Legal Question in Banking Law in India

I was guarantor of a person X for a commercial vehicle. Person was known to me and installments were paid till he was alive. On default of payments after X death, financier seized the vehicle. Owner's son Y approached financier to release the vehicle and gave undertakings and security bank cheques and finally got the vehicle released. Financier neither informed me nor took my approval to release the vehicle to Y who was quiet unknown to me. Y took the vehicle and absconded from the place to his native place in a different city and state with no clue on his whereabouts. Again after a long time on default in payments, financier approached me because they couldn't locate the vehicle and owner Y. I somehow helped them to trace the vehicle and owner Y. Again after a long time they approached me with a huge out standings. The vehicle is still used by Y at the same location. I approached financier and asked why they're harassing me, the person X to whom I was the guarantor has died, he was well known to me, but why they released the vehicle to a person Y, whom I don't know. What they are doing even after all information of Y and the vehicle. Financier showed me some clauses of agreements, all in his favor. What can I do now?


Asked on 5/23/12, 11:22 am

1 Answer from Attorneys
J. Radhakrishnan independent Practice

As per Sec.139 of the Contract Act, the guarantor is entitled to every security which the creditor has and if he loses the same, without the consent of the guarantor, the guarantor is discharged from his liability. You can take advantage of the above provision and successfully defend any action by the creditor against you

Read more
Answered on 5/23/12, 8:09 pm


Related Questions & Answers

More Banking Law questions and answers in India