability of respondent No. 2 and 4 under the Deed of guarantee executed by them on 9.4.1991 in respect of the term loan of Rs. 44,60,000/- along with accrued contractual interest thereon. However, the Financial Corporation's prayer was for a direction to the appellants and the Respondent No.2 to pay to the appellants a total sum of Rs. 4,06,97,740/- as of 10.12.2004 with future interest at the rate of 15% per annum compounded on quarterly rest basis from 10.12.2004. 3. The Financial Corporation in its petition under Section 31(1) (aa) of the Act contended that it had extended a term loan of Rs. 30,00,000/- and additional loan of Rs. 26,00,000/- and another loan of Rs. 4,00,000/- to M/s Dunford Engineering Industries Limited. Thus, a total sum of Rs. 56,49,000/- was disbursed out of the total sum of Rs. 3. The Financial Corporation in its petition under Section 31(1) (aa) of the Act contended that it had extended a term loan of Rs. 30,00,000/- and additional loan of Rs. 26,00,000/- and another loan of Rs. 4,00,000/- to M/s Dunford Engineering Industries Limited. Thus, a total sum of Rs. 56,49,000/- was disbursed out of the total sum of Rs. 60,00,000/- extended to the aforesaid company. Similarly, the financial corporation extended a term loan and additional loans in a total sum of Rs. 50,00,000/- to M/s CSI Fabrics Private Limited, and a sum of Rs. 44,75,000/- was disbursed to the said company. The appellant No.1 to 5 executed separate Deeds of Guarantee securing the aforesaid financial assistance extended by the appellant to M/s Dunford Engineering Industries Limited and M/s CSI Fabrics Private Limited. The details of the Deeds of Personal Guarantee executed by the respondent No. 1 to 5 are as follows: Date of Deeds of Guarantee Borrower Company Deeds of Guarantee executed by Guaranteed Sum 01.09.1986 M/s CSI Fabrics Private Limited The appellant Nos.3 to 5 Rs. 30,00,000/- 27.03.1986 M/s Dunford Engineering Industries Limited The appellant Nos.1 and 2 Rs. 30,00,000/- 31.03.1985 M/s CSI Fabrics Private Limited The appellant Nos.3 to 5 Rs. 30,00,000/- 01.09.1986 M/s CSI Fabrics Private Limited The appellant Nos.3 to 5 Rs. 30,00,000/- 4. Both M/s Dunford Engineering Industries Limited and M/s CSI Fabrics Private Limited merged under a Rehabilitation Scheme approved by the Board for Industrial and Financial Reconstruction (for short 'BIFR') in the year 1990 and the respondent No.2 was incorporated as an amalgamated company. Thereafter, the Financial Corporation sanctioned Additional Term loan of Rs. 45,60,000/- to respondent No.2 towards repayment of principal over dues and other sums. The appellant Nos.1 and 3 executed deed of guarantee dated 09.04.1991 insofar as the additional financial assistance granted by the Financial Corporation to the respondent No.2. 5. The respondent No.2 defaulted in its obligation to discharge the financial assistance extended by the Financial Corporation. Therefore, repeated final letters were issued to the respondent No.2 calling upon them to pay the outstanding. But, as the respondent No.2 did not clear the outstanding dues, the Financial Corporation issued the legal notice dated 29.12.2004 to the appellants invoking different Deeds of Guarantees and calling upon them to pay the total sum of Rs. Therefore, repeated final letters were issued to the respondent No.2 calling upon them to pay the outstanding. But, as the respondent No.2 did not clear the outstanding dues, the Financial Corporation issued the legal notice dated 29.12.2004 to the appellants invoking different Deeds of Guarantees and calling upon them to pay the total sum of Rs. 4,06,97,740/- which was ascertained as the amount due by the respondent No.2 to the Financial Corporation as of 10.12.2014. 6. The appellants resisted the petition filed by the Financial Corporation contending inter alia that all the appellants were parties to the separate Deeds of Guarantee executed in the year 1985 and 1986 in favour of M/s Dunford Engineering Industries Limited and M/s CSI Fabrics Private Limited, but all of them were not parties to the amalgamation proceedings before the BIFR/AAIFR/Company Court or the subsequent circumstances asserted by the Financial Corporation, including the sanction of additional loan of Rs. 45,60,000/- to respondent No.2. As such, the Deeds of Guarantee executed by them in the years 1985 and 1986 could not be invoked against them. Insofar as the appellant Nos.1 and 3, who had executed the Deed of Guarantee 9.4.1991 after the aforesaid two companies were amalgamated as per the Rehabilitation Scheme approved by the BIFR, it was contended that the liabilities of the respondent No. 2, including its liability to the Financial Corporation, as on 31.01.1997 was about Rs. 7,32,20,000/-, but the value of the assets of the respondent No.2 as on that date was much higher. The Financial Corporation had been grossly negligent in enforcing its rights against the assets of the respondent No. 2 resulting in the depletion of its value. As such, even these appellants were not liable. 7. The Financial Corporation examined one of its Manager (Technical) as PW1 in support of the petition and marked different exhibits including the Sanction Letter, Deeds of Guarantee, the Final Letters issued to the respondent No.2 and the legal notice dated 29.12.2004. The appellant No.1 examined himself as RW1, and Registered Valuer (Mr. C.A. Krishna Rangaraju from M/s Rangaraju Associates) and a Chartered Accountant (Mr. R.A. Srinivas from M/s R.A.Rajagopal) as RW2 and RW3. The appellant No.1 examined himself as RW1, and Registered Valuer (Mr. C.A. Krishna Rangaraju from M/s Rangaraju Associates) and a Chartered Accountant (Mr. R.A. Srinivas from M/s R.A.Rajagopal) as RW2 and RW3. The learned District Judge formulated the following question for its consideration: "(1) Whether the petitioner Corporation is entitled to enforce the liability of the respondents No.2 to 6 as guarantors to the loan advanced to 1st respondent company under Section 31 (1)(aa) of the Financial Corporation ? (2) Whether the respondents have proved that the claim of the petitioner is time barred?" 8. The appellants' defense before the learned District Judge was essentially that the appellant Nos.1 and 2 had executed the Deeds of Guarantee in the years 1985 and 1986 only for the definite financial assistance extended to M/s Dunford Engineering Industries Limited and M/s CSI Fabrics Private Limited respectively. But, after the amalgamation of these two companies, only the appellant Nos.1 and 2 had executed the Deed of Guarantee dated 9.4.1991 for the financial assistance extended in favour of the respondent No.2. As the other appellants had not executed any Deed of Guarantee after the year 1985-86, the Financial Corporation could not invoke the separate Deeds of Guarantee and claim a total sum of Rs. 4,06,97,740/- with interest as against all the appellants. Further, the appellants also contended that the value of the assets of the respondent No.2 was Rs. 7,55,18,000/- as evaluated in the year 1997, including the evaluation at the instance of the BIFR. The value of assets of respondent No.2 was more than its liabilities. The Financial Corporation and KSIIDC were in possession and custody of the assets of the respondent No.2 and the corporation/KSSIDC were responsible for the depletion in the value. Therefore, the consequential claim was untenable. 9. The value of assets of respondent No.2 was more than its liabilities. The Financial Corporation and KSIIDC were in possession and custody of the assets of the respondent No.2 and the corporation/KSSIDC were responsible for the depletion in the value. Therefore, the consequential claim was untenable. 9. The learned District Judge insofar as the contention that the appellants had executed specific Deeds of Guarantee and all the appellants had not executed any deed after the merger of the two companies for whom they had respectively stood guarantee, concluded that the appellant Nos.1 and 2 had executed Deeds of Guarantee dated 13.3.1985 and 27.3.1986 for the financial assistance extended to M/s Dunford Engineering Industries Private Limited, the appellant Nos.1,3,4 and 5 had executed Deeds of Guarantee dated 13.3.1985 and 1.9.1986 for the financial assistance extended to M/s CSI Fabrics Private Limited, and appellant Nos.1 and 2 had executed Deed of Guarantee dated 9.4.1991 for the financial assistance extended to respondent No.2 after the amalgamation. As such, the appellants were liable for the respective guarantees offered under the respective Deeds of Guarantee insofar as the amounts thereunder remained unpaid to the Financial Corporation . 10. As regards, the contention that the Financial Corporation/KSSIDC were not diligent in bringing about the sale of the assets of the respondent No.1 despite being in possession, and having custody of the assets, the learned District Judge examined the same in the light of the provisions of Section 29 and Section 31 of the Act. The learned District Judge concluded that the Financial Corporation could initiate action against the guarantors under Section 31 of the Act without being prejudiced howsoever by the initiation of proceedings under Section 29 of the Act. In this regard the learned District Judge relied upon the decisions of this Court reported in 1989 Bank Law Journal page 163 and the High Court of Punjab and Haryana. 11. The learned counsel for appellants, while arguing in support of the appeals, contended that respondent No.2 had no over dues insofar as ESI, PF or Electricity or labour charges and its bank account was also regular. However, in the year 1996, BIFR recorded that the respondent No.2 owed a sum of Rs. 1,04,00,000/- to different institutions and directed the respondent No.2 to pay the dues in six installments. However, in the year 1996, BIFR recorded that the respondent No.2 owed a sum of Rs. 1,04,00,000/- to different institutions and directed the respondent No.2 to pay the dues in six installments. The respondent No.2 could have paid even these arrears, but for non-cooperation by the SBI, its bankers which had extended working capital and advance loan limits. The SBI froze its account on 07.01.1997 and also advertised change in the management. Therefore, the erstwhile management of respondent No.2 resigned informing the BIFR. The BIFR handed over the assets of the respondent No.2 to the Financial Corporation and KSIIDC at the instance of SBI. The BIFR, even as back as in the year 1997, permitted the Financial Corporation, as well as KSIIDC, to enforce the Deeds of Guarantee. The BIFR recommended winding up of respondent No.2 and the Official Liquidator was appointed in the company petition on 31.03.1999. However, in the meanwhile, at the instance of the BIFR independent evaluators valued the assets and liabilities of the respondent No.2. According to RW.3, an independent evaluator, the value of the assets of the respondent No.2 was Rs. 7,55,18,000/-. On 09.12.1999, KSIIDC obtained permission of the Company Court to sell the assets of the respondent No.2. However, the sale was affected on 23.03.2008 after lapse of 11 years for a paltry sum of Rs. 1,62,00,000/- at a value much lesser than the guideline value. As such, the financial corporation and other institutions brought about depletion in the value of the assets of the respondent No.2. 12. Further, the learned counsel for the appellants contended that BIFR on 31.03.1997, withdrew the immunity under Section 22 of the Sick Industrial Companies Special Provision Act, 1985, thus eclipsing the prohibition against invoking guarantees executed by the different guarantors. The Financial Corporation had to file petition under Section 31(1)(aa) of the Act within three years from 31.03.1997 when the embargo against invoking guarantees was revoked. But the petition was filed on 17.02.2005, i.e., after three years of expiry of limitation. The learned District Judge has not considered the aforesaid contentions and therefore, the impugned order is irregular and perverse. 13. Per contra, the learned counsel for the Financial Corporation supported the impugned order. The learned counsel submitted that the allegations that the Financial Corporation has not been diligent and is responsible for depletion in the value of the assets of the company is untenable. 13. Per contra, the learned counsel for the Financial Corporation supported the impugned order. The learned counsel submitted that the allegations that the Financial Corporation has not been diligent and is responsible for depletion in the value of the assets of the company is untenable. The appellants have relied upon the Valuation Reports purported to be given in the year 1997, but the valuations are not corroborated. In any event, the assets of the company of respondent No.2 has been brought to sale by the Official Liquidator appointed by the Companies Court, after proper valuation. The liability of the appellants is under the Deeds of Guarantee, and the restrictions on invoking the guarantee, including the limitation, depend purely on the terms of the contract as held by the Supreme Court in the case of Syndicate Bank vs. Channaveerappa and others, (2006) 11 SCC 506 . 14. The learned counsel for the Financial Corporation has relied upon different decisions to assert that the canvas by the learned counsel for the appellants that the petition filed by the Financial Corporation is misconceived. The learned counsel has relied upon the decision in Karnataka State Financial Corporation vs. Smt. Jaya Menon and another, (2004) AIR Karnataka 370, and Shivappa Basappa Jigalur vs. Karnataka State financial Corporation, MFA No. 5784/2002 decided on 27/6/2005 in support of his contention that the limitation applicable to a petition filed under section 31 of the Act would be Article 137 the Limitation Act, 1963. Further, the learned Counsel has relied upon the decision of the Hon'ble Supreme Court in Gujarat State Financial Corporation vs. Natson Manufacturing Company Private Limited and others, (1979) 1 SCC 193 and M/s Everest Industrial Corporation and others vs. Gujarat State Financial Corporation, (1987) 3 SCC 597 as regards the proposition that the proceedings under section 31 of the Act would be akin to proceedings in execution of a decree which will be at a stage posterior the passing of a decree. Furthermore, the learned counsel has also relied upon the decision of the Hon'ble Supreme Court in Maharashtra State Financial Corporation vs. Jaycee Drugs and Pharmaceuticals Private Limited and others, (1991) 2 SCC 637 in support of the proposition that proceedings under section 31 of the Act would lie against even those persons who have executed deeds of personal guarantee without offering any immovable property as security. In addition, the learned counsel has relied upon a decision of this court in Karnataka State Industrial Investment And Development Corporation Ltd vs. S.K.K Kulkarni, (2009) AIR SC 1713 and others as regards the limited nature of enquiry under section 31 of the Act. 15. Though the learned counsel for the State Financial Corporation has relied upon multiple decisions on different questions, including the question as to the nature of enquiry under section 31 of the Act and the question of liability of a person as a guarantor who has executed the deed of guarantee without offering any immovable property, in view of the pleadings before the first court viz., the learned District Judge, the reasons assigned in the impugned order and the rival submissions before this court, the following questions would arise for consideration by this court in this appeal. a. Whether the impugned order calls for interference on the ground of limitation. b. Whether the appellants are entitled to claim discharge from their obligations on the ground that the Financial Corporation by its omissions has impaired the rights that the appellants could have had against respondent No.2 as envisaged under the provisions of section 139 of the Indian Contract Act, 1872. 16. The appellant Nos.1 and 2 have executed two Deeds of Guarantees dated 13.03.1985 and 27.03.1986 (Exhibit P1 and P7) insofar as the financial assistance extended to M/s Dunford Engineering Industries Limited. The appellant Nos.1, 3, 4 and 5 have executed separate Deeds of Guarantee dated 13.03.1985 and 01.09.1986 (Exhibit P2 and P5) insofar as the financial assistance extended to M/s CSI Fabrics Private Limited. After M/s Dunford Engineering Industries Limited and M/s CSI Fabrics Private Limited were amalgamated in terms of the order of BIFR, the appellant Nos. 1 and 3 have executed deeds of guarantee dated 09.04.1991 (Exhibit P3) as regards the additional loan extended to the respondent No.2, the amalgamated company. A perusal of the terms of Deeds of Guarantee, which are the appellant's Standard Form Contracts, indicate that though the terms of these agreements are general and omnibus, they are also categorical. 1 and 3 have executed deeds of guarantee dated 09.04.1991 (Exhibit P3) as regards the additional loan extended to the respondent No.2, the amalgamated company. A perusal of the terms of Deeds of Guarantee, which are the appellant's Standard Form Contracts, indicate that though the terms of these agreements are general and omnibus, they are also categorical. Each of the appellants, though under separate Deeds of Guarantee, have agreed and accepted inter alia that they shall on demand pay to the Financial Corporation whole of such principal sum, interest, commitment charges and/or other moneys, which shall be due to the Financial Corporation and they will indemnify and keep indemnified the Financial Corporation against all loss of principal sum, interest, commitment charges or other moneys secured under the security documents and all costs, charges and expenses whatsoever incurred by reason of any default on the part of the company or in filing any legal proceedings against the company and/or the guarantors for the recovery of the aforesaid sum. The further terms of the Deeds of Guarantee also indicate that documents have been executed by the appellants as Continuing Guarantees. 17. The Hon'ble Apex Court in the case of Syndicate Bank vs. Channaveerappa Beleri and other, (2006) 11 SCC 506 has considered the meaning of the phrase "on demand" and held that when a contract of guarantee is clear that the guarantor's liability would arise only when the demand is made, the right to sue to the creditor accrues only when a demand for payment is made by the creditor and is refused by the guarantors. When a demand is made requiring payment within a stipulated period, the breach occurs or the right to sue accrues, if payment is not made within the stipulated period. If while making the demand for payment, no period is stipulated within which the payment should be made, the breach occurs or the right to sue accrues when the demand is served on the guarantor. The Hon'ble Apex Court has concluded thus: "We have to however enter a caveat here. When the demand is made by the creditor on the guarantor, under a guarantee which requires a demand, as a condition precedent for the liability of the guarantor, such demand should be for payment of a sum which is legally due unrecoverable from the principal debtor. When the demand is made by the creditor on the guarantor, under a guarantee which requires a demand, as a condition precedent for the liability of the guarantor, such demand should be for payment of a sum which is legally due unrecoverable 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 demand validly made in time, the creditor can sue the guarantor within 3 years, even if the claim against the principal debtor gets subsequently time barred'". 18. It is undisputed that in this case, the Financial Corporation made a demand on the appellants vide its legal notice dated 29.12.2004 calling upon the appellants to pay the amounts due within a period of 10 days from the date of receipt of such legal notice adverting to the respective Deeds of Guarantee executed by each of the appellants. The legal notice was served on the appellants, but they did not respond to the notice. As such, the limitation will have to be reckoned from 29.12.2004. It's been held by the Hon'ble Supreme Court in Maharashtra State Financial Corporation vs. Ashok K Agarwal and Others, (2006) AIR SC 1584 that the limitation for filing the petition under section 31 of the Act would be 3 years as provided under article 137 of the Limitation Act, 1963. The Financial Corporation filed the petition on 17.8.2005 and as such, the petition filed by the Financial Corporation under Section 31(1)(aa) of the Act, which is filed within 3 years from this date cannot be said to be time-barred. 19. Further, it is nobody's case that the Financial Corporation's claim against the respondent No.2 (the principal borrower - debtor) was time barred, and in fact, it cannot be because admittedly the sale of the assets of the respondent No.2, pursuant to the orders of the Company Court, was on 23.3.2008 i.e., after the initiation of the present proceeding. 19. Further, it is nobody's case that the Financial Corporation's claim against the respondent No.2 (the principal borrower - debtor) was time barred, and in fact, it cannot be because admittedly the sale of the assets of the respondent No.2, pursuant to the orders of the Company Court, was on 23.3.2008 i.e., after the initiation of the present proceeding. Therefore, perforce it has to be concluded that the appellants' case that the petition by the Financial Corporation is time barred is wholly untenable. 20. As regards the question whether the appellants are entitled to claim discharge from their obligations on the ground that the Financial Corporation by its omissions has impaired the rights that the appellants could have had against respondent No.2 as envisaged under the provisions of Section 139 of the Indian Contract Act, 1872, will have to be examined in the context of the terms contained in the respective Deeds of Guarantee executed by the aforesaid appellants. A Coordinate bench of this court in T. Raju Setty vs. Bank of Baroda, (1992) AIR Karnataka 108, while examining the question whether it is open to contract outside the provisions of Chapter VIII, which relate to Guarantees, has held thus: "We are of the view that as the provisions contained in Chapter VII of the Act relating to Indemnity and Guarantee, they deal with one subject and they are to be read together. The liability of the surety as stated in general terms in section 128 of the Act is no doubt co-extensive with that of the principal debtor, but this liability is also subject to the terms of the contract; because section 128 of the Act itself specifically provides that the liability of a surety is co-extensive with that of the principal debtor unless it is otherwise provided by the contract. Thus the liability of the surety is subject to the terms of the contract as may be arrived at between the parties. The words "unless it is otherwise provided in the contract" occurring in section 128 of the Act will also govern the other provisions contained in Chapter VIII of the Act and enable the surety to give up the rights available to him under sections 133, 134, 135 139 and 141 of Act. The words "unless it is otherwise provided in the contract" occurring in section 128 of the Act will also govern the other provisions contained in Chapter VIII of the Act and enable the surety to give up the rights available to him under sections 133, 134, 135 139 and 141 of Act. It is a settled legal position of law that a legal right can be given up provided such giving up of a legal rights under any contract is not hit by section 23 of the Act. Section 133 of the Act makes it clear that any variance made in the contract between the principal debtor and the creditor without the consent of the surety, discharges the surety as to the transactions subsequent to variance. This consent of the surety can be obtained either at the time the contract is made between the principal debtor and the creditor to which the surety gives the guarantee for making any change or alteration in the contract to be made or not to claim any right or benefit under Chapter VIII of the Act. In other words, in the surety bond/guarantee-bond itself the surety can agree to waive his rights available to him under the various provisions contained in Chapter 8 of the act." 21. Further, a Division Bench of Bombay High Court in Mukesh Gupta vs. SICOM Limited, Mumbai, (2004) AIR Bombay 104, after a conspectus reference to the decisions on the question by the different High Courts, including the aforesaid decision of a Coordinate bench of this Court, has concluded that the rights conferred on a guarantor under Sections 133, 135 or 141 of the Act could be waived by specific agreement in a deed of guarantee, and such an agreement would amount to consent within the meaning of the provision of aforesaid clause of the Contract Act. 22. The terms of the Deed of Guarantee are categorical in that the rights of the Financial Corporation are protected unexceptionally against discharge of the appellants from their obligations. Therefore, it is obvious from the terms of the Deeds of Guarantee that the appellants have waived their right to claim discharge under section 139 of the Contract Act. 22. The terms of the Deed of Guarantee are categorical in that the rights of the Financial Corporation are protected unexceptionally against discharge of the appellants from their obligations. Therefore, it is obvious from the terms of the Deeds of Guarantee that the appellants have waived their right to claim discharge under section 139 of the Contract Act. Even otherwise, if the appellants are to succeed in the circumstances relied upon by them, it was incumbent upon them to place on record, by way of cogent evidence, that value of the assets of the respondent No.2 was indeed Rs. 7,55,18,000/- as of the year 1997. The appellants, except the testimony of RW.1 and the evidence of evaluators namely RWs.2 and 3, have not placed any material on record. Mere fact that this evaluation as stated by RWs 2 and 3 have been done at the instance of the Operating Agency, M/s. State Bank of India, appointed by BIFR cannot lend credence to such evaluation unless necessary material by way of cogent evidence is placed on record to corroborate such evaluation. 23. In the aforesaid circumstances, this Court is of the considered opinion that the impugned order passed by the learned District Judge does not call for interference either on the ground of limitation or on the ground of lack of willful omission on the part of the Financial Corporation. The questions framed are accordingly answered. The appeal is dismissed. No Costs. Pending applications stand dismissed.