Civil Suit against garauntor
Querist :
Anonymous
(Querist) 24 September 2010
This query is : Resolved
My father has stood as Garantor to personal laon(unsecured) taken by his "officer". "The officer" has retired now and gets sizeable pension amount.
"The Officer" also holds property of considerable amount but he is unwilling to pay his loan. The bank has initiated civil case against "the officer" and my father. The officer is refusing to accept the court notice and has also changed his resisdence outside the city.
What should my father do get out of this problem?
Should my father accept the notice and what else he can do?
My father has knowldge of "the officer's" pension account and also his new address.
Arvind Singh Chauhan
(Expert) 24 September 2010
Your father can't avoid notice. He should tell the court about his where about and details of his property and must pray to court that at first recovery should be made from his property. For your kind information pension can not be seized.
Raj Kumar Makkad
(Expert) 24 September 2010
Guarantor is treated similar to loanee and he has got no special rights to guie court to first try to recover the loan amount from loanee and thereafter from him. It is the plaintiff who has to decided from whom easily can he recover his amount and so your father is equally responsible as of loanee. Now question arises if your father becomes ex-parte or do not receive notice then what shall be its fate
I suggest you to try to have the notice to that officer first and then to your father so that the line of that person may be understood and defence accordingly may be taken.
Devajyoti Barman
(Expert) 24 September 2010
I disagree on this aspect. As per the Indian Contract Act, the Debtor can not initiate action action the guarantor before he has exhausted all the options to recover the debt form the borrower. So you father can surely inform the bank the whereabouts of the borrower as well as his pension account.
R.Ramachandran
(Expert) 25 September 2010
Mr. Rajeev,
You cannot agree with the views of Mr. Raj Kumar and Mr. Barman at the same time, because while Mr. Raj says that the lender can chose from whom he can easily recover the money, Mr. Barman says that the lender cannot do so without first exhausting all possible efforts to recover the money from the original debtor and only when such efforts fail then he can try to realise the amount from the guarantor.
N.K.Assumi
(Expert) 25 September 2010
But adv.rajeev, says agree partly...
Sri Vijayan.A
(Expert) 25 September 2010
1.The Borrower and the guarantor are primarily responsible for the loan.
2. In the loan agreement, if the guarantor has written that his responsibility is secondary, then the bank can't sue guarantor.
3. There are possibilities for a guarantor to limit his surety ergarding amount, etc.
4. But in this case, I assume, the guarantor might not have written any specific events, conditions, etc to protect him.
5. In this situation, he can't avoid the proceedings by the bank.
6. The only remedy available to him is to pay his officer's debt and recover the same from his officer with costs
N.K.Assumi
(Expert) 25 September 2010
Surety's liability is co-extensive with that of the principal debtor. Refer to section 128 of the Indian Contract Act. Liability of the surety is immediate and not deferred until the creditor exhaust his remedies against the principal debtor.Surety must understand that it is easy to put one's pen on a paper but difficult to fish out from one's pocket for the fruit of the friendly act is demanded and is usually painful experience.surety must always look before he leaps.
s.subramanian
(Expert) 25 September 2010
I fully support the view of Mr.N.K.Assumi. His view alone is right as per law governing the contracts of guarantee. The exhaustion of remedies by the lender with the principal borrower is merely optional and not mandatory.No court can compel him to proceed against the principal borrower first and then against the guarantor.The liability of both under law is joint and several apart from being co-extensive as rightly stated by Mr.Assumi. However it is always open to the guarantor to file necessary proceedings to recover the same from the principal borrower,if he has paid up the loan dues himself to the lender under the Doctrine of Subrogation. That is why it is widely stated that Guarantor is the most preferred debtor.
Kirti Kar Tripathi
(Expert) 26 September 2010
so for as liability of surety is concerned, he is equally responsible as the borrower. he cannot escape from his liability on the ground that creditor will exhaust his remedies against the principal debtor. However, the guarantor has a remedy to recover the same from the principal borrower, in case, he pay any amount under the debt. So it is better for your father to accept the notice of the court and assist the court. in his written statement, your father should disclose all the sources of principal debtor, from where, the debt amount could set off.
Chanchal Nag Chowdhury
(Expert) 28 September 2010
While agreeing with the views expressed by the ld. experts, I suggest Your father should file a suit against the debtor & seek attachment before judgment or at least an injunction restraining the debtor from encumbering or alienating his property. Also any usufruct of the property should be sought to be attached.
