Default of loan repayment by vijay mallya led companies

it is a fraud we can recover it

it is a fraud we can recover it

Originally posted by : RAMESH
	it is a fraud we can recover it

I know sir.

But I want to know the legal provision behind this.

Bank has to realise the debts so the mortaged assets are given to an agency for securitisation for recovering the same if the banks could not recover the dues from the mortgaged debt the bank has to recover the same from the promotor if he has given a personal guarantee 

Originally posted by : sivaram
	Bank has to realise the debts so the mortaged assets are given to an agency for securitisation for recovering the same if the banks could not recover the dues from the mortgaged debt the bank has to recover the same from the promotor if he has given a personal guarantee

Agree sir.

Now I understands. 

As per Section 126 in The Indian Contract Act, 1872

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. —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."

Also as per Section 2(f) of SARFAESI Act, “borrower” means any person who has been granted financial assistance  by any bank or financial institution or who has given  any guarantee or  created  any  mortgage or pledge as  security for the financial  assistance granted by any bank or financial institution and includes a person who becomes borrower of a securitisation company or reconstruction company consequent upon acquisition by it of any rights or  interest of any bank or financial institution in relation to such financial assistance.

However, there is no such provision in Companies Act regarding personal guarantee and invoking thereof. It is against the very purpose of limited liability concept of Company. It is standard practice among the banks and financial institutions to ask for personal gurantee of directors and shareholders along side primary and collateral security of the Company.

Many courts have supported the enforcement of personal guarantee and many courts have considered them as void.

Big ticket loans given by banks definitely involves personal guarantee also  and will be revoked by banks on sactisfactory discharge of the obligations by the borrower 

Bank can realise from the personal assets of Surety/Guarantor( promoter,director) first, and then realise the mortgaged assets of the company for the balance. The Surety has the right to claim the amount(paid by him/from his assets) from the company(borrower).Shareholders are not responsible for it unless capital is raised by way of rights to meet the loan.

In this case the bank want the default amount from the Surety whose assets is insufficeient and dont want to touch the running company for many reasons even though the Bank has a rights to seek winding up  / liquidation under the I & B Code. 

Criminals are bank officials and  the valuer who has given wrong valuation report for sanction of loan. 

Originally posted by : VENGETRAO K
	Bank can realise from the personal assets of Surety/Guarantor( promoter,director) first, and then realise the mortgaged assets of the company for the balance. The Surety has the right to claim the amount(paid by him/from his assets) from the company(borrower).Shareholders are not responsible for it unless capital is raised by way of rights to meet the loan. In this case the bank want the default amount from the Surety whose assets is insufficeient and dont want to touch the running company for many reasons even though the Bank has a rights to seek winding up  / liquidation under the I & B Code.  Criminals are bank officials and  the valuer who has given wrong valuation report for sanction of loan.

I agree sir. Thanks.

but as you said that Banks first realise from personal assets of surety and then balance from mortgage of the Company.

Will u please elaborate this with relevant legal provisions ?

What should be the order of the realisation of loan ?