Are you being asked to repay money from bank which you never took. If you have ever been guarantor to your friend/relative/business. A DRT Guarantor Defence lawyer can look into your case and tell you if you can challenge the banks claim on you. There are various defences that can be used under indian laws.
Once you become a guarantor to a person many times you are unaware of your liability. When the borrower fails to pay the bank they can come to you to recover the amount or take actions against secured property.
Can Banks Recover Loan Amounts Directly From Guarantors?
Yes. According to section 128 of the Indian contract act 1872. A guarantor will be liable to the same extent as that of the principal debtor. Unless it is provided otherwise in the contract.
So Banks can proceed against guarantor even if they have not proceeded against borrowers.
This will depend upon the Guarantee given, validity of guarantee and outstanding amount and laws which can be applied in this case.
DRT Guarantor Defence Lawyer can look into this if Bank is proceeding rightly or not.
What Problems Do Loan Guarantors Commonly Face?
Most Guarantors come across many unexpected situations after default by Borrowers. These include;
Demand letters with huge outstanding balances.
Secured assets being attached/sold.
Signing on the guarantee was disputed.
Wrong interest calculated and charges disputed.
Recovery proceedings when loan was restructured.
What are my rights after borrower becomes insolvent.
All disputes have to be looked at individually. Just because you have signed a guarantee doesn't mean that all amounts claimed are correct.
Can a Guarantor Challenge Bank Recovery Proceedings Before DRT?
The guarantor can challenge the proceedings in case of debt recovery if there are any valid defenses which he can apply for.
He can challenge on various factors such as wrong amount calculation of dues, documents were not executed properly, limitation bar applies on the suit, restriction of contract or any other valid defense under law.
The Tribunal will consider the facts and evidence that you will place before it and will not consider bare allegations.
If you hire a DRT Guarantor Defence Lawyer he will be able to draft your reply, examine bank statement and represent you in front of the Tribunal.
You should respond at the earliest and not miss out on any valuable opportunities to defend yourself.
Can Banks Auction a Guarantor's Property Under SARFAESI?
They can enforce their security interest on properties which have been provided for as collateral.
Subject to law they can take steps of taking possession and selling under the SARFAESI Act.
If the Guarantor is aggrieved they can approach DRT under section 17 if they are eligible to do so.
As a SARFAESI guarantor defence lawyer you can go through the notice for demand, possession, valuation and auctions.
Filing alone will not stay the auction you need a stay order from the Tribunal.
What Happens When the Borrower Becomes Insolvent?
Insolvency of borrower does not automatically release a guarantor. Guarantors giving personal guarantees to corporate debtors can themselves be subject to insolvency proceedings under the IBC, as applicable. Proceedings can be through NCLT instead of normal DRT recovery process. Advice must be sought to properly separate contractual recovery, secured asset enforcement and insolvency initiation prior to deciding on a course of defense.
Can a Guarantor Escape Liability After Loan Restructuring?
Modification of the underlying loan may discharge the guarantor. Sections 133 to 139 of Indian Contract Act deal with the matters relating to variation, release, impairment of remedy etc. and the protection available therein. But the guarantees are drafted these days with various consent clauses which might kill above arguments. Hence discharge cannot be claimed only on the grounds that bank changed the repayment schedule. Attorney should review the underlying guarantee, subsequent agreements and correspondences.
Why Is Early Legal Representation Important?
Neglecting recovery notices can lead to procedural disadvantages.
Timely legal consultation allows determination of documents, disputed amounts, limitation periods, and forums.
Guarantors should retain guarantee deed, sanction letter, account statements, repayment records, notices, correspondence.
Avoid signing new acknowledgements/settlements without comprehension of consequences.
Matter may be discussed with Advocate BK Singh for evaluation of available remedies.
Conclusion
A guarantor against whom recovery proceedings are initiated must respond quickly, review the relevant agreement, and file an objection with the Debt Recovery Tribunal regarding any claim that is legally untenable.
Objections must be supported by documentary evidence, adherence to procedural requirements, and may invoke protections available under relevant statutes.
DRT Guarantor Defence lawyer offers legal support for guarantor objections, navigating DRT proceedings, SARFAESI objections, and Debt Recovery Appellate Tribunal cases.
Frequently Asked Questions
1. Can bank file a suit against guarantor without suing defaulter?
Yes. Banks have the option to initiate recovery against guarantors by filing a suit where the guarantee is validly enforceable. The governing law and terms of contract will provide the extent of liability.
2. Can guarantor file a dispute if loan amount recovered by bank is wrong?
Yes. Guarantors have raised successful challenges to interest not supported by the account, miscalculations, wrongful levying of fees and charges, and amounts that were paid but not credited in bank statements.
3. Can DRT prevent auction of guarantor property?
DRT can allow such interim relief if the statutory conditions are satisfied and legal grounds are made out. Mere filing of an application will not automatically result in stay of auction.
4. Does guaranteer have liability after death of borrower?
Death of borrower does not invalidate an enforceable guarantee. Whether a guarantor remains liable after death of borrower will depend on the terms of contract, extent of obligations outstanding and the governing law.
5. Can guarantor file defense against SARFAESI notice of possession?
Yes. Eligible guarantors can challenge any actionabl SARFAESI proceedings initiated by bank before DRT under Section 17 and such challenges are usually required to be made within 45 days of the actionabl action.
6. Does loan settlement releases a guaranteer from liability?
It depends. The loan settlement agreement would need to be reviewed to understand whether such settlement releases the guaranteer from any liability.
7. Can bank attach Personal assets of guaranteer?
Yes. Banks can initiate recovery proceedings against the guarantor for amounts legally available to you. Actual attachment would depend on the security (if any) offered by the guarantor, available exemptions and following due procedure of law.
8. Can guaranteer recover the money paid to bank from borrower?
Yes. In most cases, if a guaranteer satisfies the guaranteed obligation to the bank, the guaranteer will have rights against the borrower.
9. Can guaranteer file an appeal against DRT order?
Yes. An aggrieved guaranteer who meets the qualifications can file an appeal from the orders passed by DRT to DRAT as per law. Note that there are limitation requirements and requirements of pre-deposit to be made before filing such appeals.
10. When to contact DRT Guarantor Defence Lawyer?
You should contact a lawyer as soon as you receive a notice from bank for recovery, hear about bank intending to enforce its guarantee or get notice of guarantee being disputed.
Website - https://www.drtlawyer.com/
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