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Deepak Bhandari v. Himachal Pradesh State Industrial Development Corporation Ltd.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 1019 of 2014)Decided 29 Jan 2014
Civil Appeal No. 1019 of 2014
Justice K.S. Radhakrishnan · Justice A.K. Sikri

Background

A company defaulted on loans guaranteed by one of its directors. The financial corporation recalled the loans and later took possession of and sold the secured assets under Section 29 of the State Financial Corporations Act. It then sued for the unpaid balance, and the guarantor argued that the suit was too late because time should run from the earlier recall notice.

Decision Breakdown

The Supreme Court dismissed the guarantor's appeal with costs and upheld the recovery decree. For this claim following a Section 29 asset sale, limitation for the remaining amount began when the assets were sold and the proceeds adjusted, because only then could the shortfall be identified. The independent indemnity or guarantee obligation did not disappear merely because the corporation had taken possession of the security. The Court distinguished an earlier decision about the limitation period for proceedings under Section 31, which had not decided this starting-point question. Counting time from the asset sale made the present suit timely.

Lesson Learnt

Sale of secured assets may leave an unpaid balance for which a guarantor remains responsible. The deadline for pursuing that balance depends on the claim and statutory recovery route; it cannot always be calculated simply from the first repayment demand.

Official source (sci.gov.in)View Judgment (PDF)

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