Case Note & Summary
The dispute arose from a recovery suit filed by the Himachal Pradesh State Industrial Development Corporation Limited against a company and its guarantors, including the appellant, for defaulting on loan repayments. The Corporation issued a recall notice in 1990, and after taking possession of the mortgaged assets in 1992, sold them in 1994. The Corporation filed a suit for recovery in 1994, which the defendants claimed was time-barred, arguing that the limitation period began with the recall notice. The Corporation contended that the limitation should start from the date of sale of the assets, as the amount due could only be determined then. The High Court ruled in favor of the Corporation, leading to the appeal. The Supreme Court analyzed previous judgments and clarified that the limitation period for recovery suits under the State Financial Corporations Act begins after the sale of assets, not from the recall notice. The court upheld the High Court's decision, dismissing the appeal and confirming that the suit was filed within the limitation period. The court emphasized the independence of the indemnity contract and the necessity of ascertaining the balance due post-sale for determining the limitation period.
Headnote
A) Limitation Law - Starting Point of Limitation - Limitation for filing recovery suit - State Financial Corporations Act, 1951, Section 29 - The court held that the limitation period for recovery of dues starts only after the sale of assets, as the balance amount due can only be ascertained post-sale. Therefore, the suit filed was within the limitation period. (Paras 21-24)
Issue of Consideration
Whether the limitation for filing the suit for recovery starts from the date of recall notice or from the date of sale of assets.
Final Decision
The Supreme Court upheld the High Court's judgment, dismissing the appeal and confirming that the suit was filed within the limitation period, as the limitation starts from the date of sale of assets.
Law Points
- Limitation period
- State Financial Corporations Act
- recovery of dues
- indemnity contract
- starting point of limitation
