surety liable?-no notice for auction

I don't think there is any breach of natural justice in not giving notice of auction to the surety, firstly because the clause was already there in the agreement and secondly no prejudice is caused to the surety in not giving notice of auction to him. The amount received in the auction is deducted from the outstanding amount and the surety is sued for the balance,  If you can show that this has caused prejudice to the interest of the surety, then there may be some hope..such as the vehicle was sold off in the auction at throw away price etc.

Surety is also equally liable for the repayment of the loan, if the principal borrower is failed to repay the loan amount.  But seizure notice before the seizing the vehicle of the surety is must.

Mr. Raju,

The car of the borrower has been seized against which the financial assistance was granted by the Bank. The car of the surety has not been seized.

I hereby agree with teh view of Advocate Archana.

Thanks a lot guys.

Adv.rajoo- the borrowers car was seized.

If clause was not there- does that make a difference?

The non-presence of surety at auction deprived the surety of purchasing the car and there can be a possibility of collusion between bank officials and few auctioneers. I think onus of proof should shift on the bank to show that the car was not sold at not-a-fair price once it is shown that no notice of auction was given to surety.Is my thinking way out of line here? No case laws?

Following is my view:

In case of default in payment of loan by the borrower, the Financier is considering surity also as a borrower  for iniating recovery proceedings. In such circumsances, the Financier has to involve/inform the surity in all the legal steps he followed against the borrower i.e, starting from giving legal notice, seizing the car, auctioning the car etc., By not doing so, the suirty is definetly kept in dark. There is a possibility that the borrower and financier have colluded/as mentioned by our friends in their view the car is sold for an undervlaue/surity might have taken the car and got the loan transferred in his name/got the borrower and handed him over to financier. All these options are denied to the surity. Defineltely it is an unjustice to the surity.

Thanks radha k.

Today i asked my senior if we r appealing.He said no but implied that exection will be resisted...he sounded so sure that money wont be deducted from the surety :) . Bag of dirty tricks????

If i had some case laws i was thinking of appealing myself (gratis, of course- a learning experience), but my senior has other ideas. The surety seems a decent chap.The borrower/his friend has migrated to UK. 

Thanks once again for all your opinions/advice.

Non service of notice to surity would not render the proceedings invalid. The Bank is not liable to serve such notice to surity.

Thanks Sachin. You seem to be correct. I was going through some AIR judgements (concise-contracts)- i did not find 1 case law that surety had to be given notice of auction. On the contrary, in 1 case, the court was appreciative of the Bank to dispose of the vehicle quickly.

The best remedy would be try to reduce the amount the surety has to pay in execution proceedings- get expert evidence of a valuer suggesting that car was auctioned at a too low price - here the court may grant the surety some leeway as he was prevented from attending the auction by default of the bank.