• Chit-fund company attached my property as I am the guarantor

I signed as guarantor for a chit taken by my uncle from Margadarsi Chit Funds Pvt Ltd. He paid the monthly payment for 2 years and then absconded from paying it. Now the Chit company has attached my property and kept a notice on my home door that they will sell it off. 
My uncle has many properties which are under mortgage or under debt. I came to know from few relatives that he still maintains properties secretly in some other cities.
Paying back the Chit fund company with my money is 1 option I know. But want to know what are my other options ?
Asked 2 years ago in Civil Law from Hyderabad, Telangana
1)under section 128 of indian contract act  liability of principal debtor is co extensive with that of guarantor 

2) the creditor has a right to obtain a decree against the surety and the principal debtor.
"The surety has no right to restrain execution of the decree against him until the creditor has exhausted his remedy against the principal debtor for the reason that it is the business of the surety/ guarantor to see whether the principal debtor has paid or not

3) since your uncle has absconded the lender can proceed against you to recover the chit fund amount taken by your uncle with interest 

4)you can repay the loan amount and then proceed legally against your uncle 

5) The surety after making the payment to the creditor will step into the
shoes of the creditor

6) surety has got a right to recover the
amount which he has paid to the creditor. It may include the principal amount, it
may include the interest and it may include the cost also
Ajay Sethi
Advocate, Mumbai
44209 Answers
2562 Consultations

5.0 on 5.0

you may file a civil suit for recovery against your uncle towards the payment which may be paid by you to chit fund towards to discharge your liability as Guarantor.

Nadeem Qureshi
Advocate, New Delhi
4791 Answers
219 Consultations

4.9 on 5.0

You have the following options
a)Option 1:  if you have details of your uncle's debt free properties you can share it with margadarsi and ask them to settle their dues by disposing of your uncle's property. 
b) Option 2: You as a guarantor based on notice issued to you by margadarsi can also take an attachment order from court and attach all of your uncle's properties and sell them off and pay margadarsi. 
b) Option 3: As a guarantor, you will be eligible to a full refund of monies along with interest that you pay to Margadarsi for the loan availed by your uncle. The reason is once you make the payment to margadarsi as a guarantor, by virtue of law, you will be replacing margadarsi as a secured creditor. 
c) Since you are now a secured creditor to your uncle, you are entitled to attach all of your uncle's properties(mortgaged properties, mortgage free properties) etc and claim your dues with compound interest at the rate of 24% per annum from your uncle. 
d) from law perspective, there will be no applicability of law of limitation. your uncle will be bound to pay you money with full interest of 24% per annum from the date it became due to margadarsi. 

Hope this helps.
Rajgopalan Sripathi
Advocate, Hyderabad
1264 Answers
154 Consultations

5.0 on 5.0

1.  The liability of the surety (guarantor) is described as co-extensive with that of the principal debtor i .e the surety becomes liable to pay the default amount made by the principal debtor. His liability is immediate. 

2. The only option for you is to apply for stay against the chit fund company on the ground that the rights of company against the guarantor did not crystallize till the rights of the company against the borrower are established. 
Ashish Davessar
Advocate, Jaipur
22958 Answers
631 Consultations

5.0 on 5.0

You cannot do anything about it now.  
You should ay the amount and retrieve the property.
After that you can step into the shoes of the lender and attach your uncle's properties on the basis of the settlement of his loan amount by filing a money recover suit against him and also by filing a petition for attachment of his property before judgment. 
This is how you can recover your amount.
T Kalaiselvan
Advocate, Vellore
34366 Answers
368 Consultations

5.0 on 5.0

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