CGTMSE Lone

Dear Client,
Guarantor/Surety is equally liable for repayment of the debt of the principal Borrower and if after exercising all the steps for recovery of debt against the Borrower fails, the Bank takes steps for recovery of debts from the Guarantor, attaching the security offered by the guarantor against the loan. Even in the absence of a borrower or guarantor, his or her surviving legal heirs are held liable to write off the debt from the asset or property they inherited from the deceased borrower and guarantor. So, first ensure whether lender has exhausted all the steps for recovery of loan from the Borrower or not and if any laches come out from such query, you can escalate a complaint before the Regulatory authority, RBI, online at https://cms.rbi.org.in. However, a guarantor can challenge the validity of a guarantee on grounds established under the Indian Contract Act, 1872. Sections 142, 143 and 144 of the Indian Contract Act, 1872 address the circumstances when a guarantee become invalid. As per Section 142 of the Act, any guarantee which has been obtained by means of misrepresentation made by the creditor, or with his knowledge and assent, concerning a material part of the transaction, is invalid. As per Section 143 of the Act, any guarantee which the creditor has obtained by means of keeping silence as to material facts/circumstances, is invalid. As per section 144 of the Act, where a person gives a guarantee upon a contract that the creditor shall not act upon it until another person has joined in it as co-surety, the guarantee is not valid if that other person does not join. Sections 133 to 139 of the Indian Contract Act, 1872 explain the circumstances under which a contract of guarantee would stand discharged. Sections 69, 140 and 145 of the Indian Contract Act, 1872 recognise that the surety has a right to recover from the principal debtor any sum which the surety paid rightfully under the guarantee. A valid contract requires free and voluntary consent from all parties involved. If consent for the guarantee is obtained through deceit, such as misrepresentation or concealment, then the element of free consent is compromised, rendering the guarantee invalid. The right of guarantor/surety against creditor under the Indian Contract Act, 1872 are designed to balance the risks assumed by the surety/guarantor in guaranteeing the principal debtor’s obligations. These defenses can discharge the guarantor/surety's liability, to certain extent, especially if the creditor has acted against the guarantor's interests or engaged in wrongdoing. Hence, it is recommended to consult with an expert professional to understand your rights and remedies to nafigate the issues legally and effectively.