Criminal Trident Pack: IPC, CrPC and IEA by Sr. Adv. G.S Shukla and Adv. Raghav Arora
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Seeking advise in case of guarantor for immovable property

Querist : Anonymous (Querist) 05 August 2021 This query is : Resolved 
Dear sir,

One of my relatives had avail loan 10 years ago from the cooperative bank for construction of commercial property for which I had signed as a guarantor. I believe that he was a constant defaulter to pay installment but somehow he had managed bank staff & bank also for their own benefit if any, renewed his loan for higher value by mortgaging the same constructed property.

3 years back he had been declared defaulter by his bank and seized his constructed property for Bank Auction.

In the process of Bank Auction, Even after three consecutive attempts, his bank failed to sell his property to any buyer due to higher auction value.

In the next step, according to The Maharashtra Cooperative Societies Act 1960, under Rule 85 & Section 100 for Transfer of property that cannot be sold, the bank has transferred this property in favour of Bank itself.

I am seeking your advise to discharged from guarantor liabilities since I think the bank has given more loans against overvalued mortgage property. Also, the type of agreement between the principal debtor and the Bank differs from the original agreement for which I have no concerns in a later stage according to the Maharashtra Cooperative Societies Act 1960.

Kindly advise.
Dr J C Vashista (Expert) 06 August 2021
Further extension of loan to borrower was based on mortgaged property and collateral guarantor, which have continued. Accordingly you are not discharged from your liability even if the Bank could not auction mortgaged property.
Advocate Bhartesh goyal (Expert) 06 August 2021
Yes, you are still guarantor and has not been discharged from your liability.As per your statement bank bank got transferred mortgaged property in their favour so in such a scenario you must withdraw your guarantee and intimate to borrower in this regard also.
kavksatyanarayana (Expert) 06 August 2021
Yes. Agreed with the advice of the above learned experts and have nothing to add.
P. Venu (Expert) 06 August 2021
Has the Bank made any demand upon you?
Querist : Anonymous (Querist) 06 August 2021
No sir . Till today bank has not raised any demand.
Dr J C Vashista (Expert) 08 August 2021
It implies that your query is just an apprehensive, hypothetical and imaginary for "Time Pass" as it is not real one.
Querist : Anonymous (Querist) 08 August 2021
No Sir, It is a real case I am facing nowadays & from some other portal I got advise that can get discharged from guarantor liability under section 133 of contract act due to a change in contract.
Querist : Anonymous (Querist) 08 August 2021
Resending query with more description & Seeking advise in case of guarantor for immovable property.

Dear sir/Madam,

One of my relatives had avail loan 10 years ago from the cooperative bank for construction of commercial property for which I had signed as a guarantor. I believe that he was a constant defaulter to pay instalment but somehow he had managed bank staff & bank also for their own benefit if any, renewed his loan for higher value by mortgaging the same constructed property.

3 years back he had been declared defaulter by his bank and seized his constructed property for Bank Auction.

In the process of Bank Auction, Even after three consecutive attempts, his bank failed to sell his property to any buyer due to higher auction value.

The Bank approaches the office of the District Deputy Registrar of Co-operative Societies to get a certificate from them to transfer property in favour of the bank. DDR had sent notice to all defenders including the principal defaulter and other guarantors to pay outstanding within 30 days and also ask us to be present on a particular date to express our stand if any for the transfer of property for which I was absent due to ignorance from my end due to lack of knowledge of the situation.

In the next step, according to The Maharashtra Cooperative Societies Act 1960, under Section 100, for Transfer of property that cannot be sold, the DDR had issued a certificate to transfer this property in favour of the Bank with following instructions.

1. Instructed the bank to transfer the property in their favour but transfer value was not mentioned in the certificate
2. Instructed the bank to get more and more income by renting out /operating this property by themselves.
3. All taxes will be paid by the bank.
4. Bank will maintain a separate credit/debit & loss and profit account of property for all defaulters.
5. Bank should try to sell this property at the earliest.

The bank is under process to transfer or already transferred the property for which I don’t have any idea.

I am seeking your advise to discharged from guarantor liabilities since I think the bank has given more loans against overvalued mortgage property. Also, can we treat this transfer of property as a violation of the original agreement to get out from the guarantor’s liability? or it is just the next process of the banking system after the auction process.
Kindly advise.


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