Hi all. We have a case wherein a person 'A' served as a Director in a public limited company, and gave his personal guarantee (along with other Directors) to take a loan from an NBFC, in 1996-97. The loan was secured by the company's assets, and A also pledged his company's shares, to the NBFC.
The company defaulted on the loan, around 2000-01. The NBFC sued the company, and sold off the secured assets (and recovered rs. 27 crore) vs the initial amount of rs. 15 crore, under the SARFAESI act. The NBFC has also kept the shares pledged by A.
This case is before the DRT for several reasons. But we are mainly concerned with A, the guarantor, who resigned from the post of Director in 2014. In the case filed before the DRT, his name is included, as it is a norm to sue the guarantor with the principle debtor. There are chances that A might be asked to submit a list of his personal assets to the court.
Also, A has given loans to the company several times, and the company owes him rs. 50-60 lacs.
A's personal assets are mainly his house (2 floors in a building), one floor which he owns and which he is planning to gift to his daughter on account of marriage. The other floor is inherited by his wife from his mother. And he is running a proprietorship business (completely separate from the company), which includes his factory. In this case, we would like an opinion on the following points-
1. Proprietorship firm's assets are business assets. Can they be attached to fulfil a personal guarantee?
2. Can the gift given to daughter be challenged in any way?
3. Is there any method of getting out of the personal guarantee? As he is not a Director anymore and the recovery by NBFC is more than the initial amount (though the final order would add interest to the initial amount). From the limited information we have, the NBFC's NPAs were nil in their Balance Sheet.
4. What can we do about the shares which are kept by the NBFC?
Thanks to everyone in advance