Dear Experts,
I am a guarantor to my Nephew's Loan which has gone bad. Case for recovery is going on in the civil court and as per our understanding there are many complications. One of the things I've just come to know is Indian Contract Act, Section 62.
In the original contract (Loan Agreement) Bank, Borrowrer and myself were the parties. Borrowrer is a Pvt. Ltd company with 4 Directors. There are 2 Guarantors i.e. myself and another.
About a year back the 2nd Guarantor approached the bank and after negotiations made a settlement with them. He gave cheques of the negotiated amount. Somehow he couldn't amass the required funds and hence the cheques were returned. Neither myself nor the company directors were informed nor have any of us gave any writing consent for the settlement.
Now can we apply the Indian Contracts Act, Section 62 and show that the Original Contract has been replaced by a new contract and hence the parties left out in the new contract can't be held liable for the recovery of the outstanding Loan ?
Please help.
Regards
Prasham
