The person is guarantor to friend's loan and friend is not in position to pay off the loan.
Sir, I am guarantor to my friend’s loan. I have given my ancestral property(Agriculture land) as guaranty by registered document( without consent of other coparceners). In the mortgage deed the duration of document is specifically mentioned as 10 years to which the original bank agreed). My friend is not in position to pay off the loan. So original bank declared it as NPA. Now the original bank have been overtaken by another co-op bank. The original bank has been merged with a new bank. The loan was NPA asset with the original bank. The original bank is not existence now. 11 years have passed & yet neither bank has not taken any step to recover the loan. ( The tenure of the mortgage deed of 10 years has been passed.) So under these circumstances, 1) Can my property be treated as of clear title. Is it mortgage free now ? 2) Now other coparceners are demanding their share by partition. Can we go for partition ? (They say that I have no right to mortgage the ancestral property without their consent for the benefit of outsider.) a) In this situation what will be my responsibility, what can I do ? b) What the bank can do ? c) What will be my stand if bank takes action? d) Can we dispose off the said property. Please guide me in detail. Anil,Sangli
Your property can’t be treated as of clear title, as according to the Section 36 of the SARFAESI Act, 2002 read with Article 62 of the Schedule of the Limitation Act, 1963, the bank can bring a suit to enforce payment of money secured by a mortgage charged upon immovable property as in your case till 12 years from the date when the money became due. Thus in the present case this time period of 12 years has not expired the bank can still bring a suit to enforce payment of the mortgage money. It has been noted in several cases that the mortgagor cannot take the benefit of his own default to avoid the payment of dues.
To determine whether or not you had the right to alienate (mortgage is also a kind of alienation) the property jointly owned by the coparceners it is essential to know your position in the HUF, alienation by a coparcener of the property jointly owned by the other coparceners is invalid if done without the consent of all the coparceners but if you are a Karta then you can alienate the property without the coparcener’s consent in certain situations like 1) necessity, 2) for the benefit of the estate or 3) under certain religious obligation but in the present scenario none of such conditions exist, thus even if you are the Karta such alienation would be recognized as unauthorized alienation under the Hindu Law and such transfer under the Transfer of Property Act, 1882 would be voidable at the instance of the other coparceners.
As far as the position in respect to the partition is concerned that can only be done through obtaining an injunction by the court on the mortgage of the said property, as the coparceners have the right to restrict alienation of property in this cases. It has been held in several cases that an injunction can be obtained by the coparcener on the alienation if there is evidence of partition of property.
In the present situation your responsibility lies mainly with respect to the mortgaged property as of now, you can file a suit in the court along with the coparceners seeking to invalidate the mortgage deed as it lacked the consent of all the coparceners and can either approach the bank to settle the mortgage in your personal capacity and thus redeem the property.
In the present scenario it seems that the bank is very well within its capacity to enforce payment through the mortgaged property but it can be challenged on ground of lack of consent from the coparceners and the bank’s inability to give notice under section 13 of the SARFAESI Act, as it is required to give to the borrower (you would be considered a borrower in this respect) stating his liability and asking him to settle the dues within the 60 days of serving the notice.
The bank as per the Section 13 of the SARFAESI Act, 2002 can enforce its security interest after serving the notice to the borrower asking him to discharge his full liability within 60 days. It this is not done, the bank can take the possession, appoint a manager to manage the said property and can also sell it, etc.
It can as file a case if the security amount is not fully realised by the methods as mentioned above in order to hold the borrower( in this situation guarantor’s position with respect to the bank is same as the borrow) liable against the same.
Your stand in case the bank takes action can be to challenge the validity of the mortgage deed as it was a form of unauthorized alienation as mentioned earlier; also you can question the bank’s inaction for so many years and its failure to either notify you or to realise the loan from the said property.
The main remedy lies in filing a suit and restraining the bank from enforcing its security from the property by obtaining an injunction on the grounds as mention earlier. It is likely that the court would not allow the bank to either sell or take possession of the said property taking into consideration its status being a property jointly owned by the HUF.
Disposing off the said property in the near future seems unlikely as the bank would try to enforce its security through the property and it would be a subject of the suit filed by you and the coparceners who seek to restrain the same by the bank. Your liability is to be determined by the court in respect to the coparceners as well as the bank and only by the court’s decree it seems that the property would be able to attain a clear title.
Vijaykumar Motilal Hirakhanwala vs Ramprasad Dagduram, (1960) 62 BOMLR 222
Shiba Prasad Singh v. Rani Prayag Kumari Debt and Ors., 1931 L.R. 59 IndAp 331
Rupchand v. Indradevi, AIR 1997 MP 200, 202
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