• Civil suit against Guarantor's legal heir

This is regarding the case wherein a public bank filed a case on the legal heir of deceased guarantor in 2013. The loan was sanctioned to a proprietorship firm.The firm & its proprietor are unknown to guarantor’s legal heir.
Details of the case
1.A public bank sanctioned a loan for the amount of Rs5lacs to a proprietorship firm for the electric generator under CGTSME scheme in April 2011.My Father had given the personal guarantee in that loan.
2.My father died on July 2011(within 3 month after sanction). The new guarantor was not appointed by bank even after knowing the death of my father. Legal heir does not inherit any movable or immovable asset.
3.The loan account was operated by the borrower till July 2012.
4.The loan account became NPA by bank on Oct 2012.
5.Bank filed legal suit for recovery of amount Rs 4.5 lacs including interest in the court of District Judge on Oct 2013
6.There are total three parties in the case (Firm, Firm’s proprietor and me).
7.Borrower is not traceable and all the documents in the case (like borrower ID card/Pancard/Firm’s address) are fake.
8.Loan was sanctioned by bank in one day after receiving the loan request from the borrower.
Please suggest,
Any solution so that I will be removed from this case.
Do I liable to pay the loan amount, if so, up to what amount.
Any other suggestions/opinion.
Asked 3 years ago in Civil Law from Delhi, Delhi
1) you are not liable as legal heir if you have not inherited any property from your father 

2) you have to defend the suit proceedings and take the plea in your written statement that no property has been inherited by you from your father 

3) contact a local lawyer 
Ajay Sethi
Advocate, Mumbai
45611 Answers
2680 Consultations

5.0 on 5.0

Hi, as per law Guarantor is liable to pay the amount if the original borrower has fail to pay the amount. 

2. Though your father has signed as a guarantor you have no options but you have to pay the amount and you may take some reasonable time and you may  have options to contest the case but ultimately you are liable to pay the amount.
Pradeep Bharathipura
Advocate, Bangalore
4551 Answers
203 Consultations

4.5 on 5.0

1. The liability of your deceased father, irrespective of whether you have inherited or not any property from him, cannot be enforced against you. It could have been enforced only against your father during his lifetime. 

2. The principal liability is that of the borrower whereas the guarantor can be proceeded against only in the event of default by the borrower. In your case the borrower is untraceable whereas the guarantor is since deceased.

3. You should contest the case filed by the bank in the court as you are not liable in any manner. 
Ashish Davessar
Advocate, Jaipur
22977 Answers
634 Consultations

5.0 on 5.0

1st thing the guarantors liability starts only after the failure of the original borrower to pay and where the remedy is available then the proceedings must be initiated upon both the original borrower and the guarantor together. The court in such circumstances must try and get the money recovered from the original borrower or his assets.

Where such recourse is not possible then the entire liability may shift on the guarantor and such liability transcends on to his legal heirs. however the liability of the legal heirs is limited to the extent of the property inherited from the guarantor and not beyond that.
Saptarshi Banerjee
Advocate, Kolkata
220 Answers
4 Consultations

4.5 on 5.0

1. Your deceased father had stood guarantor for he loan taken by thye borrower who submitted fake documents,

2. Guarantors are not appointed, people stand as guarantor the way your deceased father did,

3.After the demise of the guarantor, his legal heirs are liable to pay for the amount your deceased father stood guanrantor for,

4. The legal heirs liability to discharge the guarantee is limited to the amount of the guarantee or the amount inherited by the legal heirs of the eceased guarantor, whichever is less,

5. Since the legal heirs did not inherit any property from the deceased guarantor, they are free from any liability on this unpaid loan account,

6. So, relax.
Krishna Kishore Ganguly
Advocate, Kolkata
18511 Answers
448 Consultations

5.0 on 5.0

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