Legal Question in Banking Law in India

Mr. varadraj, requests his own uncle Mr. Padmanabh, who is working as lecturer in vijaya college, basavangudi, bangalore to be surety to his arrangement. After mr. padmanabh signs the surety deed the loan amount was sanctioned and released to mr. varadraj. the equated monthly installment will come to Rs.22000, which has to be credited to KSFC's account on on before 10th of each month. after 13 months of regular payment Mr. varadraj has failed to pay the monthly installment to the KSFC. After that incident there were several attempts made by KSFC to recover the amount from Mr.varadraj, but in vain. the matter has reached the court and the Dist. court of Bangalore has given its decision in favour of KSFC and asked the defendants (mr.varadraj and mr.padmanabh) to pay off the loan amount. Now KSFC writes to mr.padmanabh to pay the money as he is surety for the arrangement. but the contention taken up by mr.padmanabh is that unless KSFC exhausts its remedies against the Principal debtor he cannot be asked to discharge his liability as surety. advise the KSFC on the matter, by quoting the judicial pronouncements on the matter. Explain what you understand by bank guarantee with the help of the various decisions of the court.


Asked on 7/10/11, 2:04 am

1 Answer from Attorneys
J. Radhakrishnan independent Practice

Once the court has decreed the suit against both Varadaraj and Padmanabha, the KSFC can execute the decree against Padmanabha. No ruling is necessary for this proposition. It need not exhaust the remedies against Varadaraj before proceeding against the surety Padmanabha.

The lawyer of KSFC will take care to argue the matter.

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Answered on 7/10/11, 8:12 am


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