ASHIM KUMAR BANERJEE, J. - (1.) NICKON Electronic Devices Private Limited obtained financial assistance from West Bengal Industrial Development Corporation to the extent of Rs.55 lakhs that they failed to repay. The appellants and or their predecessors were in the helm of the affairs of the company. They also guaranteed the loan. The Corporation issued a notice under Section 31(1)(aa) read with Section 30 of the State financial Corporation Act 1951 (hereinafter referred to as the said Act of 1951) inter-alia demanding repayment of the loan. The notice as appears from page 137-139 would depict, Corporation demanded the sum not only from the company as the borrower but also the guarantors, it was a composite notice. The notice dated September 29, 1995 would require repayment within 15 days from the date of the said notice. Needless to say, the borrower did not pay the sum, so were the guarantors. On February 14, 1996 the Corporation took physical possession of the assets mortgaged by the borrower. The Corporation published a sale notice on November 5, 2012 and subsequently on August 7, 2003 and sold the entire assets at and for a sum of Rs.12 lakhs only. The sale was concluded on March 15, 2004. After appropriation of the said proceeds, the Corporation issued a notice of demand upon the guarantors on June 7, 2005 and filed a proceeding under Section 31(1)(aa) of the said Act of 1951 on September 7, 2005 inter-alia demanding the principal sum of Rs.36.03 lakhs and interest to the extent of Rs.7.01 crores approximately. The learned Single Judge dismissed the said application on January 22, 2008 holding it hopelessly barred by the laws of limitation. The Division Bench set aside the said decision vide judgment and order dated March 25, 2009 holding the claim not barred. The guarantors filed an application for review that the Division Bench dismissed on July 27, 2009. The Apex Court dismissed the Special Leave Petition at their instance on November 23, 2009. The Corporation filed application for sale of assets belonging to the guarantors wherein the guarantors resisted with the plea, the claim was barred by limitation. His Lordship held, the issue was res-judicata. His Lordship rejected the contentions and allowed the application. His Lordship directed the Joint Receivers to sell the properties.
(2.) APPEARING for the appellants, Mr. Samit Talukdar learned senior Counsel would contend, the appeal would involve interpretation of two earlier judgments being the initial judgment and the order of the learned Single Judge dismissing the application on the ground of limitation and the judgment of reversal by the Division Bench. He would contend, learned Single Judge held, it was barred by laws of limitation on the strength of the notice issued on September 29, 1995. The Division Bench held, the date of the notice was of no consequence for the purpose of computing the period of limitation. It would depend upon the date of default. According to Mr. Talukdar, once the notice was given demanding the money within 15 days, the period of limitation as per the Division Bench should commence from date of default being the date when 15 days period expired and the guarantors did not pay. Mr. Talukdar would rely upon two Apex Court decisions in the case of Maharashtra State Financial Corporation Vs. Ashok K. Agarwal and others reported in 2006 Volume-IX Supreme Court Cases page- 617 and Karnataka State Financial Corporation Vs. N. Narasimahaiah and others reported in 2008 Volume-V Supreme Court Cases page- 176. Relying on the said two decisions Mr. Talukdar would contend, the provisions of the said Act of 1951 were complete code by itself hence, Corporation would have to follow the provisions of the said statute that would however, not take away the rights of the parties under the common law. According to him, even if the initial notice upon the guarantors was superfluous, the borrower's default in making payment would automatically start the ball rolling and the liability of the guarantor would start from the date of default. Considering such analogy, the application would be barred by laws of limitation. Per contra, Mr. Rudra Sankar learned counsel appearing for the Corporation submitted a written argument wherein he would contend, the liability of the guarantor would only arise when the Corporation would fail to realize the dues from the borrower. The Corporation issued notice under Section 29 upon the borrower, took possession of the assets and sold the same. Even after appropriation of the sale proceeds the Corporation Could be not in a position to recover the dues in full, hence, the liability of the guarantor would start on such date. Unless and until the asset was not taken possession of and sold, the guarantors would have no liability.
(3.) WE have carefully perused the judgment and order passed by the learned Single Judge on both the occasions as also the decision of the Division Bench on the issue. We have also considered the relevant provisions of law as appears from the statute and the decisions of the Apex Court in Mahashtra and Karnataka case. We fully agree with Mr. Talukdar, the said Act of 1951 was a complete code by itself. It was a special statute giving power to the financial institutions to enter into possession of the assets of the borrower and sell the assets to realize their dues without waiting for a decision on the issue from the Court of law. Section 29 would permit the Corporation to enter into possession of the mortgaged assets without any reference to Court and sell the same for recovery for their dues. Section 29 would provide, in case of default in making repayment of the financial support that they got from the Corporation, the Corporation would have right to take over the management and/or possession and would have right to transfer or sell to realize their dues. Such power under sub-section 1 would give legal sanctity to such transfer as contemplated, in terms of sub-section 2. Sub- section 4 would denote, the Corporation would be entitled to retain the cost, charges and expenses as well as for appropriation of the proceeds towards their dues. Under Section 30 the Corporation have the right to recall any financial support and call for repayment of the dues by notice served upon the industrial concern. In case of failure to comply with such direction, the Corporation would be entitled the take steps under Section 31 for recovery of their dues. They could approach the appropriate Court for an order of sale of the property and for enforcing the liability and other interim protections.;