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NUPUR BANSAL   07 May 2017

Director's personal liability in company's loan amt recovery

Hello all, In one of my private company, all the directors have given personal guarantee for company's loan. One of them is actually employee of the company and doesn't held any share of the company. Now the company has made default in repaying loan amount. Is there any way to save that employee director's single house (Which he has occupied) from recovery of loan amt? (Section 60 of CPC or in any other act). Please reply. Thank you


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 8 Replies

G.L.N. Prasad (Retired employee.)     08 May 2017

Personal guarantee is not connected with object, designation.  A personal guarantee is a personal guarantee for all purposes.  The maximum thing one can explore is taking the liability of that in between present directors or providing suitabel personal guarantee of a person with equal worth if the principal (Bank/Iinstitution) agrees with the proposal.

SANTOSHSINGH. (ADVOCATE sardarsena@gmail.com)     08 May 2017

Yes it can be done but it will be a very technical and specialised legal action.

We are currently doing it  at SURAT in GUJRAT and NAWAPUR in Mahrashtra with good results.

Rama chary Rachakonda (Secunderabad/Highcourt practice watsapp no.9989324294 )     08 May 2017

 Ordinarily, a director is not, by way of holding the position of a director, liable for the debts of the company. The law in this regard is well settled and has been reiterated by courts in several judgments. For instance, the Delhi High Court in the matter of Tristar Consultants vs. M/s. VCustomer Services India Pvt. Ltd. & Another1made the following observations and upheld deletion of the name of the director from the suit filed, inter alia, for recovery of outstanding amount and damages:

"20. Directors of companies have been described as agents, trustees or representatives of the company because of the fact vis-a-vis the company they act in a fiduciary capacity. They perform acts and duties for the benefit of the company. Thus, directors are agents of the company to the extent they have been authorized to perform certain acts on behalf of the company.

NUPUR BANSAL   08 May 2017

Dear Rama Chary sir,

But in my case, director who is actually employee of the company along with promoter directors has given personal guarantee to the bank. Can in this case that employee director be saved from the liability of bank loan recovery?

NUPUR BANSAL   08 May 2017

Thank you Mr. GLN Prasad ji

G.L.N. Prasad (Retired employee.)     08 May 2017

To understand the issue, the query is posted once again

personal guarantee for company's loan.

 

I do not know the appliability of Tristar Consultants vs. M/s. VCustomer Services India Pvt. Ltd. & Another1 in personal guarantee by Directors as that judgment states about directors involved in fiduciary capacity.  for and on behalf of the company, whereas personal guarantee is different one in personal capacity in individual name.

Anand Bali Adv. (Advocate Solicitor & Consultant)     08 May 2017

Dear Sir with a big sorry I have to mention that NO. In fact giving the personal gurantee is an offer which is to be made individually person to person. In your case the employee who was a director of the company with no share holding has offered his personal liability towards the loan amount which was considered and sanctioned by a financial institution at the time of the final sanction of the loan.

Only by pursueance and pleasement by showing that if cumulatlivly other Director's property meets the desired amount the property of the this perticular employee/ Director can be saved in full or part as may be; but not legally. In fact he is personally and sjointly both liable to pay the loan default amount.

NUPUR BANSAL   09 May 2017

What if that director has only one residential house?

As per section 60 (ccc) of CPC, Punjab and Haryana state amendment -

(ccc) one main residential house and other buildings attached to it (with the material and the sites thereof and the land immediately appurtenant thereto and necessary for their enjoyment) belonging to a judgment-debtor other than an agriculturist and occupied by him: Provided that the protection afforded by this clause shall not extend to any property specifically charged with the debt sought to be recorded.”

can in this case director save his residential house, he is neither agriculturist nor labourer nor domestic servant in the state of Haryana and Punjab??

And can we take this amendment reference in the case in Delhi High court?


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