Legal Question in Banking Law in India
Not signed continuous guarantee deed by creditor himself
A loan of rs. 25000/- was given to a borrower repayable 12 postdated cheques of rs. 2375/- of monthly equal instalments. At the same time, a guarantor with guarantor�s two post dated cheques of rs. 12000/- dated 29.06.2007 and 13000/- dated 29.06.2008 was also taken with documents 1. continuous guarantee deed dated 29-12-2005, 2.a letter from guarantor handing over said two cheques, 3.a letter from guarantor about his address, age etc. all these three is duly signed by guarantor. But by chance, the signature on the continuous guarantee deed is not done by CREDIOR himself and said deed has already been filed in trial court alongwith other documents. A case u/s section 138 was lodged against guarantor after invoking guarantee by regd letter because the borrower did not pay the amount of his cheques. Question I is whether it will effect the case, as continuous guarantee deed is not signed by CREDITOR HIMSELF, Question II is whether a civil case against guarantor can be filed for money suit on these documents specially when continuous guarantee deed is not signed by creditor himself and already lodged in criminal trial court.
4 Answers from Attorneys
Re: Not signed continuous guarantee deed by creditor himself
The cheques signed by the guarantor, if bounced can be the subject matter of prosecution under Sec.138 N.I.Act by the payee/creditor. For validity of a guarantee, it is enough if it is signed by the guarantor. The signature of the creditor in whose favour it is recited as having been executed is not necessary. The civil case also will succeed against the guarantor. Even without suing the principal borrower, a creditor can sue his guarantor.
Re: Not signed continuous guarantee deed by creditor himself
1)No
2)Yes
Re: Not signed continuous guarantee deed by creditor himself
the Case under section 138 will not be affected adversely against you. you can proceed against both - the borrower as well as guarantor. the signatures are required only on cheques signed by the account holder and not on other documents.
Re: Not signed continuous guarantee deed by creditor himself
Yes, a civil case for recovery can be filed against both - the borrower as well as guarantor.
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