Signing a loan guarantee for family/friends or your business seems harmless until payments stop. Now the bank turns to you for money, sends recovery notices and threatens action against your property. A DRT Guarantor Defence Lawyer will advise you on what you legally owe and if the lender followed due process.
Can a Bank Recover Money Directly From a Guarantor?
Yes. As per Section 128 of Indian Contract Act the liability of a guarantor is co-extensive with that of the borrower unless it is otherwise provided by the contract of guarantee. Typically, a lender need not first make efforts to recover amounts from borrower before initiating action against the guarantor
But its not a blank cheque you sign. The terms of guarantee, loan records, repayment track record and conduct of the lender needs to be reviewed. A bank guarantor defence lawyer would be able to point out the disputed amounts, contractual limitations and potential legal defences.
What Problems Do Guarantors Face Before the DRT?
Guarantors are often presented with demands for unpaid principal, interest, penalties and costs of recovery with no explanation as how the amount was calculated. Some guarantors find out that the borrower had altered terms of loan or had availed additional facilities. Some face recovery proceedings against properties mortgaged/given as security along with their personal assets.
Examples of issues raised are guarantor signatures being forged, guarantees not being fully executed, inflated demands, non-accounting of payments made, notices not being served as required, auction being threatened for wrong properties etc. While all these are valid issues, they need to be backed by proof and not just claimed. It is also never advised to ignore a DRT notice of recovery just because the guarantor was not the original borrower of the loan.
Can a Guarantor Challenge SARFAESI Possession or Auction?
If a secured creditor has proceeded with Section 13(4) SARFAESI measures, the aggrieved guarantor can file an application before the Debt Recovery Tribunal under Section 17. This must be done within 45 days of the measure sought to be challenged. Such an application is heard by the tribunal to consider if the enforcement measure was in conformity with law and rules. Thus, if the case is made in time, a typical SARFAESI application could raise defect as to notices sent, taking possession, valuation amount and manner of sale among other issues.
Merely getting a Section 13(2) demand notice does not of itself give rise to the same remedy under Section 17 typically. A SARFAESI guarantor rights attorney will be able to pinpoint exactly when and consider making an application/request for interim relief.
When Can the Guarantee Itself Be Disputed?
Not all Disclaimers are cut-and-dried as the lender might assert. There could be issues relating to consent, misrepresentation, amount guaranteed, variation, impairment etc. Sections 133, 139, 141, 142 and 143 of Indian Contract Act would become applicable depending on the facts
Hope this helps. These are defences available on facts of the case. There are no straight exemptions. Original guarantee deed and correspondence would be very crucial.
What Should You Bring to a Legal Consultation?
Bring your guarantee deed, sanction letter, account statements, payment records, demand notices, possession notices, auction papers and previous correspondence. Add any messages which record modifications to the loan or conversations with the bank.
Your DRT case defence lawyer can review these documents, clarify procedural timelines, assess potential arguments and negotiate where possible. No responsible lawyer will guarantee that all guarantees will be cancelled, or that every auction will be stopped.
Frequently Asked Questions
1. Can bank sue guarantor first?
Yes. Unless the contract and law say otherwise, the lender can take action against the guarantor without first seeking recovery from the borrower.
2. Can my house be sold in auction?
If the property is under mortgage, the mortgage can be enforced by law. The sale of other properties depends on the mode of recovery, ownership and available protections.
3. Is oral assurance valid?
Guarantees can be oral or written as per the general law of contracts, but transactions with banks are usually in writing and require certain formalities.
4. Can I dispute unfair demand?
Yes. The declared amounts, interest, charges and credits towards payments are subject to verification and can be disputed in the proceeding.
5. Am I discharged if the borrower becomes insolvent?
No. Insolvency or initiation of resolution process against the borrower does not automatically discharge all guarantor obligations.
6. Can I initiate SARFAESI case right away?
Issuance of demand notice alone generally does not authorize application under Section 17. Identify the enforcement option and associated timeline.
7. What happens if I am wrongly signatory?
Raise the claim early and secure proof of your claim. genuineness of the signature (s) may have to be tried.
8. Can I settle with the bank?
Yes. You can settle if the lender agrees to terms. However, you should also get a clear written undertaking of release of the guarantor.
9. Can we appeal DRT order?
Appeal against certain orders/directions of the DRT is vested with DRAT within a statutory period, subject to certain conditions and a deposit.
10. Do I have respond to bank’s notices?
Yes. You should atleast review their notices early on to be aware of the timelines, preserve documents and not lose your chance to raise defenses.
Conclusion:
Loan guarantees put your savings, assets and future earnings at risk of aggressive recovery actions. DRT Guarantor Defence Lawyer Timely legal review can help you weed out legitimate demands from frivolous claims. This matter can be discussed with Advocate BK Singh for personalized advice. DRAT attorney provides guarantor defense and help you in DRT proceedings, SARFAESI matters, DRAT appeals.
Website - https://www.drtlawyer.com/
Read More - Best Lawyer to Stop E-Auction Notice DRT Legal Help?