A co-applicant is completely responsible for the loan in case the partner defaults, dies or otherwise refuses to participate in the partnership. The bank will pursue collection from one applicant without consideration of the partnership agreement. Technically, a co-applicant becomes a co-borrower and by being a co-borrower, he is liable for the repayment of the loan and other dues.

Thus, a co-applicant becomes equally liable for repayment of the loan amount in case of non-payment by the borrower. The co-applicant will also be responsible for the repayment of the loan in case of death of the primary borrower, even if there is insurance cover to the primary borrower. Many banks and financial institutions insist on having a co-applicant but it is more of a necessity than a requirement. There is no legal requirement to have a co-applicant.

Since you are co borrower you are liable to repay the loan 

2) bank can proceed against 3 borrowers for recovery of loan amount with interest 

3) only option available to you is to repay the loan to prevent your CIBIL record being affected

If you have received a notice from bank, it becomes your duty to give a reply either denying the contents or admitting them.

Banks may ask the co-applicant who wants to opt out, to sign a quitclaim deed as well, to forgo his ownership over the property title

Financial institutions neither like nor have any inclination to make any changes in the original arrangement. However, the co-applicant will have to inform the bank why one of them is moving out.

It would not be wise to show disagreement in front of the bank officials, as they try to present you with new options. Hence, the borrowers should communicate with one another and reach an agreement, before visiting the bank branch, to discuss the problem. Disagreements that you show to the bank officials, may ultimately result in extra cost for the borrowers. The financing institution may charge more interest if they see your desperation, or delay the process and keep earning interest.

The primary purpose of a co-applicant in a joint loan is to provide financial guarantee, it is his responsibility of repayment in case the primary borrower defaults. 

A question  like this from a CA is surprising. Please refer to Sections 43 and 44 of Indian Contract Act, 1972. You will know there is no way out for you.

If the primary borrower clears the outstanding secondary applicants are released. It is not the question  accepting the liability, it is the question  clearing the liability.

Dear Sir,
1. The co-applicant or co-borrower is equally liable to repay the loan.
2. the only option available is to repay the loan to absolve yourself
3. when it comes to debt liability, if the outstanding is also paid off, then you will not have to be involved. If not, you will become liable.

Thank You

• For further assistance, you can book a consultation with me.
• 
  

If primary applicant agrees to repay the loan amount then you are safe 

The principal borrower is actually liable to repay the loan amount. 

However if he is accepting the entire liability and discharges the loan amount,  you need not be worried about it. 

You can talk to your father and solve this problem amicably. 

From the past several years father business was not good and he had to use many financing options like thru banks, relatives, family members. 

If the above is true, then how on earth did you agree to become a co-applicant???

and you are yourself a tax consultant!!!

its not that you are a layman and do not understand the repercussions of defaulting in a loan!!!

now you are liable with the principal borrower 

you must know as a CA that a guarantor's liability is co-extensive with that of the principal borrower

in this case you are not even the guarantor but a co-applicant!!

how could you have signed the loan documents with the bank??

saying that it was under family pressure is no legal ground and no authority or court will buy such an argument!!

you ought to have known that

1. The liability of a co-applicant is always co-extensive with that of principal borrower. If the bank cannot recover it from the borrower it can recover it from co-applicant.

2. It is immaterial that you are separate from your father or are not a part of his business. Even a stranger can be a co-applicant and will thus be liable.

3. It is not a joyride to be declared an insolvent. Most of the insolvency petitions are dismissed.

- Since you are co-applicant with your father for taking the loan from the bank , then legally you are also under the obligation to reimburse the loan amount if not paid by the first applicant . 

- Further, in the event of NPA , the bank having right to auction the mortgaged property . 

- However, if your father is capable to pay , then you can plead to the bank to recover the amount from him and not from you 

If he accepts and agrees to pay then there is no problem.