Legal Question in Business Law in India

5 of my friends entered into a partnership and during setup of business due to insufficient funds obtained a bank term loan and OD. The bank funded this by taking one of the partner's flat as collateral. All 5 partners have signed the bank loan papers. Now the firm has run into loss and business had to be shut down, this being mainly due to bad decisions taken by 1 working partner(A) whose flat is given as collateral. Now the bank has asked to clear its loan. Other than verbal assurance to the partner(A) whose flat is put as collateral, there is no written agreement signed by other partners that they will take liability of flat in case of failure of paying the bank loan.

Will the other partners face any consequence if the partner(A) takes legal action.


Asked on 12/12/14, 6:01 am

1 Answer from Attorneys
Fca Prashant Chavan Expert Edge LLP

13.12.2014

Dear Sir / Madam,

Yes, as partners all the five persons are equally responsible and liable to settle the bank loan. The other partners will face legal action if partner (A) files a suit against them.

Regards,

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Answered on 12/13/14, 4:38 am


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