• Guarantor suing borrower for settlement amount he paid to bank

I am a guarantor in my nephew's loan. After years of court battle I have decided to settle the matter with the bank. I am aware that I can sue my nephew for the amount of the money that I pay to the bank towards his loan settlement.

The issue is he doesn't have any asset or money on paper. Now if I sue him and if he doesn't have any money (officially) to pay me, what happens then?

Please guide.
Asked 6 months ago in Civil Law from Surendranagar, Gujarat
1) once payment is made by you as guarantor of loan you can sue the principal debtor to recover the amount paid by you to the bank 

2) you can obtain decree against the nephew and if he does not pay take out execution proceedings for attachment of his property . if debtor does not have any assets you can seek his arrest in execution proceedings

3)you can also take proceedings to declare him as an insolvent under provisions of insolvency act 
Ajay Sethi
Advocate, Mumbai
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Section 51 of the civil procedure Code, which provides for the different modes of execution of a decree and lays down that, where the decree is for the payment of money, execution by detention in prison shall not be ordered, unless, after giving the judgment-debtor an opportunity of showing cause why he should not be committed to prison, the court for reasons recorded in writing is satisfied.

"(a) that the judgment-debtor, with the object or effect of obstructing or delaying with the execution of the Decree.

(i) is likely to abscond or leave the local limits of the jurisdiction of the Court, or

(ii) has, after the institution of the suit in which the decree was passed, dishonestly transferred, concealed, or removed any part of his property, or committed any other act of bad faith in relation to his property, or

(b) that the judgment-debtor has, or has had since the date of the decree the means to pay the amount of the decree or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same or,

(c) that the decree is for a sum for which the judgment-debtor was bound in a fiduciary capacity to account".
Ajay Sethi
Advocate, Mumbai
23367 Answers
1224 Consultations
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The issue is he doesn't have any asset or money on paper. Now if I sue him and if he doesn't have any money (officially) to pay me, what happens then?

Since you stood as guarantor to the borrower and as the borrower failed to repay you had to step into his shoes for repayment and now since you have discharged the entire loan you are eligible for recovery of the settled moan amount from the borrower.
You look of r his sources of income or if he posses any property for attaching the same before judgment in the recovery suit to be filed against him. .
T Kalaiselvan
Advocate, Vellore
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Then the court will send him to jail in execution proceedings if there is a decree in your favour and he is unable to return the amount he is held liable to repay. 
Ashish Davessar
Advocate, Jaipur
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449 Consultations
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