| Originally posted by : sivaram |
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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 |
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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.
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