Legal Question in Banking Law in India

Respected sir i had asked a question which is as under.

I am a govt of india employee and i have given guarantee to a borrower who also is a govt Andhra pradesh state govt employee. He is about to retire by april 2014. But being a regular employee he is expected to get good settelment amount and pension after retirement.Now he is defaulter and has paid only Rs 45000/- as againts nealy Rs 1.2 lakhs till date. ( Total loan amount is Rs 2 laks and he has to repay it in 36 EMI of nearly Rs. 9800/- . EMI started from May 2012) Now financial institution has filed case in court. In this case attachment for recovery should be ordered first to borrower or to guarantor or both simultaneoulsy.

For this respected Fca Prashant Chavan replied which is as under

Attachment for recovery of dues is primarily against the borrower first, and only if the loan amount outstanding is unsettled, the guarantor is called upon by the bank / financial institution to settle the remaining outstanding amount of the loan.

Thanks for the same to lawguru as i got some courage to face problem.

I think this may be in the form of rule also which directs attachments for recovery against borrower first. Can i get reference of such a rule or something which can be quoted in court. Next hearing in court is on 02/09/2013. Thank you very much sir


Asked on 7/31/13, 2:02 am

1 Answer from Attorneys
J. Radhakrishnan independent Practice

I am sorry that Prashant Chavan has replied that attachment should be first against the borrower and only if the loan amount is not settled then recourse to guarantor. This is not correct. A guarantor is co-extensively liable with the borrower. The Creditor can choose to recover the whole debt from the guarantor alone without proceeding against the principal debtor(borrower). That is the latest affirmation by the Supreme Court. Better goad your friend to settle the loan so that you escape from recovery by the bank.

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Answered on 7/31/13, 10:00 pm


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