THE HON'BLE MR JUSTICE L.NARASIMHA REDDY Writ Petition No.22022 of 2002 ORDER: The petitioner intended to establish a Pharmaceutical Industry and for that purpose, she approached the A.P. State Financial Corporation, respondent herein. Term loan of Rs.6,55,200/- and seed capital loan of Rs.1,31,000/- were sanctioned. Out of this, Rs.5,63,490/- and Rs.1,534/- were released to the petitioner in the year 1992. The industry could not take off and on the ground that the petitioner did not pay the instalments, the respondent seized the unit on 04.02.1994, by invoking its power under Section 29 of the State Financial Corporations Act (for short ‘the Act’). The sale of the unit fetched a sum of Rs.5,00,000/- and it was handed over to the purchaser on 03.09.1994. The respondent issued an intimation, dated 08.11.2001, to the petitioner, requiring her to pay the balance. Correspondence ensued and the respondent repeated its demand, through letter, dated 10.12.2001, stating that in case, the petitioner fails to pay the amount, steps would be taken under Section 31 of the Act, or the relevant provisions of the A.P. Revenue Recovery Act (for short ‘the R.R.Act’). The petitioner filed W.P.No.26378 of 2001 challenging the notice, dated 10.12.2001. It was disposed of on 21.08.2002, directing that before taking any steps against the petitioner, under the relevant provisions of law, the respondent shall be under obligation to determine her liability. It was in this context that the petitioner made a representation, dated 16.10.2002, stating that the amount claimed by the respondent is barred by limitation and raising certain other grounds. The respondent issued a notice, dated 22.10.2002, directing the petitioner to pay a sum of Rs.17,85,000/- together with other expenses and interest by 01.11.2002. It was also mentioned that in default, proceedings would be initiated under the provisions of the enactments, referred to above. The said notice is challenged in this writ petition. It is represented that the very claim made by the respondent is barred by limitation, since the demand was made about seven years after the unit was sold. The respondent filed a counter affidavit, denying the allegations of the petitioner. The fact that the unit was sold and a sum of Rs.5,00,000/- was realized is not denied. After making reference to various notices, the respondent contends that the petitioner is under obligation to pay the amount and that the claim is not barred by limitation. Heard Smt. Anasuya, learned counsel for the petitioner and Sri M.Vidya Sagar, learned counsel for the respondent. The petitioner borrowed the loan, under two different accounts, from the respondent. On account of non- payment of the same, the unit itself was seized and thereafter, sold by having recourse to the procedure under Section 29 of the Act. The sale of the unit was complete and possession thereof was delivered on 03.09.1994. It is the specific plea of the petitioner that ever since 1994, she was not issued any demand notice till 08.11.2001 and at every stage, she raised the plea of limitation. When the respondent threatened her with the proceedings under different enactments, through its notice, dated 10.12.2001, the petitioner approached this Court by filing W.P.No.26379 of 2001. The same was disposed of, directing that before any steps are taken, the actual amount shall be determined. Well in advance, the petitioner submitted a representation, dated 16.10.2002, stating inter alia that she is not liable to pay any amount, since the claim has become barred by limitation. This was taken note of in the impugned notice, dated 22.10.2002. The plea of limitation was not even adverted to and straight away, it was determined that the petitioner is liable to pay a sum of Rs.17.85 lakhs. The State Financial Corporations are conferred with certain extraordinary powers in the matters of recovery of loans advanced by them. However, they are not relieved from the rigours of law of limitation. In State of Kerala vs. Kalyani Kutty[1], the Hon’ble Supreme Court held that time barred loan amount cannot be recovered, by invoking the provisions of the Act or the R.R.Act. The said judgment was followed by this Court in N.A.Radha vs. State of Andhra Pradesh[2]. The respondent did not even plead any grounds, which have the effect of acknowledging the loan and extending the period of limitation. Therefore, the inescapable conclusion is that the claim made by the respondent is barred by limitation. The writ petition is accordingly allowed and the impugned notice, dated 22.10.2002, is set aside. There shall be no order as to costs. _________ 20.11.2008 JSU THE HON'BLE MR JUSTICE L.NARASIMHA REDDY Writ Petition No.22022 of 2002 Date: 20.11.2008 JSU [1] AIR 1999 SC 1305 [2] 2000 (2) ALT 484