Dr. G.R. Rajagopal @ Dr. Rajagopal and Dr. Rekha vs Karnataka State Finance Corporation

Mohan Shantanagoudar, J.—The order passed by the II Additional District Judge, Mysore, In Misc. Petition No. 36/2005 allowing the application filed by the respondent herein under Sections 31(1)(aa) and 32 of State Finance Corporation Act (for short hereinafter referred to as the ''Act'') is called in question.

The records reveal that appellant No. 1 borrowed certain sums of money from the first respondent-Corporation. Appellant No. 2 was the guarantor for the loan transaction. She stood as a personal guarantor for the loan of the first appellant. Since the amounts are not repaid by the appellants herein, the respondent herein filed petition under Sections 31(1)(aa) and 32 of the Act seeking relief of direction by way of enforcement of liability of the appellant No. 2 as surety to pay the amount due to the Corporation and for such other reliefs. Practically, relief sought for is only against appellant No. 2. The said application filed by respondent herein is allowed holding that the respondent herein is entitled to enforce the liability of appellant No. 2 herein as surety to the loan borrowed by the first appellant. Consequential reliefs are also granted in favour of the respondent against appellant No. 2. The same is impugned in this appeal.

Sri Manmohan, learned counsel appearing for respondents submits that the claim of the respondent-Corporation is barred by time, inasmuch as the last notice issued to the first appellant by the Corporation is dated 14.2.2000 but Misc. Petition No. 36/2005 is filed under Sections 31(1)(aa) and 32 of the Act for enforcement of the liability in the year 2005; since the said petition is filed after three years, the same is barred by limitation; that the Assistant General Manager of the respondent-Corporation had no authority to file petition under Sections 31(1)(aa) and 32 of the Act and consequently, the petition itself was not maintainable.

Aforementioned contentions are not raised before the Court below. Both the contentions are questions of law and fact. Had the appellants raised these points before the Court below, the respondent would have definitely adduced evidence or produced material for opposing the same on facts. The question as to whether appellant No. 1 had acknowledged the debts or the question as to whether notice dated 14.2.2000 is the final notice or not, are all pure questions of fact, which cannot be allowed to be raised for the first time before the appellate Court. So also, the second point raised by the appellants that Assistant General Manager of the respondent-Corporation did not have authority to approach the Court below is a pure question of fact. The Corporation did not have chance to rebut the said question before the Court below, inasmuch as such a contention was not raised before the original Court.

Be that as it may, the records prima facie reveal that the prayer sought for by the respondent-Corporation before the Court below is only against appellant No. 2, the guarantor. The respondent-Corporation is stated to have served notice on the appellants on 1.1.2004 invoking the personal guarantee of the second appellant. Thereafter application is filed before District Judge. In view of the same, the claim cannot be said to be barred by time. Ever; otherwise, as has been held by this Court in the case of Gulhati and Another Vs. Karnataka State Financial Corporation and Others, , the scope of enquiry under Sections 31 and 32 of the Act is very limited and it is in the nature of an application for attachment of property before the judgment. The application u/s 31 of the Act cannot be treated as a plaint and it would not be barred by limitation provided under Article 137 of the Limitation Act. The scope of the investigation is restricted to the claim of the financial corporation, which has to be established in order to entitle it for any of the reliefs as mentioned in sub-section (1) of Section 31 of the Act.

Even otherwise, we do not find any ground to interfere with the impugned order on merits as appellant No. 2 surety has not shown any cause on or before the date specified in the notice issued to her As per sub-section (4A) of Section 32 of the Act. If no cause is shown on or before the date specified in the notice issued under sub-section (1A) of Section 32 of the Act, the District Judge shall forthwith order the enforcement of liability of the surety. Since the surety did not show any cause before the date specified in the notice issued by the Corporation under sub-section (1A) of Section 32 of the Act, the District Judge has rightly ordered for enforcement of liability of the surety.

Hence, appeal fails and accordingly, the same stands dismissed.