JUDGMENT : This appeal under Section 32(9) of the State Financial Corporation Act, 1951 (for short, 'the Act') filed against the judgment and order dated 26.09.2014 passed in Civil Miscellaneous No.23/2009 by the Principal District & Sessions Judge at Raichur determining the liability of the appellants towards the respondent No.1 -Karnataka State Industrial Investment & Infrastructure Development Corporation Limited (for short, 'Corporation') under Section 31(1)(a)(aa) and Section 32 of the Act for a sum of Rs.5,24,21,409/-and Rs.1,10,48,116/-and to direct the respondents to pay the said sum together with interest at 20% per annum and 20.5% per annum, respectively. 2. For the sake of convenience and to avoid overlapping, the parties are referred to as per their rank before the trial court. 3. The facts leading to filing of the present appeal briefly stated are that, the respondent No.1, a private limited company represented by its Managing Director, respondent No.2 had approached the petitioner -Corporation for financial assistance by way of term loan of Rs.101 lakh for the purpose of establishing unit for cutting, polishing of various types granites blocks and to manufacture granites slabs and tiles. The petitioner -Corporation advanced the said loan amount to the respondent Nos.1 to 3 in terms of letter of sanction dated 24.05.1996. The respondents had executed the following documents: Sl. No Nature of Documents Dated 1 Mortgage deed executed by respondent Nos.2 and 3 20.10.1997 2 Loan agreement executed by respondent Nos.2 and 3 20.10.1997 3 Hypothecation deed executed by respondent Nos.2 and 3 20.10.1997 4 Irrevocable personal guarantee executed by respondent Nos.2 and 3 20.10.1997 5 Surety agreement by respondent Nos.2 and 4 20.10.1997 4. After execution of the aforesaid documents, the petitioner -Corporation had released an amount of Rs.1,00,19,000/-as against Rs.101 lakh. The respondent No.1 thereafter again approached the petitioner -Corporation for further financial assistance in the form of Bridge loan of Rs.25 lakh and the same was sanctioned on the terms and conditions mentioned in letter of sanction dated 20.07.2000. Respondent Nos.2 and 3 had executed the following documents. Sl. The respondent No.1 thereafter again approached the petitioner -Corporation for further financial assistance in the form of Bridge loan of Rs.25 lakh and the same was sanctioned on the terms and conditions mentioned in letter of sanction dated 20.07.2000. Respondent Nos.2 and 3 had executed the following documents. Sl. No Nature of Documents Dated 1 Loan agreement executed by respondent Nos.2 and 3 28.08.2000 2 Hypothecation deed executed by respondent Nos.2 and 3 28.08.2000 3 Irrevocable personal guarantee executed by respondent Nos.2 and 3 28.08.2000 4 Agreement offering security in the form free hold rights over immovable property by respondent No.2 and 4 28.08.2000 5 Agreement offering security in the form free hold rights over immovable property by respondent No.2 28.08.2000 5. On execution of aforesaid necessary documents, the petitioner -Corporation had released Bridge loan of Rs.14,76,000/-on 25.10.2000 and Rs.10,00,000/-on 31.03.2001. The respondent Nos.1 to 4 have failed and neglected to repay the installments resulting in the petitioner -Corporation issuing a demand notice to them. Since the demand was not met, the petitioner -Corporation in exercise of its power under Section 29 of the Act taken over the mortgaged assets of the respondent No.1. The petitioner Corporation made efforts to sell the assets and issued several advertisements from 01.08.2005 to 18.03.2009. The petitioner -Corporation auctioned the property of the respondent No.1 on different dates for an aggregate sum of Rs.30 lakh which was deposited on 26.11.2010. Since the appellant was liable to pay term loan of Rs.4,13,73,293/-and Bridge loan of Rs.1,10,48,116/-, in all a sum of Rs.5,24,21,409/-as on 05.12.2008 and the respondents were liable to pay future interest at 20% and 20.5%, respectively compounded quarterly rests, the petitioner -Corporation invoked the personal guarantee executed by respondent Nos.2 to 4 by issuing notice dated 26.02.2009 and in view of non-compliance with the demand made in the said notice, the petitioner -Corporation proceeded to invoke the personal guarantee and collateral securities provided by respondent Nos.2 to 4 as the respondents were jointly and severally liable to pay the aforesaid sum together with future interest. In pursuance thereof, a petition under Section 31(1)(a)(aa) and Section 32 of the Act seeking determination of liability of the respondents at Rs.5,24,21,409/-and future interest thereon was filed. 6. The respondent Nos.1 to 3 appeared through their counsel. Respondent No.4 remained absent and was placed ex parte. In pursuance thereof, a petition under Section 31(1)(a)(aa) and Section 32 of the Act seeking determination of liability of the respondents at Rs.5,24,21,409/-and future interest thereon was filed. 6. The respondent Nos.1 to 3 appeared through their counsel. Respondent No.4 remained absent and was placed ex parte. Respondent Nos.1 to 3 filed their written statement contending inter alia that the petition was misconceived and was not maintainable in law as the same was barred by law of limitation under Article 137 of the Limitation Act being beyond the period of 3 yeas from the date of actual cause of action. However, they have admitted the transaction and execution of the loan documents, guarantee and personal guarantee agreements. They, however denied the liability to pay the overdue interest and penal interest. It is contended that the respondents could not pay the loan in view of the non-availability of working capital from the Bank and lack of power supply required for level of production due to which they suffered heavy loss. The cause of action in the matter arouse in the year 2005 when the petitioner -Corporation initiated action under Section 29 of the Act. Therefore, the petition had to be filed within 3 years thereof which according to the respondents is clearly barred by the law of limitation. 7. On behalf of the petitioner -Corporation, its Assistant General Manager is examined as P.W.1 and got marked documents at Exs.P.1 to 24. On the other hand, respondent No.3 got himself examined as R.W.1 and got marked two documents at Exs.R.1 and 2. 8. The trial court based on rival pleadings, framed the following points for its consideration. 1. Whether petitioner proves the petition claim against respondents? 2. Whether petition claim is barred by limitation as contended by respondents? 3. What order?. 9. Inasmuch as the respondents had admitted the loan transaction, disbursement of the loan amount, its default, execution of loan documents and guarantee documents and also the statement of account furnished and issuance of notices, upon scrutiny of the evidence made available, the trial court determined the liability as claimed by the Corporation and held that the respondents were due and liable to pay the same. 10. As regards the issue of limitation, the trial court applying the law laid down in: (a) Gulhati & Anr. 10. As regards the issue of limitation, the trial court applying the law laid down in: (a) Gulhati & Anr. vs. Karnataka State Financial Corporation and Ors., reported in ILR 2007 KAR 44 (b) Karnataka State Financial Corporation vs. Smt. Jaya Menon & Anr., reported AIR 2004 KAR 370 (c) Syndicate Bank vs. Channaveerappa Beleri & Ors., reported in AIR 2006 SC 1874 , into the facts and circumstances of the case wherein it has been held that the right to apply accrues only after service of notice to the surety and that the guarantor's liability would depend upon the terms of a contract determined the liability and respondent Nos.1 to 4 jointly and severally liable to pay the amount claimed by the petitioner -Corporation by its judgment and award dated 26.09.2014. Aggrieved by the aforesaid judgment, the respondent Nos.1 and 2 are before this court. 11. The learned counsel for the appellants-respondent Nos.1 and 2 submitted that the court below grossly erred in not considering the factual aspect of the matter in that the petition under Section 31(1)(a)(aa) and Section 32 of the Act was barred by limitation in view of the initiation of the proceedings under Section 29 of the Act even as in the year 2005. It is further contended that the provisions of Article 137 of the Limitation Act applies when no period of limitation is provided elsewhere and that even according to the petitioner -Corporation the respondents defaulted in the year 2005 and that the period of limitation of 03 years ought to have been construed to have commenced when the proceedings under Section 29 of the Act had been initiated. As such, the filing of petition under Section 31(1)(a)(aa) and Section 32 of the Act in the year 2009 was beyond the period of limitation. It is further contended that the said petition under Section 31(1)(a)(aa) and Section 32 of the Act was not maintainable since even during the pendency of the said petition the petitioner -Corporation had not recovered the value of the mortgaged property furnished by the respondent No.1 and that the relief sought are beyond the purview of Section 31 of the Act. 12. 12. On the other hand, learned counsel for the petitioner -Corporation submitted that the petition filed before the trial court was well within limitation reckoned from the date of issuing of demand notice invoking the personal guarantee and collateral security offered by respondent Nos.1 to 4. He relied upon the judgment of the Apex Court in the case of Deepak Bhandari vs. Himachal Pradesh State Industrial Development Corporation Limited, reported in (2015) 5 SCC 518 . 13. Heard the learned counsel for the appellants and the learned counsel for the contesting respondent No.1 -Corporation and perused the records. 14. In view of categorical admissions by the respondents with regard to availing of term loan and Bridge loan, execution of loan documents, personal guarantee, security documents, statement of account and issuance of notices the only question in this appeal, requires consideration is with regard to period of limitation in filing the petition under Section 31(1)(a)(aa) and Section 32 of the Act. 15. The Apex Court in the case of Deepak Bhandari (supra) at paras-28 and 29 held as under: "Merely because SFC acted under Section 29 of the State Financial Corporation Act did not mean that the contract of indemnity came to an end. Section 29 merely enabled SFC to take possession and sell the assets for recovery of the dues under the main contract. It may be that on SFC taking action under Section 29 and on their taking possession they become deemed owners. The mortgage may have come to an end, but the contract of indemnity, which was an independent contract, did not. The right to claim for the balance arose under the contract of indemnity, only when the sale proceeds were found to be insufficient. The right to sue on the contract of indemnity arose after the assets were sold. The present case would fall under Article 55 of the Limitation Act, 1963 which corresponds to old Articles 115 and 116 of the old Limitation Act, 1908. The right to sue on a contract of indemnity/guarantee would arise when the contract is broken. Therefore, the period of limitation is to be counted from the date when the assets of the Company were sold and not when the recall notice was given." 16. In the instant case, admittedly the petitioner -Corporation invoked its power under Section 29 of the Act and issued advertisements from 01.08.2005 to 18.03.2009. Therefore, the period of limitation is to be counted from the date when the assets of the Company were sold and not when the recall notice was given." 16. In the instant case, admittedly the petitioner -Corporation invoked its power under Section 29 of the Act and issued advertisements from 01.08.2005 to 18.03.2009. Possession of the assets of the respondents were taken on 15.03.2005 and same were auctioned same for an aggregate of sum of Rs.30 lakh which were recovered over a period of time. Even after adjustment of Rs.30 lakh realized from the sale of mortgaged assest under Section 29 of the Act. Respondent No.1 was due in a sum of Rs.5,24,21,409/-as on 15.12.2008 with future interest thereon to the petitioner -Corporation, and in view of the default committed by the respondents, the Corporation issued notice to the respondent Nos.2 to 4 on 26.02.2009 invoking the personal guarantee and collateral security provided by respondent Nos.2 to 4, calling upon them to jointly and severally pay the aforesaid sum. As the respondents had not complied the demand made therein, the petition under Section 31(1)(a)(aa) and Section 32 of the Act was filed on 06.11.2009. Thus, from the date of issuance of said notice, the filing of the petition is well within the limitation. 17. It is also necessary to note that it is not the case of the respondents that the invocation of the guarantee was against the terms and conditions. Admittedly, the personal guarantee and the security offered by the respondents is a continuing guarantee. The contract of gurantee and surety was invoked for the first time under the aforesaid notice dated 26.02.2009. Therefore, the cause of action to file the petition under Section 31(1)(a)(aa) and Section 32 of the Act arose when the respondent Nos.1 to 4 remained defiant even after receipt of aforesaid notice dated 26.02.2009. As noted above, the petition was filed on 06.11.2009 which is well within period of 3 years from the date of accrual of cause of action for the purpose of determination of the liability of respondent Nos.2 to 4 in terms of the provisions of the Act. 18. As noted above, the petition was filed on 06.11.2009 which is well within period of 3 years from the date of accrual of cause of action for the purpose of determination of the liability of respondent Nos.2 to 4 in terms of the provisions of the Act. 18. In view of the law laid down by the Apex Court and under the facts and circumstances of the case, we are of the considered view that the trial court has evaluated the facts and circumstances of the matter in right perspective and has arrived at just conclusion holding that the petition filed by the petitioner Corporation was well within time. 19. It is made clear that any amount received/recovered by the Corporation in exercise of its power under Section 29 of the Act needs to be adjusted against the total outstanding. Further it is made clear that the impugned judgment and order is only determination of liability of respondent Nos.2 to 4 towards the Corporation. In that view of the matter, no grounds are made out by the respondents warranting interference in the matter. Therefore, we hold that the appeal is devoid of merits and same is therefore liable to dismissed. Accordingly, it is dismissed.