liability of a guarantor after inhancement of loan amount

Querist : Anonymous (Querist) 25 May 2011 This query is : Resolved
I was a guarantor for the pvt. ltd. company,for certain amount. After few years bank increased the loan amount with different guarantors. May I liable for the original amount if the a/c goes to NPA.

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Jitendar Kumar gupta (Expert) 25 May 2011
if the loan continue then u r liable for the loan.

Advocate. Arunagiri (Expert) 25 May 2011
You are liable for the original loan amount only. Not for the enhanced loan amount.

M.Sheik Mohammed Ali (Expert) 25 May 2011
yes, your liable the original amount only

Guest (Expert) 25 May 2011
I hereby differ with the above opinions to the extent that if the original guarantee agreement has been replaced with a fresh agreement for the total of the enhanced amount the original guarantee would cease to exist.

Querist : Anonymous (Querist) 25 May 2011
thanks Dhingra saheb,It gave me lot of relief.

Devajyoti Barman (Expert) 25 May 2011
Yes, Mr Dhingra is right.

The the surety is discharged from the original guarantee when the creditor takes another surety with permission of the principal debtor but without keeping the first surety updated.

A contract of guarantee is a three way contract amongst the principal debtor, surety and the creditor . If any of them does not agree with the other then the whole contract ceases to exist.

R.Ramachandran (Expert) 25 May 2011
I completely agree with the views of Mr. Dhingra and Mr. Barman.

Advocate. Arunagiri (Expert) 25 May 2011
The author had said that the bank had increased the loan. The author had not told that it is a fresh loan. When the loan amount is increased, we can not presume that the previous loan agreement is replaced. It may be case of new /additional guarantors.

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