Can a bank release the guarantor documents without borrower

Bank has right and discretion to dicharge guarantor when guarantor is prepared to pay an amount equvalent to value of the security furnished by him is Rs.43 lacs. Bank is not concerned with your consent for such discharge, when it is able to recieve Rs.43 lacs instead of doing an exercise for realisation of the secured asset by taking legal action. Sanction letter is substituted by loan documents and hence sanction letter terms if any not incorporated in the loan agreements shall be deemed to be waived by both the borrower and the bank. Eventhogh the guarantor cannot revoke his guarantee, the bank can accept value of the security and dicharge him from guarantee allowing the redemption of the mortgage too. You have no scope to succeed in a suit if you intend to bring against the bank in this regard. Therefore I advise you not to take any action against the bank. However please ensure that your loan account is maintained in order and it is not slipped to NPA  category and avoid unsavoury action that may be taken by the bank for recovery of the balance amount of the debt.

When it is clearly mentioned in the sanction letter that property would not be released without the consent of the company then it is a clear lapse on bank side. Discharge of mortgage without the consent of the company could be termed as illegal. It is a different issue that bank is always interested in collecting its dues but in ur case it cannot go against the conditions drafted in loan docment. I would say that if ur account had become NPA then they could have resorted to this kind of method as the last means of recovery. As ur account is running smoothly you  should take this matter to the higher ups and tell them the difficulties u may face due to decrese of limit in near future.

I disagree with Mr Ramachary in the part where he belittles the sanctity and importance of the sanction letter. The sanction letter is  a very important document where all the terms and conditions of the loan is mentioned. The "facility documents" like loan agreement etc, and the "security documents" like mortgage deed, hypothecation agreement etc., follows from the sanction letter, and not the other way round. The Bank/borrower cannot ignore the sanction letter when the situation suits the Bank/borrower. Therefore, I strongly believe that the Bank is wrong in releasing the property documents to the father "without the borrower's consent", as was required as per the sanction letter. However, I must add that presence of the borrower is not required to release such documents/security, unless sanction letter mandates it.

I agree with Mr Ramachary, however, with his advice that the Bank should not be proceeded against. The entire litigation process will take too muct cost & effort. The Directors should rather focus on running their business properly. I think the situation now is that there is not enough "security/collateral" for the Co.to avail suffcient cash credit loan. You cannot help it - I would suggest to approach different Banks and choose the Bank that sanctions highest loan amount on the basis of all available security.

Probably the members are is a guesing position in the absence of the language of the conditions of the sanction letter. Normally bank's documents are full of legal jargons and discretions, the interpretation there of is a must before arriving at some conclusive opinion.

So, it will be better if Mr. Srikant reproduces the extracts of the conditions included in the sanction letter on which he has any doubt instead of getting varied and confusing responses.

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