LexMAHARASHTRA STATE FINANCIAL CORPORATION versus ASHOK K. AGARWAL AND ORS .
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• - MAHARASHTRA STA TE FINANCIAL CORPORATION A Y. ASHOK K. AGARWAL AND ORS . MARCH 30, 2006 [ARUN KUMAR AND R.V. RAVEENDRAN,JJ.] B Limitation Act, 1963-Article 136 or 137-Applicability of. to application under Sections 31 and 32 of State Financial Corporations Act. 1951-Held: Article 137 is applicable and not Article 136-Article 136 is C applicable to execution of decree or order of civil court-There being no execution of decree or order of a civil court while dealing with an application under Sections 31 and 32, Courts below rightly held Article 136 inapplicable-State Financial Corporations Act, 1951-ss.31 and 32-Code of Civil Procedure, 1908-Section 2(2). D Appellant-Corporation had sanctioned loan to a Company. Respondents are Directors of this Company who stood S!!reties for the loan amount The company failed to repay the loan amount. In 1983, appellant filed an application under Sections 31and32 of the State Financial Corporations Act, 1951 against the borrower Company praying for sale of hypothecated properties. The properties were put to sale. But there was shortfall in amount realised from such sale and E so on 2.1.1992, appellant filed application under Section 3l(l)(aa) against respond<!nts for recovery of the amount due. ADJ dismissed the application on the ground of limitation, which was upheld by High Court. Hence the present appeal Appellant contended that application under Section 31 is in the nature of F execution proceedings, therefore, Article 136 applies which allows a period of twelve years for execution of decrees and orders and the application was thus within time. Dismissing the appeal, the Court HELD: 1. Section 31 of the State Financial Corporations Act, 1951 contains special provisions for enforcement of claims by State Financial Corporations. There is no decree or order of a civil court being executed while dealing with an application under Sections 31 and 32 of the Act. It is only on the basis of a legal G 617 I-I 618 SUPREME COURT REPORTS [20061 3 S.C.R. A fiction that the proceedings under Section 31 are treated as akin to execution proceedings. In fact, there is no decree to be executed nor there is any decree holder or judgment debtor and therefore in a strict sense it cannot be said to be a case of execution of a decree. Therefore, Article 136 of the Limitation Act has no application in the facts of the present case. [621-DI B Gujarat State Financial Corporation v. M/s. Natson Manufacturing Co. (Pi Ltd and Ors., [ 19791 1 SCR 372; 1\,f!s. Everest Industrial Corporation and Ors. v. Gujarat State Financial Curporatiun, [1987[ 3 SCC 597 and Magan/a/ etc. v. Jaiswal Industries Neemach and Ors., [ 19891 3 SCR 696, referred to. 2. Article 137 of the Limitation Act applies in the facts of the present case. C When Article 137 is applied, the application moved by the appellant-Corporation on 2.1.1992 for proceeding against the sureties i.e. the respondents, was clearly barred by time and the courts below were correct in holding so. [621-E, Fl 3. The amendment under Section 31 of the State Financial Corporation D Act which authorises the State Financial Corporations to take action under Section 31 of the Act for enforcing the liability against the sureties, was brought about in the year 1985 by introduction of sub-section (aa) in Section 31 (1) of the Act. Even after this amendment the appellant did not wake up to take any step against the sureties in the present case. Notice was issued to the sureties only on 7.12.1991 and the application for enforcement of liability against them was E filed on 2.1.1992. The application, therefore, was clearly barred by time and the decisions of the courts below cannot be faulted. [621-G, H; 622-A-B[ CIVIL APPELLATE JURISDICTION : Civil Appeal No. 372711999. From the Judgment and Order dated 22.7.1998 High Court of Bombay F at Goa in F.A. No. 80/1994. Santosh Paul, Rajeev Sharma, A.K. Rao and M.J. Paul for the Appellant. Ashok Grover, (A.C.) for the Respondents. G The Judgment of the Court was delivered by ARUN KliMAR, J. The appellant Maharashtra State Financial Corporation (hereinafter referred to as 'the Corporation') had sanctioned a loan of Rupees Five lakhs in favour of Mis. Crystal Marketing Private Limited on 14th November, 1978. The respondents in the present appeal were Directors H of the said borrower and stood sureties for the loan. The amounts under the - • MAHARASHTRA S
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