Or. XXII, Rule 4, Sec. 128 Contract Act
D.R. VARMA
(Querist) 21 July 2008
This query is : Resolved
Dear brother & sister advocates :
I filed a money suit against the principal borrower and three guarantors. The 1st defendant (prl. borrower) was represented by counsel and during pendency of suit, 1st def. died, but the said fact was never brought to the knowledge of either the plaintiff or the court (as per O22R10A) and the suit was decreed.
Basing on the decree, an EP was filed and in the said EP one of the guarantors filed an Application stating that the decree is a nullity because the suit has abated against all the defendants. This application has been dismissed and the matter has been carried in revision to the High Court and is pending.
What is the legal position :
In a money suit, does the death of the princiapal borrower remove the liability of the guarantors.
Kindly advise post haste and oblige.
D.R. VARMA, Advocate, drvarma1@rediffmail.com
GOPI KRISHNA
(Expert) 21 July 2008
the guarantors are liable even though the principle barrower is died and you can go againt them
D.R. VARMA
(Querist) 21 July 2008
any citations or authority of law on which the said reply of yours is based, kindly inform and help
the question is open, by mistake i typed resolved
so continue the flow of answers and discussion
adv.ranchi
(Expert) 21 July 2008
The same depends upon the terms and conditions of teh agreement. If under the agreement, Guarantor's liability is restricted to the liabilty of the Principal Debtor, abatement of the principal debtor would abate the guarantor.
But if no such agreement is there, guarantor is joint and severally liable.
One may go through the provisions as contained in the Special Contracts of Guarantee to find out more.
Regards,
Adv. Ashutosh
Srinivas.B.S.S.T
(Expert) 23 July 2008
Sir the liability of the guarantors is severally and jointly as such the death of the pricipal borrower will not cease the liability of the guarantors. You dont need citations for this.
SANJAY DIXIT
(Expert) 23 July 2008
No. The financial institution will freeze the account of the borrower to determine
the indebtedness and unless there are other sources of payment, the financial
institution will seek recourse from the guarantor.
Moreover the extent of the liability of a guarantor will be as specified in the guarantee document. A guarantor may be held liable for the liabilities of the borrower in accordance with the terms of
the guarantee document.
