Prime and collateral security
S Radhakrishnan
(Querist) 24 March 2010
This query is : Resolved
When a Bank has financed housing loan and the house is also taken as collateral security for the business loan, can the bank arrange to dispose off the house property for recovery of its business loan without exhausting its remedey against the prime security in the business loan. Please also advice about the details of the relevant judgment.
Parthasarathi Loganathan
(Expert) 24 March 2010
Bank has every legal right to dispose of the properties taken as prime or collateral security without any priority and nature of the securities held to a loan.
Parveen Kr. Aggarwal
(Expert) 24 March 2010
A debtor has no authority to ask the creditor bank to act in a particular manner by first taking action against the primary security and only thereafter he can realise the collateral security. It is the prerogative of the creditor bank to initiate recovery proceedings against a defaulting debtor and the bank may firstly proceed against the collateral security than the primary security.
