Bank's rights on Directors Personal Property


Dear Sir,

I am a Director of A pvt ltd company Which has taken a loan from a Nationalised bank say Bank A.Due to Heavy loses in the Industry ,the industry was not able to pay back the loans.The account was declared as NPA by the bank Three years ago.Only the industry property was mortgaged for the loan in th bank.Which has yet not been auctioned. The bank has filed a case in the DRT court for the personal property of the directors.

I have a personal Residential buliding Which is mortgaged in another bank say bank B against a loan of about 20 lakhs.The laon was taken before the private limited company was established.The value of the building is about 50 lakhs.I have given personal guarantee in bank A as a director.


I request you to enlighten me on what options do i have to safegaurd my properties.Morover can i proceed and sell this property if i want?

 
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POWER OF DEFENSE IS IMMENSE

You must engage a proper advocate , since as a routine the courts and DRT order such attachments but it can not be done.


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Retired

Director's property can be attached.

 
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POWER OF DEFENSE IS IMMENSE

Directors personal property can not be attached but banks do it in routine which is illegal.

Any agreement to give personal guarntee of a director for his company  is illegal and this very fact can be cleverly used to initiate  counter claim for damages against the bank.

 
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Originally posted by :JSDN -advocate DEFENSE
"
Directors personal property can not be attached but banks do it in routine which is illegal.

Any agreement to give personal guarntee of a director for his company  is illegal and this very fact can be cleverly used to initiate  counter claim for damages against the bank.
"

Can you please explain this Sir. How giving a personal guarantee & hence attaching personal property of director to NPA company is illegal? Appreciate your time & thanks for your advice. 

 
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POWER OF DEFENSE IS IMMENSE

you have dug an one year old reply, pl give exact problem or it is student querry.

 
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Advocate

Bank can attach through the Court/ DRT, the properties owned by the guarantors, even if they were not mortgaged and if the bank can convince the court that the value of the secured properties, will not be sufficient to satisfy the suit dues.

 
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partner.

What banks are doing  is  illegal. In case of partnership firms the partners liability is unlimted say their personal assets too can be attached . In case of private limited company this is being done by banks purely to armtwist the director to settle the  dues. As Mr.Raju rightly said that court will weigh the pros and cons of the case and decide on its merits. But you have to fight it out or banks will intimidate you with an ultimatum saying that this property would be brought to sale much before the secured asset.

 
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Hi, 

Yes mine is a student querry, while searching on this subject of NPA is found this. So suppose a director has given his personal guarantee for a loan from the bank and it has gone bad i.e. NPA. So now the bank should proceed first against the secured assets against the loan and then personal guarantee of the director. So Sir, from you reply I was confused as to how giving personal guarantee for a bank loan is illegal & further claiming a personal property (in NPA situation) by invoking the personal guarantee is illegal and hence was curious for the same. 

Mr. Raju & Mr. Khalid, thanks Sir for your inputs. 

 
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Advocate

If the value of secured property is not sufficient to recover the suit dues, or even to pressurise the borrower/ guarantor, usually banks try to attach the personal properties of guarantors even before proceeding on the secured property.  Bank need not wait till sale of secured property, in order to proceed on unsecured assets.  Guarantors property cannot be sold under SARFAESI Act, if it was not mortgaged to the bank. 

In the instant case, as the guarantors property is already mortgaged to another bank, the Applicant bank in DRT can get only second charge of the property, after settling the dues of that other bank.


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