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2014 (1) TMI 1945 - HC - Indian LawsMaintainability of suit - time limitation - decree for suit for recovery of legitimate dues against the respondents-defendants No. 1, 2 and 3 jointly and severally - HELD THAT:- Admittedly, the appellant-bank preferred a suit before the learned trial court with the prayer for decreeing the suit for recovery of its legitimate dues against the respondents-defendants No. 1, 2 and 3 jointly and severally. The learned trial court reached to the conclusion that all the documents were executed by the defendants in favour of the Bank and accordingly decreed the suit against the respondents-defendants No. 1 and 2, however, learned trial court dismissed the suit as against the respondent-defendant No. 3 on the ground that it is instituted against him beyond the period of limitation. So far as the main contention raised by the counsel for appellant-bank regarding the suit being within limitation in respect of defendant No. 3 in the light of the provisions Section 18 of the Limitation Act on the basis of acknowledgment letter executed by the defendants No. 1 and 2 confirming the balance due to acknowledging the liability, is concerned, it is to be noticed here that the defendant No. 3 executed guarantee agreement (Ex. 23) which bears the signature of the Guarantor from "A to B". A perusal of Section 18 of the Limitation Act, makes it clear that where before expiration of the limitation prescribed in Limitation Act for filing a suit, an acknowledgment of the liability is accepted by the borrower or Guarantor or any person authorized by the Guarantor, then such acknowledgment made, shall also be applicable on the person on whose behalf it is given and fresh period of limitation shall be calculated from the date and time when the acknowledgment was signed and such acknowledgment can be signed by the borrower or Guarantor either personally or by the agent duly authorized in this behalf - a conjoint reading of the provisions of Section 18 of the Limitation Act and the condition No. 9 of the Guarantee Agreement, makes the position clear that the acknowledgment of the liability made by the principal borrowers i.e. Respondents No. 1 and 2 should be considered as an acknowledgment of the liability on behalf of the Guarantor i.e. the respondent-defendant No. 3 also, which shall be binding on him and would provide fresh period of limitation for filing suit against the defendant No. 3 either from the time it was signed by the principal borrower. The present case is also relating the recovery of the loan amount by the sale of immovable property of defendant No. 3 which was mortgaged with the Bank to secure the loan amount - it is settled law that the liability of the principal borrower and the guarantor in respect of recovery of the loan amount is coextensive and not distinct and therefore, in the opinion of this Court, the acknowledgment for the purpose of the liability vide Ex. 21 made by the principal debtors/borrowers is also binding on the respondent-defendant No. 3 Guarantor and since the suit was filed claiming relief for recovery of the loan amount, out of the sale proceeds of the immovable property of the defendant No. 3, the suit is clearly covered under the provisions of Article 62 of the Limitation Act prescribing limitation of twelve years and accordingly, it was filed, which can be treated within the limitation. The judgment and decree impugned passed by the trial court dated 16.8.2003 dismissing the suit as against the defendant-respondent No. 3 as barred by limitation by deciding the issue No. 2 and 3 against the appellant-bank and in favour of the respondent-defendant No. 3 is therefore, liable to be set aside and the appeal filed by the appellant-bank deserves to be allowed against the defendant No. 3 - Appeal allowed.
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