IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN WEDNESDAY, THE 6TH AUGUST 2008 / 15TH SRAVANA 1930 OP.No. 7299 of 1997(R) ---------------------- PETITIONER: ------------ 1. M.K.KUMARAN NAIR, S/O.LATE SRI.KRISHNAN NAIR, AGED 49 YEARS, RESIDING AT BRINDAVAN HOUSE, MARKET ROAD, ALUVA, ERNAKULAM DIST. 2. M.K.GOPINATHAN, S/O.LATE SRI.KRISHNAN NAIR, AGED 39 YEARS, RESIDING AT VIJAYASREE MANDIRAM, MARKET ROAD, ALUVA, ERNAKULAM DIST. 3. M.K.BALAKRISHNAN NAIR, .DO. .DO. BY ADV. SRI.PHILIP MATHEW RESPONDENTS: ------------- 1. DEPUTY TAHSILDAR(RR), KERALA FINANCIAL CORPORATION, KALOOR, ERNAKULAM-682 017. 2. KERALA FINANCIAL CORPORATION, REP. BY ITS DISTRICT MANAGER, DISTRICT OFFICE, KALOOR, ERNAKULAM-682 017. 3. MANAGING DIRECTOR, KERALA FINANCIAL CORPORATION, VELLAYAMBALAM, TRIVANDRUM-695 033. 4. STATE OF KERALA, REP. BY ITS CHIEF SECRETARY, GOVERNMENT SECRETARIAT, TRIVANDRUM. R1 TO 3 BY ADV. SRI.M.M.SAIDU MUHAMMED, SC R4 BY GOVERNMENT PLEADER THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 06/08/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ORDER ON CMP NO.13059/1997 IN O.P. NO.7299/1997 DISMISSED: SD/-(C.N.RAMACHANDRAN NAIR, JUDGE.) 6.8.2008 SD/-(V.K.MOHANAN, JUDGE.) APPENDIX PETITIONER'S EXHIBITS: P1: TRUE COPY OF COUNTER AFFIDAVIT FILED BY RESPONDENT CORPORATION IN O.P. NO.4872/1991 DT.24.6.91. P2: TRUE COPY OF ORDER PASSED BY THIS HON'BLE COURT IN CMP NO.540/92 IN O.P. NO.4872/91-E DT.12.3.1992. P3: TRUE COPY OF DEMAND NOTICE ISSUED BY R1 TO THE PETITIONERS ON 2.4.1997. P5(IN IA NO.1756/2007): TRUE COPY OF NOTICE DT.26.11.90 ISSUED BY R2 TO THE BORROWER COMPANY. RESPONDENT'S EXHIBITS: R2(a): TRUE COPY OF LOAN AGREEMENT DT.29.8.1988. R2(b): TRUE COPY OF DEED OF GUARANTEE EXECUTED BY PETITIONERS ALONG WITH THE OTHER DIRECTORS OF THE BORROWER COMPANY. TRUE COPY PA TO JUDGE C.N.RAMACHANDRAN NAIR & V.K.MOHANAN, JJ. .................................................................... O.P. No.7299 of 1997 .................................................................... Dated this the 6th day of August, 2008. JUDGMENT Ramachandran Nair, J. The petitioners are admittedly directors and guarantors for the loan availed by the company from KFC. The O.P. was filed 11 years back challenging personal recovery against directors based on personal guarantees executed by them. In fact, other directors have also filed writ petitions, O.P. Nos.4872 and 6574 of 1991. These O.Ps. have been dismissed by this court as infructuous on 11.8.2000. Counsel for the petitioners submitted that the assets of the debtor-company were taken over by KFC under Section 29 of the State Financial Corporations Act and the same have been sold at a considerable price. The case of the petitioners appears to be that the sale price is above the debt amount and therefore, personal recovery against directors based on guarantees executed by them is not permissible. In fact, the learned Single Judge while referring this case to Division Bench has observed that sale price is above the debt amount. However, it is clear from the Reference Order that sale was stalled by the other directors of the company and consequently the purchaser backed out 2 of the offer. The petitioners also do not appear to have helped finalisation of the sale which probably leaves balance debt due to KFC. Since the connected cases are dismissed as infructuous, probably the other directors have no grievance as of now. Recovery can be continued based on personal guarantees executed by the directors, if balance debt is still due to KFC. Even though petitioners raised a contention that they did not have notice and that the debt is barred, we do not think we can consider these issues without reference to evidence pertaining to the steps taken by KFC for recovery after default. Question of limitation is a mixed question of fact and law and the same can be raised before the recovery authority. The O.P. is accordingly disposed of directing the Tahsildar to consider the objections raised by the petitioners, call for records from the KFC and get their views and proceed for recovery based on personal guarantees executed by petitioners, if there is still outstanding debt and the same can be recovered under the security agreements. The petitioners are given freedom to raise all objections before the Tahsildar. C.N.RAMACHANDRAN NAIR Judge V.K.MOHANAN Judge pms