Legal Question in Banking Law in India

Sir , my friend has borrowed a loan amount of 1.5 crore from d bank over a property worth 3 crores . I hav given my home worth 50 lakhs as an additional guarantor ... Since my friend dint pay d loan amount , d bank is about to bring d properties for auction ... Now my question is , can d bank auction d guarantor property(50 lakh) without bringing the main loan property (3 crore) into auction ? Aren't they supposed to auction d main loan property first n then bring the guarantor property for auction and that too only if they are not able to recover the loan amount after selling the main loan property?

Asked on 9/24/13, 3:39 am

1 Answer from Attorneys

Fca Prashant Chavan Expert Edge LLP


Dear Sir / Madam,

NO, the Bank cannot auction the guarantor's property without first conducting the auction of the main borrower's mortgaged property pledged to the Bank. YES, the Bank is entitled to auction the guarantor's property, if and only if, there is a shortfall in the recovery of the loan by auction of main borrowers property. Further, the reserve price for auction of the property cannot be lower than the prevailing market rates of properties where the main borrower's property is situated, which can be substantiated by an independent certified valuer's report.


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Answered on 9/24/13, 7:28 am

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