Criminal Trident Pack: IPC, CrPC and IEA by Sr. Adv. G.S Shukla and Adv. Raghav Arora
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Starship Trooper   04 August 2015

Claim on non mortgaged property of guarantor.

Hello experts,

My mother (aged 59, widowed housewife, now has no personal income) has 2 properties. one inherited and one self acquired. She is guarantor in the family business and has pledged one property (in Mumbai, inherited) as collateral againt OD/CC facility. The other property (in village, self acquired) is free from any bank lien.

Family business is on verge of going bankrupt and she may be called upon to pay as guarantor.

My questions to the experts,

1) While the pledged property may be attached by bank under SARFAESI, can the village property be attached also ?

2) Can bank claim on her for amount more than value of Mumbai property ?

3) Who is liable to bear Capital Gain tax on the sale under SARFAESI ? 

4) What civil / criminal action can she be liable to face in case she cannot pay as guarantor ?

In anticipation of early response.

Starship Trooper.

 

 

  

 

 

 



Learning

 3 Replies

Ajit Singh Cheema (practising Advocate)     05 August 2015

Dear Sir ,

My pointwise reply may be as under:

1.If the property is Agricultural land being used for agricultural purposes it shall be exempt from Sarfaesi Action.

2 .Yes ,  the bank may file suit after Sarfaesi action for recovery of the balance outstanding .

3. If the property is sold under Sarfaesi act, the capital gains tax may be irrelevant.

4. Only a decree may be got against the guarantor.

1 Like

SIVARAMAPRASAD KAPPAGANTU (Retired Manager)     06 August 2015

My clarifications are as follows pointwise:

 

1. Bank can proceed under SERFASI Act against the property mortgaged to them. Since the other property is not mortgaged to them, they may not be able to take over that property, as they can very well take over and sell the Mumbai property as it is under their mortgage.

 

However, Bank can file a petition before the Court seeking Attachment before Judgement, preventing your mother from selling the other property, if the sale proceeds of the Mumbai property (under mortgage to bank) are not enough to cover the liability with them. Courts normally accede to the request of the Banks, unless you can prove that the value of Mumbai property is enough for satisfying the liability with the Bank.

 

2.Had your mother merely signed Mortgage papers alone, bank could not have proceeded against here for amounts beyond the value of the property. Since she signed Guarantee/Surety also, Bank can very well proceed against here for full liability beyond the value of Mumbai Property under mortgage to them, in case such amount is not enough to cover the liability.

 

3.I am doubtful whether Capital Gains Tax shall be applicable for a property sold under SERFASI Act as Bank is selling. However, since property is in the name of your Mother, it is a little bit tricky.  Better obtain proper clarification from a practising and tax matter handling Chartered Accountant in this regard.

 

4.Standing Guarantee and Mortgaging will only attract civil action only, unless any action is taken to alienate the property by devious methods without the Bank's knowledge etc.

1 Like

Advocate Venkateshwara Rao   09 August 2016

Hi,

Please follow the following steps:

1.If the property is Agricultural land being used for agricultural purposes it shall be exempt from Sarfaesi Action.

2 .Yes ,  the bank may file suit after Sarfaesi action for recovery of the balance outstanding .

3. If the property is sold under Sarfaesi act, the capital gains tax may be irrelevant.

4. Only a decree may be got against the guarantor.


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