hello there once again
i am standing as a guarantor against the secured loan (house loan where house has been mortgaged to the bank).
few days ago i received a letter saying that loan has over due and it shall be cleared.
my question is in such case how do i defense myself because, the property was mortgaged to bank that is why loan was sanctioned, then why not bank auctions the property and other assets of creditor to recover loan then look at me to recover rest of amount as guarantor.
what shall be my defense?
The most common scene of the financial institutions (Banks / societies etc):
"The borrower's account has become NPA, the cheque given by the borrower has bounced, even as guarantor your checque dated xxx has bounced and so as guarantor your are asked to deposit xx amount within 15 days otherwise legal proceedings wait for you u/s 138".
My questions to this common scene are:
(1) Has any time borrower refused to repay? or as lending institution have they obtained in writing from borrower that he can not pay?
(2)As being the guarantor was I any time informed in writing that borrower is not been able to pay so at the earliest as being guarantor I must clear the dues otherwise the legal action against the guarantor as deemed fit will be taken?
(3)Are the banks authorised by some authorities that even without written notice about the due payment and to deposit it, the guarantor may be sued against u/s 138?
(4)Are not these financial institutions liable to inform guarantor in writing about measures taken by institutions for recovery of dues from the borrower?
(5)Are the institutions lawful in their actions?
please advice as your opinion going to help many who are suffering as guarantors.
(1) As per Chapter III of SARFAESI ACT 2002 Point 13 (Enforcement of security interest) sub point 3(A)If, on receipt of the notice under sub-section (2), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within one week of receipt of such representation or objection the reasons for non-acceptance of the representation or objection to the borrower.
(2) Rule 18 of Income-tax (Certificate Proceedings) Rules 1962 provides as under:
“18. No sale under this Schedule shall take place on a Sunday or other general holiday recognised by the State Government or on any day which has been notified by the State Government to be a local holiday for the area in which the sale is to take place”.
(3) The auction of the said property is decided and the same is published in news papers. Bank also sticks a note by the side walls of bank premises and ATM centre display the name of borrower and his guarantor along with the minimum price of the property.
(a) Bank shows attitude for the auction as if property or the person, which is being auctioned? So they have right to advertise the thing which is being auctioned.
(b) Auction date is over which was 29/03/2013 (Good friday), bank should have removed the posters for the auction by now. But bank has not yet done that.
(c)As per rule 18 of income tax rules of proceedings, was the auction date valid?
(d)Most importantly, as per Chapter III of SARFAESI ACT 2002 Point 13 (Enforcement of security interest) sub point 3(A), the notice was served in Jan 2012, the outstanding of the notice and the printed bank statement from the bank differed by 70 to 80 000, borrower responded to the zonal office by regd a/d letter and then no reply from the zonal office and local branch till now. Was the auction of the property was lawful?
(d)Where should be contacted for these irr-regularities.
1. interest calculated on loan amount by credit coop society is flat or reducing.
2. the overdue interest is charged on EMI or principal or only interest part of EMI e.g. if EMI is 47777 where 27777 is principal and 20000 is interest, then OD interest should be calculated on 47777 or 27777 or on 20000.