bankaing,guarantor

Querist : Anonymous (Querist) 31 August 2010 This query is : Resolved
loan from co-op bank at maharshtra.
'a'taken loan for 1 year hypothication.
'b' become gurantor and signed.
next year 'a'paid interest for year and renewed same loan .
at the time of renevation "b" refused to sign as a guarantor and did not sign for making renewal of loan papers.
"a" fails to repay loan next year.
bank and co-co operative deppt.held responsible to "b" as guarantor.

is it right? and legal or illegal ?
what remedy?

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s.subramanian (Expert) 31 August 2010
No.you are not liable.it is illegal to make you liable as guarantor.

A V Vishal (Expert) 31 August 2010
Interesting Query!!!, going by what you have narrated, the liability of the guarantor has not ceased since the loan is not completely cleared but only the interest is serviced and the loan is renewed, it is a case of continuing guarantee, unless the principal debtor had cleared the principal too and taken a fresh loan, you would have been saved. Please Understand that there is difference between renewal of existing loan & taking a fresh loan, so you are liable for the debt.

Parthasarathi Loganathan (Expert) 01 September 2010
I agree with Vishalhji to state that the liability of a guarantor is co-extensive that of the principal debtor as long as the loan dues are outstanding. Bank can very well proceed against the guarantor for recovery after exhausting all the means for recovery from the borrower

Surrender K Singal (Expert) 01 September 2010
Has the Renewal been with some other Guarantor or without Guarantor - all such documentation at the time of renewal would need to be perused to find some loop hole in the Bank's case !

Querist : Anonymous (Querist) 02 September 2010
Resp. singalji
ther are two guarentors before renewal of the loan. i refused at renewal stage when they made totally new documents.they mentioned my name as 2nd. guarantor but i did not signed.

Parthasarathi Loganathan (Expert) 02 September 2010
Without execution of valid documents to support guarantee then where is the liability for the guarantor

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