Urgent: bank guarantee in divorce settlement

Generally Bank Guarantees are given in commercial transactions or for performance of contracts. Please ascertain from your bank if it is prepared to give such guarantee in divorce settlement matters (disputes). If you choose to furnish Bank Guarantee (BG) to assure payment of Rs.XX Lacs as condition for obtaining of a divorce decree, the bank has to honour invocation of BG subject to production of original divorce decree drawn (recorded) by court  in terms of the compromise settlement signed and filed by both, yourself and your wife.  Of course production of original BG by the divorcee  is also necessary (for bank's records). The conditions for invocation are required to be specifically recorded in the "Restrictive Clause" of the BG. Bank having issued has to ensure that, the invocation of BG is proper, as per the terms and conditions recorded by the court  and ensure that there is no misrepresentation or fraud before honouring the BG. If the bank honours the BG wrongly or due to negligence (on account of cheating by your wife or otherwise as stated in your query) bank is not entitled to reimbursement of the BG amount so honoured. This point is to be particularly recorded in the counter guarantee / indemnity that you may sign in favour of the bank. But if the honouring is valid, you are liable to pay the same to the bank. Bank is bound to furnish all the information for invoking counter guarantee against you.

As far as I know Bank generally does not issue  Bank Guarantee on the terms mentioned by you. If the Bank agrees to issue, it will be the responsibility of the Bank to ensure the legality of the documents presanted to it  while releasing payment against invoking of the BG. if it accept invoking of  the BG on the basis of fake documents and release payment,  Bank has to compensate you. On the other hand  your wife, with whom you are seeking divorce, revoke the BG and receive  the payment on the basis of forged documents, she will be inviting criminal action hence inviting troubles.

Hi Ramachary & Rajendra,

Thanks for your detailed replies. I have another query, please see if you can answer.

If I hand over a post dated cheque (dated 31/12/13) ) to my wife on first MCD motion (let say 20/04/13) and mention in MCD MoU that :

(1) it is encashable only after divorce decree is granted.

(2) if wife does not appear for MCD MoU till 31/12/13 then I can stop payment for that cheque.

And then if she does not appear for second MCD motion and try to encash that cheque (which have been stopped for payment by me as per MoU)  on 31/12/13 then will it attract any IPC section against me (i.e. 138 NIA)???

As per my understand, she can atleast file FIR and make me face trial of a criminal case. Is my understand correct???

Or with such an MCD MoU conditions  I am completly safe if I stop the payment of cheque at right time (i.e. 31/12/13).

While addressing the advocates please note to prefix 'Mr.'

Your query itself finds all the answers. You may contact your local lawyer through whom you propse to move your proposal.

Hi Mr. Ramachary

I apologize for missing the honor.

But before going to lawyer, I am still evaluating and understanding the basics. My question remains unanswered, please see if you can answer:

if she does not appear for second MCD motion and try to encash that cheque (which have been stopped for payment by me as per MoU) on 31/12/13 then will it attract any IPC section against me (i.e. 138 NIA)???

As per my understand, she can atleast file FIR and make me face trial of a criminal case. Is my understand correct???

Or

with such an MCD MoU conditions I am completly safe if I stop the payment of cheque at right time (i.e. 31/12/13) and no FIR is possible.

Originally posted by : c.p.s. ramachary
	(1) Generally Bank Guarantees are given in commercial transactions or for performance of contracts. Please ascertain from your bank if it is prepared to give such guarantee in divorce settlement matters (disputes).     (2) If the bank honours the BG wrongly or due to negligence (on account of cheating by your wife or otherwise as stated in your query) bank is not entitled to reimbursement of the BG amount so honoured.

Respected Sir,

You mentioned 2 important points above. Please find below my concerns/reply:

(1) Co-operatives banks are providing such BG against Fixed deposits in advance.

(2) You mentioned that if wife make fraudulant divorce decree and invoke that BG successfully then will not bank be responsible to cross-check that divorce decree from court? If not, then what is the logic behind a conditinal BG as bank will always pay the money to girl?

Thanks in advance for your reply.

Regards

If the cooperative bank whichever is coming forward to give you BG favouring your wife for accepting divorce decree it goes without need to say that, the bank has to thoroughly check that the original decree passed by the court is true and then only honour the invocation of the BG held by your wife (only after divorce). For any negligence on the part of the bank, it has to recover the money from your wife rather than falling back on the FDRs put by you as security for issuing such BG.

In case a post dated cheque is issued and later the payment is stoped and if  the beneficiery of the cheque proceed against you u/s 138 of the NIAct, you have either to prove before the court that the consideration of the cheque (Divorce) was not made availabe to you as agreed in MCD and this will be a case of litigation. You have to prove your case beyond doubt. Sometimes the payee of the cheque also proceed against drawer in case of dishonour of the cheque under provisions of the IPC (Fraudlent act). Again you have to prove your case beyond doubt.

However, you can mention the clause in MCD to pay the amount at the time of final decree and pay the amount by Bank draft before court. However,  the procedure and all pros and cons are to be discussed with your local lawyer.