Law does not protect the negligent; due diligence is required to assert rights : Telangana High Court
High Court Upholds Trial Court's Decision Against A.P. State Financial Corporation in Loan Recovery Case
News Report:
Hyderabad, September 17, 2025 - In a significant ruling, the Telangana High Court has dismissed the appeal filed by A.P. State Financial Corporation, upholding the decision of the lower court to dismiss their application due to a default in appearance. The judgment reiterates the importance of diligence and proactive legal pursuit in asserting rights.
The case revolves around the A.P. State Financial Corporation's efforts to recover outstanding amounts from M/s. Kabs Fabrics Pvt. Ltd., whose promoters had defaulted on a loan sanctioned in 1992. The corporation had initially secured the loan with a mortgage on land, buildings, and machinery, along with personal guarantees from the company's directors. However, after the company defaulted, the corporation invoked its powers under the State Financial Corporation Act, 1951, leading to the seizure and sale of assets. Despite these efforts, a substantial amount remained unpaid.
The corporation filed an Original Petition (O.P. No.1833 of 2006) to recover the outstanding dues, which was dismissed for default on July 9, 2007. In an attempt to revive their case, the corporation filed an Interlocutory Application (I.A. No.3130 of 2007) to recall the dismissal order. However, this application was also dismissed on January 17, 2008, due to the corporation's absence during the hearing, which they attributed to a miscommunication regarding the hearing date.
Aggrieved by this outcome, the corporation filed another application (I.A. No.277 of 2008) seeking to recall the dismissal of their previous application. The corporation claimed that their legal counsel had erroneously informed them of a different hearing date, which led to their absence. However, they failed to produce the critical letter dated January 2, 2008, allegedly containing the miscommunicated date.
The trial court found the corporation's explanation unconvincing, noting the absence of the aforementioned letter as evidence. Upholding the trial court's decision, the Telangana High Court emphasized that the law does not protect the negligent and that rights must be asserted with due diligence. The court remarked that the corporation's failure to demonstrate sufficient cause for their absence or to produce the necessary evidence rendered their appeal untenable.
Justice Gadi Praveen Kumar, delivering the judgment, stated, "The law stands as a vigilant guardian of those who guard themselves, but denies protection to those who sleep over their entitlements." The court concluded that the trial court's decision did not suffer from any infirmity and did not warrant interference.
The ruling serves as a cautionary tale for parties involved in legal proceedings, highlighting the necessity of vigilance and adherence to procedural requirements. It underscores the judiciary's stance that rights are accompanied by responsibilities, including the duty to pursue legal remedies diligently.
With the dismissal of C.M.A. No.678 of 2010, the interim orders have been vacated, and all connected applications closed without orders as to costs. The decision marks a definitive end to the corporation's efforts to revive their dismissed petition, reinforcing the principle that legal protection is contingent upon proactive engagement and adherence to procedural norms.
A.P. State Financial Corporation v. A. Sridhar Reddy, (Telangana)(DB) : Law Finder Doc Id # 2780366
