Recovery of loan liability from heirs of deceased guarantor
anil kumar sharma
(Querist) 24 August 2015
This query is : Resolved
In this typical case, the father and son were doing contractship business. Both were registered as Contractors with the Public Works Department. The father was registered as Class A contractor while the son was registered as Class D Contractor. In order to conduct the business of contractship, they had a Bank Cash Credit Limit of 7 crores in which the son was the Guarantor. Also as a precautionary measure, both father and son had adequately insured themselves on the advice of Bank Authorities to cater for any eventuality/mishap. Suddenly one day, the only and promising son aged 31 years lost his life in a car accident leaving behind his wife and minor son aged 3 years. At this critical junction he also left behind a loan liability to the Bank to the tune of Rs 4.50 crores and approximately Rs 90 Lacs to the local market. Consequently, the insurance company made payment of one policy on the name of the deceased to the tune of Rs 1.20 Crores in which the wife of the deceased was the nominee. In another policy insured on the name of the deceased for a sum of Rs 2 crores for the purpose in which also the wife is the nominee is pending. The wife of the deceased had left her matrimonial home along with the minor son 5 months after the death of her husband and is now putting her stakes on the claimed money received from insurance companies notwithstanding the loan liability which her husband had left behind. What is her responsibility as far as repayment of loan liability is concerned from the property inherited/claimed wherein her deceased husband was a Gurantor? Also what should be done to make her accountable for clearing the bank loan liability? Please advice.
anil kumar sharma
(Querist) 24 August 2015
Your valuable suggestions on the subject are solicited please.
Guest
(Expert) 24 August 2015
Better Write it in your Bad Debts And Forget And Forgive Her.If Possible Request Her to Contact Here For Additional Assistance and Guidance.
Guest
(Expert) 24 August 2015
The Bankers Would Fold their Hands In Front of Great Defaulters In Millions and Here Asking suggestion How to Harass A Widow.Really Great.
Guest
(Expert) 24 August 2015
Few in the Last List of 25 Great defaulters are 25)Moser Baer India Ltd Rs 581 Crore. 24)Century Communicator Ltd Rs 684 Crore And It Goes On and On.
SAINATH DEVALLA
(Expert) 25 August 2015
Wife cannot be held responsible for the deceased husband's liability unless she is involved in them.But the share of her in the husband's property or other benefits will be settled minus the existing liability of the husband.She has a right to claim the insurance amount as she is a nominee,but as I said the liabilites will be deducted from it,once the creditors come into picture the wife cannot escape settling their dues.The bank very well knows the accident insurance and they will not keep quit.
Anirudh
(Expert) 25 August 2015
Insurance money is not the property of the deceased. Therefore the wife cannot be said to be inheriting from her husband. Unless there is some property belonging to her late husband, which she inherits, the wife cannot be held responsible for the liabilities of her late husband. The insurance money, in which she is the nominee, has to be paid to her by the Insurance Company. If the Insurance Company does not pay, then she has to approach the Insurance Regulator with a complaint.
If the guarantor has expired, then the lender has to ask the borrower to get another guarantor.
SAINATH DEVALLA
(Expert) 25 August 2015
Dear Querist,
" Also as a precautionary measure, both father and son had adequately insured themselves on the advice of Bank Authorities to cater for any eventuality/mishap."
Hence the bank liability exists in the insurance claim.Its insurance against the bank's liability at the insistence of the bank and not a general insurance policy.
Anirudh
(Expert) 25 August 2015
If that be the case, then the Bank would have been made the Nominee and not the wife!
Rajendra K Goyal
(Expert) 25 August 2015
Default in which account, personal loan / CC account of the son or referred CC account in which son was only a guarantor?
If liability is in personal loan account, the recovery can be from estate of son. If liability is in CC account in the name of father, father is also responsible for payment and outstanding money can be recovered from him.
Bank can recover from life policy payment if policy was assigned in favor of Bank against loan.
R.K Nanda
(Expert) 25 August 2015
no more to add.
Guest
(Expert) 25 August 2015
In what way the problem is concerned with you with particular reference to the debtor, the deceased son, the widow or the loaning bank?
P. Venu
(Expert) 25 August 2015
Yes, how you are concerned with the issue?
