Guarantor's Liabiility
uma anand
(Querist) 29 September 2009
This query is : Resolved
What is the liability of the guarantor in case if the principal fails to repay the loan. Guarantor needs to pay even the interest amount or its only the pricipal amount that has to be repaid to the bank.
Sachin Bhatia
(Expert) 29 September 2009
THE GUARANTORS' LIABILITY ACT
Action against guarantor
Sec 3(1)Notwithstanding that he is not a party to the bond, a creditor may, subject to the terms and conditions of the bond, upon obtaining a judgment for the debt against the bondee, recover the debt and the cost of obtaining the judgment, awarded as part of the judgment, from the guarantor and for that purpose may bring and maintain an action against the guarantor in a court of competent jurisdiction.
AEJAZ AHMED
(Expert) 29 September 2009
Dear Uma Anand,
" A guarantor's liability depends upon the terms of his contract "
Kindly go through the folowing Judgements of Supreme Count which is in detail about the liability of Guarantor/surety.
i) http://indiankanoon.org/doc/1462688/
ii) http://indiankanoon.org/doc/1320013/
In fist udgement by referring to Sections 126, 128, 129 and 130 of the Contract Act and Article 55 of Limitation Act, Supreme Court laid down as under.
"..When the demand is made by the creditor on the guarantor, under a guarantee which requires ademand as a condition precedent for the liability of the guarantor, such demand should be for payment of a sum which is legally due and recoverable from the principal debtor..."
In Second one it i observed as :
" "the liability of the surety is co-extensive with the principal debtor, unless it is otherwise provided by the contract. "
R.R. KRISHNAA
(Expert) 29 September 2009
The liability of the guarantor is co-extensive with that of the principal debtor. Guarantor is fully liable to pay both the principal amount and its interest.
n.k.sarin
(Expert) 29 September 2009
agreed with Mr.kishan
Raj Kumar Makkad
(Expert) 29 September 2009
Yes. guarantor is equally responsible for all the outstanding debts which includes principal amount and interest etc.
joyce
(Expert) 29 September 2009
Gaurantor steps in the shoes of the debtor when the loan liablity follows them.The advices of Ahemad, Sachin, n uma holds good.
vinjamuri ranga babu
(Expert) 01 October 2009
hello,
Guarantor has to pay the interest along with principal as per the guarantee agreement given by the guarantor to the bank.
vr
Sarvesh Kumar Sharma Advocate
(Expert) 29 September 2009
Adinath@Avinash Patil
(Expert) 29 September 2009
