Mahhesh Kummar Aggrawal (Proprietor) 25 October 2016

Course of action to 3rd party guarantor for npa of any a/c

Hello respectaed panel lawyers,

I started a business in 2012, borrowed a T/L 15 Lakh and Working capital of 7 Lakh under CGTMSE without any collateral, mortguage or personal guarantee other than SIDBI (by default). Initially, it was performimg good but since last 1 and half years, I am just saving the account from slipping to NPA by paying instalment and interest in CC a/c. Its a job work industry related to Iron and Steels market.

I am having another firm, where I have borrowed 45 Lakhs as Cash Credit limit. Since, I am in to Iron and Steels business and in last 2 years, the concerned market has witnessed a severe downfall, I am too a sufferer. Lot of debt due for collections from market but only in words. I took a T.O.D. of 7 lakhs in July for 15 days but could not pay in Time because of failure of committments of my customer whom I have supplied material.

Recently, 5 days back, this account slipped to NPA for the same, where my Father-in-Law stands guarantor (Intangible) without mortguaging any property.

Today he received a legal Notice to close the account by paying all the outstanding amount of Rs 52 Lakhs, where I have deposited an amount of Rs 1,40,000/- but it is adjusted in interest of these 3 months with penal interest.

Please suggest me, what should be my move? As, presently I am not in a position to close the account by paying all the dues but my intensions are very much clear to pay and regularise the account once the market stables its position. I am in huge financial loss but do not want to be called a defaulter. Is my father-in-laws property at risk because of this? Can bank attach his property too, though he has not given any property related documents to Bank?

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6 Replies

adv.bharat @ PUNE (Lawyer) 25 October 2016

Yes bank have right to recover it from the gurnator.

U can give legal notice to the material receiver for recovery of pending amount.

Mahhesh Kummar Aggrawal (Proprietor) 25 October 2016

Thanks for your reply Advocate Bharat. Can anyone else give a satisfactory matured reply to this query. I know Bank will recover it from Guarantor but I want to know the process and the way to avoid it.

G.L.N. Prasad (Retired employee.) 26 October 2016

There is no other alternative except negotiating the bank for compromise and seeking time and giving a letter explaining the difficulties. Who ever offers advice, only gives matured advices. When there is no other way, no one can suggest a way out to avoid, as Banks have the same pressure from RBI.

Mahhesh Kummar Aggrawal (Proprietor) 26 October 2016

Here you are Mr. G.L.N. Prasad, thanks for responding. I want to know step by step movement. My statement of Matured advice means, it is obvious that bank will recover amount from borrower and failING to that, from guarantor. But, there are lot of ways to approach Bank for restructuring the loan and/or giving additional time for repayment, tenure enhancement. Is there any relevant case where Cash Credit has been converted to T/L, something like this I want to know. As, in my case, banker are very much supportive, coz, NPA is purely because of adverse market condition and abnormal payment conditions of customers. I am expecting them to cooperate with me but I should have sufficient and relevant knowledge to request them for the same.

MARU ADVOCATE (simple solutions for criminal legal problems -- yourpunch@gmail.com) 26 October 2016

Well it is legal position that you have to repay the loan but it is not possible in present situation.

So instead of paying small amounts put your energy for counter actions to buy time, it is possible.

Do not make mistake of sending letters to the bank otherwise you will not be able to get advantge of many mistakes of bank which are always there.

Because the whole problem is on two counts one the banks mis read the RBI directives for NPA and start demanding whole loan which is not right.but on the other hand it is illegal.

Second there are many legal hurdeles for taking possession of the unit but the banks in hurry just create terror and in the long run the working sufferes and what ever is possible is also lost.

In a similar case from Surat Gujrat where the banks had issued possession notice, we are ble to get stay from courts.

Please contact with full details for line of action. Send your email for feedback on similar postions.

Mahhesh Kummar Aggrawal (Proprietor) 26 October 2016

Thanks a lot @Maru Advocate, this kind of reply I was expecting since yesterday. I have stated the things in short, may I be guided, if anything more is needed. It will greatly help me, if, you ask me point wise, I assure you to give full details as you want. As, I don't know, which thing will benefit me. You will be best guide.

Thanks n Regards