If you do not have a guarantor you do not get loan and if you get he gets liable.Guarantor should be only limited to questioning/help in moan recovery via no coercive measures but no way he should be made to pay for the simple reason that he never was a beneficiary.
By
SUMEET DIKSHIT, Real Estate Transactions & Advisory, Real Estate
| 02 04 2012 20:21:22 +0000
Where as the guarantor is willing and signing, the lender shall make all efforts to make good and collect from the borrower. But I have seen the lender take least effort on borrower and jump on to guarantor.
By
Gopala Krishnan H, Freelancer, Technology Consulting
| 07 27 2011 00:27:36 +0000
The court should take a common sense view rather than take an elitist view just to pass an act. If your own blood relative or close friend asks you to be a gurantor and then default, can you be made to pay ? or can you refuse them from being a gurantor ? The answer is no to both. Courts in our country are either silent or far too activist where laws are passed for no ryhme or reason and without applying the mind. Where is the principle of natural justice here, can the court prove that the gurantor enjoyed the fruits of the labour ie., the money borrowed by someone else ? How then can they penalise the gurantor ? This is common sense.
By
Jaygopal Raghavan, Marketing Manager, Landmark Group
| 07 26 2011 19:16:43 +0000
When borrower is reaping the benefits , he stands to lose also in case of default, why punish the gurantor ?
By
Sanjay Bhardwaj, Partner/Principal/VP, Health Management Solution
| 07 26 2011 14:34:09 +0000
Borrower should be considered liable in first place, as he is the lone beneficiary. Thanks for referral, Aarti.
By
SHRIKANT MANOHAR DANKE, Project Manager, Phadnis Infrastructur Ltd
| 07 26 2011 12:59:50 +0000
This is not correct because anyone who support his friend/wife/husband etc..for his financial crisis/own home/own vehicles etc..in human being if this judgment implement compulsory there will be difficult for financial institution for giving loan & how can they survive without giving loan?one side mostly all people invest in Nationalized bank as Fix deposit & bank pay interest for that but thee will only one side flow of fund it will be reflect finance market.
By
vipul kamdar, Manage Sales, Aero Care Industires
| 07 26 2011 12:12:21 +0000
Banks should abolish the practice of seeking Guarantor for loans. Alternatively, they should charge one time premium to insure the loan amount. Guarantors are made "guinea pigs" in this case as they do not enjoy any portion of the loan amount and are forcibly made liable for the loan taken by virtue of being a "kith or kin or a friend" of a borrower!
By
S. Muralidharan, Executive Director, Knowledge Foundation & Campus Around the Corner
| 07 26 2011 03:02:36 +0000
On repayment of loan borrower qualify for tax rebates , whereas guarantors when repay defaulted loan are on the losing end, they don't qualify for tax rebates.
By
Rajesh Tekale, Counsel, Advocate on Record , High Court, Mumbai
| 07 25 2011 23:55:20 +0000
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WHO CARES It has become an advantage to the borrower now, he is waiting for the bank to take action against the guaraantor by exhausting all his assets.Later he wants to go to the bank and settle the dues. In my case the principal borrowers property is worth to the extent of loan .He is raising litigations on the property so that my property is disposed first. The bank people are ready to give only the mortagage rights of the principal borrowers property .If the loan is cleared .if their property is registered to us we are ready to pay the amount going for one time setlement.
By
Puvvada Praveen, Principal, chaithaya pragathy high school
| 05 25 2012 07:41:04 +0000
Both the views expressed in these two columns are not correct because they are not in consonance with the law. The ruling of the Apex Court is not only based on the documents but mainly bases on the basic legal principle of the Law of Contracts. The Indian Contract Act, 1872 deals with the contract of guaranty or surety. Section 126 defines the terms as below: 126. "Contract of guarantee", "surety", principal debtor" and "creditor". 126."Contract of guarantee", "surety", principal debtor" and "creditor".-A "contract of guarantee " is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the " surety"; the person in respect of whose default the guarantee is given is called the " principal debtor ", and the person to whom the guarantee is given is called the " creditor ". A guarantee may be either oral or written. So also the surety's liability is mandated in section 127 as follows: 128.Surety's liability.-The liability of the surety is co- extensive with that of the principal debtor, unless it is otherwise provided by the contract. Illustration A guarantees to B the payment of a bill of exchange by C, the acceptor. The bill is dishonoured by C. A is liable not only for the amount of the bill but also for any interest and charges which may have become due on it. Therefore according to law the creditor after getting a money decree against both the Principal debtor and surety, may proceed to execute the decree either against the debtor or the surety alone as he pleases. Normally the debtors borrow with intention not to repay and make the surety of his foul game of simple cheating. It is a known fact. Therefore there is no wonder if the decree-holder-creditor to think it is safe and sure to recover money from the guarantor. Once safety is more important for one than the interest of the other. That is the natural conduct, particularly in commercial world where the morality has no consideration. It is the money that speaks but not the moral or sympathy factor. Thus the decision of the Supreme Court is perfectly according to the law of the land.
By
Prof V Narayana Swamy, Freelancer, Freelancer
| 08 10 2011 15:43:56 +0000
Aarti I agree with you but at the same time the guarantor is responsible since on the basis of his/her recommendation the amount has been paid.
By
Rathin Deb, Advisor and retail consultant, currently as Branch Manager, Tower Infotech Ltd
| 07 29 2011 04:17:56 +0000
well pointed out by Mr.Ajay, thanks Arthi
By
karthikrathnam , Branch manager,
| 07 27 2011 08:39:42 +0000
Guarantor means...who guarantee the Liabilities!!! and that is done through submitting a legal document to the bank.so the guarantor has the responsibility to repay the loan and fulfill the commitment.
By
Rohit Thakur, Electrical Engineer-Industrial, Quality Engineering and Software Technologies
| 07 27 2011 04:05:29 +0000
Guarantor is a person who takes guarantee that money will be repaid. So even if friendships may change he is legally bond to this.
By
Aarti Gupta, Legal Consultant
| 07 26 2011 11:33:16 +0000
By the defination, a guarantor is the chap who will hold guarantee for the loan in case the primary vendor defaults. There is nothing new or outstanding in this. It does not need a sSupreme Court Ruling. Sheer nonsense. Say your pest-friend buys a car (10 Lakhs) or a house (75 Lakhs). You are the guarantor only until the car or house is hypothecated to the Company or Bank. Moment the deed is in the hands of the Company/Bank, the requirement for the guarantor ends. But your pest friend, pest that he is may not choose to surrender the title documents, holding you eternally responsible - 10 years for the car or 25 years for the house. You can at this stage insist, not to the pest, but to the Bank/Company that they make immediate efforts to take possession of the title documents (as per clause 1.2.3 of the loan agreement). Put this in writing. Your friend will be forced to surrender the title deeds. Alternatively, as a last resort, resign from the company - no point in facing the pest for 25 years. But as long as you are the guarantor, and the original defaults, the onus of paying the loan vests with you. In one company where I was Head-IT, we used to automatically deduct instalments from the guarantor's salary if either the salary was not enough, or the primary loanee was defaulting. May not be strictly legal, but it was being done. This is the legal point of view. If you have problems, do not stand as guarantor. But you will at sometime also need a loan. Then no one will be ready to stand guarantee for you. This is a two way street.
By
V. Srinivas, Freelancer, Information Technology
| 07 26 2011 10:37:02 +0000
There are 'guarantors' available in the market for a price, though unfortunately. When bankers rely on them after due deligence, they must become liable to pay. As a matter of principle, I dont sign as a guarantor and ask others to sign as a guarantor for me. I am peaceful !!
By
MS_Pi , Top Management, Confidential
| 07 26 2011 10:28:04 +0000
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