I have given a GPA to my brother to seek a loan of 30 lakhs against our joint property ( 4 legal owners - a mother and 3 brothers) in 2014. This loan was cleared around 2022/2023. Once the loan was cleared my brother has failed to collect the property documents from the financial institution. Last year they have raised a loan of 50 lakhs on the same property from the same financial institution but they didnt sign a new agreement for the collateral. What rights does the financial organisation have to keep them without getting into a new agreement and not obtaining signatures from all the parties linked to the property? I sense that my brothers have betrayed as they dont answer any questions asked correctly and also said that the bank manager might not know the procedure properly.
It is necessary to peruse GPA executed by you to advise
if it was specific GPA then brother could not have taken loan on repayment of earlier loan
3) issue legal notice to bank as to on what basis loan of 50 lakhs have been sanctioned without your consent
4) file suit for partition for division of property by merges and bounds
5) seek injunction restraining sale of property by your siblings
1. Send a legal notice to the financial institution as to how it can lend loan of 50 lakhs for the second time without obtaining consent and signatures from all the legal heirs.
2. In case the matter is not resolved to your advantage, lodge a Police Complaint against the financial institution as there appears a conspiracy to cheat you.
It is to be seen on making full repayment of the earlier loan the security in terms of the property got released or not.
If not then on the basis of the same security a loan may be sanctioned but in absence of signature of all the owners the sanction of the new loan is irregular.
Hence you can write the Bank for revoking this loan and delivering the papers of the property.
In default appropriate legal recourse can be taken.
If your brother was authorized to obtain loan on the basis of the Power of attorney deed, and this power deed will automatically terminate upon discharge of loan or death of the principal or if the principal terminates the power deed for whatever reason, then your brother cannot obtain another loan once again on the basis of the same power of attorney deed. Hence the contents of the power deed is to be perused for rendering more proper opinion.
If you are confirmed that the loan was fully discharged then the bank should have returned the original title documents to the borrower duly registered before the concerned registrar.
If your brother had not obtained signatures from all the shareholders to obtain fresh loan then it is an act of fraud and cheating.
You can issue a legal notice to the bank to stop disbursing the loan to the borrower who had forged your signature on the loan papers and if at all he obtained the loan on your behalf too on the basis of the previous power of attorney deed, it is not valid owing to its nature because it was executed only for the previous loan purpose and ot for the fresh loan.
you can also lodge a criminal complaint against your brother for the acts of cheating, fraud and forgery of documents besides breach of trust etc.
where is the property situated
Are we ok to sue the financial organisation as they have obtained my consent at the time of issuing the loan again last year? what are my rights?
Since you had given your approval through GPA for the first loan only and not for the second loan, which you were not aware of. Hence you can sue the financial organisation.
If you have given consent to obtain fresh loan then you have no case
Dear client,
The situation you described raises several important legal and procedural questions. The financial institution’s rights to keep the property documents and extend a new loan without a new agreement or signatures from all parties depend on the terms of the original loan agreement and the General Power of Attorney (GPA) you provided. Generally if the original loan agreement included a clause that allows the property to serve as continuing security for future loans, the financial institution might have the right to extend additional credit without a new agreement. The GPA you provided to your brother might have granted him broad authority to manage the property, including securing additional loans. However, this should be explicitly stated in the GPA document.
If the financial institution extended the new loan without obtaining the necessary signatures or a new agreement, the validity of the loan could be challenged. This is especially true if the GPA did not explicitly authorize your brother to secure additional loans. If your brothers acted beyond the authority granted by the GPA or without your consent, they might be liable for breach of trust or fraud. You have the right to demand the return of the property documents once the original loan was cleared. The financial institution should not retain the documents without a valid reason or agreement.
Carefully review the original loan agreement, the GPA, and any correspondence with the financial institution to understand the terms and conditions. Given the complexity of the situation, it is advisable to consult with a property lawyer who can provide specific legal advice based on the documents and facts of your case. Contact the financial institution to clarify the basis for the new loan and the retention of the property documents. Request copies of all relevant documents and agreements.
Relevant Laws and Rules
Thank you. Should you require any further clarification, please do not hesitate to contact us.
Dear Client,
A mortgage or loan against a property typically requires the consent and signatures of all the legal owners, especially when the property is jointly owned. If a new loan was raised without your explicit consent and a fresh agreement, the validity of the loan might be questionable. The financial institution should ideally have obtained the consent and signatures of all the property owners, especially when the GPA you provided was likely specific to the initial loan in 2014. The financial institution has a duty to ensure that all legal procedures are followed when sanctioning a loan against a property. Failing to obtain a new agreement or the signatures of all property owners may be seen as negligence on their part. If your brother acted beyond the authority granted in the GPA, this might constitute a breach of fiduciary duty You can revoke the GPA granted to your brother, preventing him from acting on your behalf in the future. consult with a legal professional and take appropriate action.
The financial organisation alone cannot be responsible for this fraudulent act, your brother and who all were involved in this are responsible to give reply and to reverse the loan entries which was obtained without your consent and signature.
if your signature was forged then yo can very well lodge a criminal complaint against your brother who had forged your signature