SMT. K. SWARNALATHA v. KARNATAKA STATE INDUSTRIAL INVESTMENT AND DEVELOPM

Rs.2,17,24,670.06 (Rupees Two Crores Seventeen Lakhs Twenty Four Thousand Six Hundred Seventy and Paise Six Only) due as on 20-10-2000 towards the Term loan of Rs.118.00 lakhs with future interest at 23% p.a. from 21-10-2000 till the date of payment, on the footing of compound interest at quarterly rests basis.

(b) To declare and direct that, the Respondents 2 to 6 are jointly, severally and personally liable to pay a sum of Rs.41,31,781.86 (Rupees forty One Lakhs Thirty One Thousand Seven Hundred Eighty One and Paise Eighty Six Only) due as on 20-10-2000 towards the additional term loan of Rs.22.00 lakhs with future interest at 21.5% p.a. from 21-10-2000 till the date of payment on the footing of compound interest at quarterly rests basis.

4. On service of notice, sixth respondent/petitioner appeared, filed his statement of objections, denied all the averments made in the

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petition. During the pendency of proceedings petitioner filed an application for amendment of petition seeking to add prayer column with the leave of court. Prayer sought for by the proposed amendment was to sell the property, which is mortgaged by sixth respondent as a collateral security towards the loan availed by principal borrower i.e., first respondent. Said application for amendment was allowed by trial Court and same was set aside by this Court in W.P.No.5578/2012 by Order dated 03.04.2013, Annexure-E, against which order Special Leave Petition filed by KSIIDC before the Apex Court, came to be dismissed vide order dated 30.09.2013, Annexure-F.

5. Immediately thereafter application in question under Order VII Rule 11(d) CPC came to be filed by sixth respondent seeking for rejection of petition or to dismiss the petition filed by KSIIDC as not maintainable contending interalia that reliefs claimed by petitioner invoking Section 31(1)(aa) cannot be granted and it is outside the purview of said statutory

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provision. It was also contended that reliefs claimed in the petition from the reading of averments made in the petition would indicate that it is barred by law. Hence, Misc. Petition was sought to be dismissed on the ground that it is barred by law.

6. Trial Court after considering the objections filed to said petition by KSIIDC rejected the same by impugned order by arriving at a conclusion that rejection of amendment application would not by itself be a ground to reject the petition at threshold and though sixth respondent had contended that petition filed by KSIIDC is not maintainable, no valid grounds were forthcoming as to circumstances under which the petition being not maintainable. It has also been held by trial Court that respondents' counsel has not explained as to how the petition is barred by law. As such, for reasons indicated in the impugned order application in question came to be dismissed.

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7. It is the contention of Smt.Hemalatha Mahishi, learned counsel appearing for petitioner that the nature of reliefs claimed in the Misc. Petition filed by KSIIDC was not maintainable under Section 31(1)(aa) of State Financial Corporation Act and KSIIDC cannot seek relief of declaration under State Financial Corporation Act and as such, any exercise undertaken by trial Court to adjudicate the petition would be an exercise in futility and would not serve the purpose and as such, at the threshold petition is liable to be rejected by invoking Order VII Rule 11(d) CPC. In support of her submission she has relied upon the following judgments:

1. (1979) I SCC 193 :- GUJARAT STATE FINANCIAL CORPORATION vs. NATSON

MANUFACTURING CO. PVT. LTD. AND OTHERS

2. AIR 1989 SC 2113 :- MAGANLAL vs. M/S.

JAISWAL INDUSTRIS, NEEMACH AND OTHERS

3. AIR 2009 SC 1713 :- KARNATAKA STATE INDUSTRIAL INVESTMENT & DEVELOPMENT CORPORATION LTD. vs. S.K.K.KULKARNI & ORS.

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4. AIR 2006 SC 1534 :- MAHARASHTRA STATE FINANCIAL CORPORATION vs. ASHOK K.AGARWAL & ORS.

8. Having heard the learned counsel appearing for petitioner and on perusal of impugned order as well as pleadings and application in question as also objections filed thereto, this Court is of the considered view that contention raised by learned counsel for petitioner does not merit acceptance and it is liable to be rejected for reasons indicated hereinbelow. For the Courts to invoke Order VII Rule 11(d) averments made in the petition alone requires to be considered and any amount of plea advanced by defendant/respondent in written statement or objections would be outside the purview of such consideration. Plaint cannot be rejected on the basis of allegations made by defendant either in the written statement or objections filed to the petition or on the basis of averments made in the affidavit supporting the application seeking for rejection of plaint. This principle is very well settled. In order to examine whether plaint

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is barred by any law as contemplated under Order VII Rule 11(d) CPC, averments made in the plaint alone has to be seen and they are assumed to be true. For this purpose the judgment in the case of RAMESH B. DESAI VS. BIPIN VADILAL MEHTA reported in 2006 (5) SCC 638 and specifically paragraph 16 can be looked up. The language of Order VII Rule 11(d) CPC is quite clear and unambiguous. Plaint can be rejected on issue of same being time barred or limitation where the suit or petition appears from the statement of plaint to be barred by any law. "Law" within the meaning of Order VII Rule 11(d) CPC would include law of limitation. Although it is the substance and not merely the form that has to be looked into the pleading has to be construed as it stands without any addition or subtraction.

9. In the instant case, sixth respondent who has been contesting the petition filed an application under Order VII Rule 11(d) for rejection of petition contending that relief claimed by KSIIDC under Section

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31(1)(aa) cannot be granted by the Court below and same is impermissible and as such, petition is liable to be rejected.

10. A bare reading of Section 31(1)(aa) would clearly indicate that it is a special provision available to the financial corporations to enforce the liability of a surety. As to whether there is liability on the part of surety, and if so, whether such claim can be enforced by the KSIIDC within the prescribed period, is a question of fact will have to be gone into by the jurisdictional Civil Court and the issue of limitation cannot be decided as an abstract principle of law, particularly in the background of facts obtained in the present case whereunder said financial corporation/ KSIIDC to enforce its claim against principal borrower has issued notice in the year 2001 and immediately thereafter has invoked Section 31(1)(aa) to enforce the claim against the surety. Thus, prima facie at this stage, it cannot be held that the claim sought to be enforced by KSIIDC is barred by limitation.

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11. Though averments made in the affidavit supporting application is as vague, vagueness could be Smt.Hemalatha Mahishi, learned counsel appearing for petitioner has contended that on account of application for amendment filed by financial corporation to include the prayer for permitting the petitioner corporation/ KSIIDC to sell the property mortgaged, having been rejected, would be a good ground to arrive at a conclusion that the claim of financial corporation itself is barred, would though at first blush looks attractive does not appear to be so. The application for amendment of including additional prayer sought for by the petitioner / KSIIDC namely to incorporate or to add prayer to pass an order permitting it to sell the mortgaged property, having been allowed by the trial Court, came to be set aside by this Court on the ground that on account of proviso to Rule 17 of Order VI CPC placing an embargo for filing such an application after the commencement of trail and there being no due diligence exhibited by KSIIDC and said application

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having been filed belatedly. Rejection of said application for amendment does not indicate that prayer sought for in the petition by financial corporation to enforce its liability, has stood wiped out. In that view of the matter, contention raised by Smt.Hemalatha Mahishi, learned counsel appearing for petitioner cannot be accepted.

12. In the case of MAHARASHTRA STATE FINANCIAL CORPORATION vs. ASHOK K. AGARWAL & ORS. reported in AIR 2006 SC 1534 relied upon by learned counsel for petitioner does not come to her rescue, inasmuch as, in the facts obtained in the said case it was noticed by Apex Court that corporation had moved an application to proceed against sureties in the year 1992 and notice demanding repayment of loan amount was issued against borrower on 08.03.1983 and application under Section 31 & 32 of State Financial Corporation Act, 1951, had also been filed against the borrower on 25.10.1983 and as such, liability of surety had crystalised in the year 1983 itself

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and as such, enforcement of claim against sureties in the year 1992 was held to be time barred. However, facts obtained in the present case would clearly indicate that notice to principal borrower was undisputedly issued in the year 2001 and the claim against surety was sought to be enforced by petitioner Corporation immediately thereafter i.e., in the year 2001 itself by filing present petition on 30.05.2001. Hence, at this juncture, it cannot be held that claim of petitioner is barred by law of limitation. In that view of the matter, this Court does not find any good ground to interfere with the well reasoned order passed by trial Court.

13. For these myriad reasons indicated hereinabove, this Court is of the considered view that petition lacks merit. Accordingly, writ petition stands dismissed.

Sd/-

JUDGE

DR

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