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Dispute for guarantee in an account which has become NPA

(Querist) 05 October 2016 This query is : Resolved 
Hello my father in a good will gesture signed a guarantee mortaging his floor for an OD to his friend. The period defined was 1 year. The account has been used by his friend for his business interest in which my father has no role. This account has since become NPA as his friend has not been paying the bank. The bank now wants to start proceedings for recovery. How can I save his floor. His age is 65 plus.
Guest (Expert) 05 October 2016
It is immaterial whether your father has any role or no role in operation of the OD account, only guarantee is relevant for the bank.

If you want to save your father's floor, to extinguish the liability of guarantee, there are two options available to your father:

1) Compel his friend to pay the OD dues to the bank; OR

2) Your father may pay the dues, himself.
Sachin (Querist) 05 October 2016
If the friend was agreeing to pay the situation would not have arisen. However after persistent following he has deposited 1 lac yesterday against the current total liability of more than 1.3 cr can this help in prolonging the notification so that we get some time to further pressure him.
Advocate M.Bhadra (Expert) 05 October 2016
The guarantor of a loan is liable to pay it if the debtor fails to clear it.

The guarantor's liability is co-extensive with that of the principal borrower.Normally in secured loans the lender bank will take possession of the mortgaged house under SARFEAESI Act and sell it and for any shortfall, they can sue the guarantor also.

The best protection for the guarantor is to pay off the debt, as and when demanded and take all the mortgage documents from the Bank and proceed in civil suit against the borrower.
Guest (Expert) 05 October 2016
Payment of paltry some out of huge outstanding is no guarantee to help in prolonging the notification.

But, question arises, why such a vague question asked here instead of asking the bank? Not the experts here, but the concerned bank has to give you some time.
Kumar Doab (Expert) 05 October 2016
Find out all assets of the borrower and act to get these attached, if possible.

Rajendra K Goyal (Expert) 05 October 2016
If borrower does not pay, guarantor has to pay otherwise recovery proceedings from mortgaged property would start.

If the guarantor pays the loan, he would have same right against the borrower as the Bank was having.
R.K Nanda (Expert) 05 October 2016
Nothing to add more.
Sachin (Querist) 05 October 2016
I recently read an article wherein SC had given a judgement that a single director in a company with many stake holders even though has give his property as mortgage but Bank must take his accountability as limited. Is it true?
Ms.Usha Kapoor (Expert) 06 October 2016
Nothing to add more.
Guest (Expert) 06 October 2016
Mr. Sachin,

I wonder, if you compare your father's position, as an individual, and a director of a company as per company law!

However, you are free to challenge the bank, as based on your contention and file a petition on the basis of the stated judgment of the SC.
Sachin (Querist) 06 October 2016
I just want to know whether any options are their ? What is required to regulate the NPA account so that action is postponed? I am not one who understand these complexity as it is first time have got in any sort of legal issues. So seeking expert advice from this forum.
Sachin (Querist) 06 October 2016
My father is an individual and was never part of the company.
Rajendra K Goyal (Expert) 06 October 2016
If the director has additionally guaranteed the loan account in his personal capacity also, I doubt his liability would be limited.

However, if you give the reference of the decision, we can clarify the position further.
Guest (Expert) 06 October 2016
Mr. Sachin

If you are not one who understand these complexity as it is first time have got in any sort of legal issues, what was the specific reason to refer the SC judgment and bring in the Director of a company in the scenario of the problem of your father, as an individual?

I fully understand that your query is of academic nature and your reply even about deposit of Rs.1 lakh by the friend of your father also seems to have been fabricated.

Please don't try to extract answer for your academic query. I have already made mention of two options for your father. Rest assured, Banks's NPA account cannot be regulated without clearance of defaults, either by your father or his friend.
Kumar Doab (Expert) 06 October 2016
If you have the decision of apex court, post it.

Find out all assets of the borrower and make these known to Bank, court and your own counsel.
Sachin (Querist) 06 October 2016
Mr.Dhingra with all respect the query is for no academic interest. I have my area of working. This is a real pure case which is currently taking my lot of energy to get my father out of this mess so that he can have all that he has saved his house. As for the assets of the borrower, what information I have collected till now is that even the house he is living is in name of his wife. But yes this suggestion I shall discuss with the bank and appoint council to some how see how I can help my father come out of it.
Rajendra K Goyal (Expert) 08 October 2016
You can find out when the borrower transferred the house in the name of his wife. If it was with the intention to defraud Bank / guarantor same is to be challenged.
Guest (Expert) 08 October 2016
If your query pertains to a real problem, you have knocked the wrong door if you have taken the case of liability of 1.3 crores of rupees in a very casual manner and not hired a lawyer to defend your father.

Please be aware, any reply to your casual nature of query, without getting the case duly examined by some capable lawyer, cannot serve your purpose.

So, you are advised to hire services of a capable lawyer at your place without any further delay.
Kumar Doab (Expert) 08 October 2016
If the borrower is so shrude then he is not fit to be left to loose around in a civilized society.



Approach a very sharp counsel that has unshakable reputation.
Rajendra K Goyal (Expert) 08 October 2016
Agree with the advice from expert Kumar Doab, discuss in detail with some senior lawyer master in such matters.
Sachin (Querist) 09 October 2016
Thanks Mr.Kumar and Mr.Goyal.
Rajendra K Goyal (Expert) 09 October 2016
You are welcome.


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