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PARAS KANTILAL HARIYA (Student)     03 November 2014

Death of loan borrower & bank guarantor



A friend of mine has taken Loan from A Sahakari Bank of Rs. 10,000. He had taken Loan on 23/Dec/2003.

He died by an accident in 2005. Now in 05/Jan/2006 I & other bank guarantor got a notice from Bank to Pay  the loan amount with interest But we didn't pay anything to bank.

Now again we got notice from bank on 27/sep/2014 to pay Rs. 29,319.

Now please let me know what options we have to get out of this problem. We have heard that sice bank has given notice to me after more than 3 years we need not pay the LOAN AMT. SINCE IT IS TIME BAR.

Is the above one true or if not please let me know in Layman Language what exactly weneed to do.

Thanx in advance


 6 Replies

V M DAHAKE (PROPRIETOR)     04 November 2014

Dear Mr. Hariya,

 Limitation period for recovery of debt is three years from your last acknowledgement of loan. Limitation period only means bank can not recover it through court..

You can  deny the entire contents of notice / reply suitably. You will still need to contest the claim, denying the amount due and pleading limitation as and when and if bank files the case; else suit may be decided against you ex-parte, depending on exact facts.

c.p.s. ramachary (1500)     05 November 2014

Mr. Prakash Kantilal Hariya,

Your liability depends upon the terms of the guarantee agreement executed by you and your friend. Please verify the terms of the guarantee. If it is continuing guarantee, death of borrower does not automatically discharge the guarantors nor the debt is barred by limitation, if the term speaks that your liability does not cease until closure of the loa account. Denying the liability is not that easy and mere deneyal does not dicharge you from the liability. It is better to contact the bank and discharge your moral obligation as the bank had accommodated the deceased borrower on the strength of your guarantee agreements. Otherwise you have to face litigation in court of law.

Dalip Singh (Advocate)     07 November 2014

Sehkari bank can recover the amount through arbitration proceedings before the Registrar Coop. Societies as the jurisdiction of civil court is barred.  It seems that the bank has not filed the case since it is time barred.   Time barred loan cannot be recovered merely by sending the notice. In case the bank files a case against you and supply you the copies of documents and statement of account, you can contest the case based on the documents supplied and your defence therein.   After the death of your friend, the loan can be recovered firstly from the legal heirs of your friend from the assets of your friend and in case legal heir fails to repay, the loan can be recovered from you as your liability is joint and several.

c.p.s. ramachary (1500)     11 November 2014

Assets of the deceased if any devolved in  favour his legal heirs alone can be dealt with in decree execution.

Jitesh (self)     19 November 2014

pls share any judgements on limitation of 3 years.

Sudhir Kumar, Advocate (Advocate)     25 November 2014

You were to fully refund the loan if it was not time barred. 

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