your father can execute will for his assets
2) legal heirs/ beneficiaries would be liable for his debts to extent of their inheritance
3) creditors can sue the legal heirs after demise of father for recovery of 61 cr
Can someone who is a personal guarantor of bank loans write a will to give his assets to 3rd parties?
My father, 80 years old, is a Canadian citizen (former Indian citizen) living in New Delhi and has an Aadhar Card, PAN card, and Voter ID. He ran from Kuwait in 2016 after multiple corporate loans were taken by his Kuwaiti company from 2012 to 2014 in the amount of INR 61 Crores. He was unable to repay and he absonded. He is a personal guarantor for those loans. In Feb 2024, he registered a will in the name of people outside the family (those who are not his legal heirs and descendants). He should have liquidated his properties to pay the debt of Kuwait but instead gave the properties to 3rd parties so that they could "shield" the assets away from the creditors in Kuwait. He doesn't have enough assets to pay the full loans he took in Kuwait, essentially he is personally illiquid or insolvent, and he is a wilful defaulter in Kuwait, but not declared so in India. He is a fugitive from the Justice Department in Kuwait. Is my father even allowed to make and register a will in India even though he is a personal guarantor for unpaid loans in Kuwait?
Asked 1 year ago in Property Law
Religion: Hindu
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11 Answers
Hello,
- As he has documents that shows his identity and residence proof, he can register his Will in India, passing as an Indian Citizen.
- The fact that he is a personal guarantor for unpaid loans in Kuwait would not disqualify him from proceeding to register a Will favouring third party beneficiaries as he is at liberty to bequeath his properties to anyone of his choice.
- If the lending institution gets wind of the Will, they can dispute the execution of the Will as they can seek a lien on the properties to clear the loan.
In case he decides to transfer his property through a Will, he can very well do so provided he is having clear and marketable title to the property he proposes to bequeath.
The Will shall come into force only after his lifetime
However if the properties have been given as collateral security for the loans which he stood as guarantor, then they may file a suit against the beneficiary in case they become aware of this arrangement
The properties in India are not put up as collateral in the loans in Kuwait as my father signed Promissory Notes with the Kuwaiti Banks. Now he is trying to "park" his assets in India by not giving them to his natural heirs so that the properties in India can't be sold off to pay the debts of Kuwait. In other words, he wants to leave for the heavenly abode indebted to the creditors of Kuwait. Can an injunction be put on the properties in India by the creditors today based on the will that my father has written?
Asked 1 year ago
Will can be revoked at any time by testator
2) creditors have to file case against him to recover their dues and seek attachment of his properties
1. When your father is a Canadian Citizen, how can he hold Voter ID card etc. in India?
2. No law in India prohibits any Citizen of other Country holding OCI Card from bequeathing his properties in India by executing a Will.
3. It is up to the Kuwait Company to initiate criminal/civil proceedings in India against your father and obtain Court order restraining him from alienating his properties in India and/or Canada.
1. No law in India prohibits your father from bequeathing his properties to a third party as per his wish depriving you.
2. As explained in my earlier post, the Creditor Company of Kuwait can initiate legal action in India seeking restrain order on him in conveying title of his properties in India/Canada in favour of anybody else before repaying his outstanding.
Dear Client,
As a personal guarantor for the loans in Kuwait, your father is legally liable to repay those debts. Even though the properties in India were not used as collateral, creditors could potentially pursue legal action to recover their dues. Creditors in Kuwait may attempt to secure an injunction on your father’s properties in India to prevent their transfer or sale. This can be done by filing a civil suit in India and arguing that the transfer is intended to defraud creditors. Legal heirs, such as yourself, can challenge the will on the grounds of undue influence, lack of testamentary capacity, or if the will is intended to defraud creditors. It would be prudent to seek immediate legal counsel to explore your options, especially if you suspect that the will is intended to defraud creditors or if you wish to challenge it as a legal heir.
No injunction suit can be filed by Kuwait creditors against your father in India for the debts he incurred in Kuwait.
no cause of action arose in India hence they may not be able to file a suit in India in India for recovery of the loan amount.
If at all they obtain a decree in that country then they can file an execution petition to execute the decree with the details of the assets/property that he possess in India. if he has not given any details about the properties in India then they may not be able to even file an execution petition to execute the decree without the details of the property to bring them on auction sale for recovery
As of now no action seems to have been taken by Kuwait lenders nor there was any notice to your father to repay the amount hence for now you may wait and watch the developments to take action suitably when the occasion arises.
Since my father is a personal guarantor for the loans in Kuwait, why can't the Kuwait creditors put a lien on his personal properties in India? If he tries to dispose of these assets in India, doesn't it form a criminal or fraud case against him? My father knows of the final decisions in the court cases against him in Kuwait, yet he is trying to "park" the properties with 3rd parties in India who have nothing to do with the situation in Kuwait, so that he can continue to mortgage the properties in India to continue his Indian business by taking loans from banks like IDBI, IndusInd, Axis Bank, SBI etc. Kuwait creditors should be after him personally and not allow him to transfer his assets to 3rd parties in India. There should be some section of IPC or CRPC or ICA (2013) covering the rights of international creditors?
Asked 1 year ago
Under the India-UAE Bilateral Investment Promotion and Protection Agreement (BIPA), UAE banks have the legal right to recover defaulted loans from Indian residents through India's judicial system. The banks can initiate civil proceedings in Indian courts to recover the outstanding amount
The Government of Kuwait has to seek permission to sue your father for recovery of loans he availed in Kuwait and it is less possible for them to get the details of the properties of your father until and unless they have been given as collateral security toward the loan as a guarantor too.
If your father refuses to furnish the details or properties lying on his name then the lender has to make his own efforts to locate the details of properties lying on the name of the borrower/guarantor.
In the meantime in the absence of a restriction order by any court of law the disposal of his property by any means by your father will be valid and cannot be challenged.
The practical feasibility and the involvement of laws of two countries are the impediments which will be a hindrance or a barrier for the creditor to recover the loan amount in this connection.
Dear Client,
Generally, foreign creditors do not have direct jurisdiction over properties in India unless there is a mutual legal assistance treaty or other specific international agreements between the countries involved. Kuwait and India do not have a comprehensive agreement allowing Kuwaiti creditors to directly place a lien on Indian properties. If your father is transferring assets with the intention to defraud his creditors, such transfers could be declared void. Creditors or legal heirs can challenge such transfers in court. If the loans in Kuwait were secured by a personal guarantee that can be proven to be fraudulent or misleading in India, Kuwaiti creditors might have grounds to challenge his actions under Indian law. You or other legal heirs, or the creditors, could file for an injunction to prevent the transfer or sale of assets in India if there is evidence that your father is attempting to defraud creditors. It is advisable to consult with a legal expert in both Indian and international law to explore all possible legal avenues for challenging your father’s actions and protecting the interests of all parties involved.