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Mortage loan

(Querist) 02 October 2017 This query is : Resolved 
Property is in the name of my mother and my my father is a co-applicant for the mortgage loan . My father expired 10 months back and now we are thinking of clearing the loan and get back the documents .
There is another loan in the same bank for my relative , surity property is also in the name of my relative , but my father signed as a guarantor and there is no asset in the name of my father .
Now the manager says that he will not give back the documets even we clear the loan unless my relatives loan also get cleared.
Does the manager has the right to not to give our documents ?
Ms.Usha Kapoor (Expert) 02 October 2017
under section 128 of Indian Contract Act surity's liability is coextensive with that of the principal debtor hence you and your mother clear the relatives loan first and chase relative for enforcing your rights as surety/Guarantor rights by selling of relatives property which is available in the form of collateral security and appropriate the sale proceeds for satisfaction or clearance of his loan first and then proceed to clear your loan and get back your documents given as security for creating equitable mortgage of title deeds deposited by your parents as security..To give an example of case law on this point let examine the ratio of the following SC case:

Jan 27 1999 (HC)
Kerala State Financial Enterprises Ltd., Thrissur Vs. C.J. Thampi and ...

Court : Kerala

Reported in : AIR2000Ker36

..... save as provided in the contract, the liability of the surety is co-extensive with that of the principal debtor. since the sureties have agreed to pay the entire amount their liability is immediate and it cannot be deferred until the creditor exhausted his remedies ..... surety has no right to ask the creditor to pursue his remedies against the principal debtor at the first instance. this dictum laid down by the supreme court in the aforesaid case was later followed with approval in state bank of india v. saksaria sugar mills ltd., air 1986 sc 868, wherein it has been held that under section 128 of the indian contract act, 1872 ..... that section 128 of the indian contract act which defines surety's liability says in categorical terms that liability of the surety is co-extensive with that of the principal debtor unless it is otherwise provided by the contract. ext. p-1 is the contract which defines the relationship between the parties. in the face of the specific legal provision contained in section 128 of the indian contract act, ..... the same on an erroneous ground. to recapitulate, under section 128 of the indian contract act as also under ext. p-1 agreement, the liability of a surety is co-extensive with that of the principal debtor unless it is otherwise provided by the contract. it is settled law that a surety may be proceeded against without first proceeding against the principal ..
Sudhir Kumar, Advocate (Expert) 02 October 2017
prima-facie agreed with above views.
Dr J C Vashista (Expert) 02 October 2017
Clear the loan of your mother and issue a legal notice through a local lawyer if the bankers do not release hypothecated documents.
Advocate Bhartesh goyal (Expert) 02 October 2017
Yes firstly clear outstanding amount due on your mother's loan a/c and demand the property documents. Bank can not retain/ withhold the documents as your mother was not guarantor on your relative loan a/ c.even if bank does not release then issue notice to bank and file complaint before Consumer Forum.
Rajendra K Goyal (Expert) 02 October 2017
Mother has expired and property belonging to her would be inherited by your father after her.

Bank has a general lien on assets of the borrower / guarantor.

Bank can recover loan from property share of father (guarantor) inherited from your mother.
P. Venu (Expert) 02 October 2017
I fully agree with the suggestions from Learned Experts Dr.J.C.Vasishta and Advocate Shri Bhartesh Goyal. The Bank is unjustified in retaining the documents once the mother clears the debt.

Learned Expert Shri Rajendra K Goyal: It is the father and not the mother who has expired I trust you would be magnanimous enough revisit to your suggestion. Integrity of the this forum, in my humble view, obliges that errors and lapses ought to corrected at the earliest opportunity..
Rajendra K Goyal (Expert) 02 October 2017
Expert P.Venu ji,

Sorry for the mistake, thanks for correcting me. Thanks and feel obliged.

In the given circumstances agree with the expert Advocate Bhartesh goyal.



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