Liability of principal debtor is co extensive with that of guarantor 

bank can proceed to recover loans against guarantors 

bank would seek to auction your property to recover its dues

Change of management shall not affect your position as the guarantor, unless you have revoked your personal guarantee in respect of the new one. You need to obtain a stay against the sale of your property from the DRT.

Hi 

You should file a securitisation application  under Section 17 of SARFAESI ACT before the Debt Recovery Tribunal and claim injunction against the bank . 

In law vide Section 128 of Contract Act, the liability of the borrow is coextensive with that of guarantor. Banks can choose to proceed against the Guarantor and recover their monies by auctioning the properties offered as collateral by guarantors.

Once the guarantor settles with the bank, then the guarantor will become the creditor and can proceed to recover monies from the borrower. 

In your case, your defense (under section 130 of contract act)shall be the change of management of company (provided the change of management has occurred before the account became NPA and new management has signed the loan documents)

Alternatively, you can always , obtain a stay of SARFAESI Proceedings against you  from Debt Recovery Tribunal (subject to conditions) and during the litigation period, force the borrower to settle with the bank. 

Hope this information is useful. 

1) if your mother residing in property has signed receipt of notice it is proper service 

2) if you have not signed as guarantor you cannot be held personally responsible for company dues 

4) if you have given property as collateral then bank can seek to auction the property 

You can object the same before DRT court and take a stay if they are before the said court. They need to first sell the primary asset and then move to collateral in case of deficit

The action can be taken against guarantor even without suing the principal debtor for recovery and even if the decreed amount is covered by mortgaged decree. ... Such book debts therefore constitute secured assets which can be enforced under Section 13(4) (d) of SARFAESI Act.

The security interest is created with respect to the property called ‘secured asset’ by the guarantor for the benefit of borrower and not for his own benefit, therefore, by a deeming fiction a person who has given any guarantee has also been referred to as a borrower. It is precisely for this reason Section 13 (4) empowers the bank to take recourse to the measures in the event borrower fails to discharge his liability and more significantly Section 13 (4) (a) empowers the bank to take possession of the ‘secured assets of the borrower’ including the right to transfer by way of lease, assignment or sale for realizing the secured asset. The only conclusion which can be drawn from the above provision is that even if the secured asset is created on the property belonging to the guarantor, it remains secured asset of the borrower, as referred in Section 13 (4) (a) of the Act, 2002. If it is interpreted in the manner in which the Bank has put forth, every guarantor would come forward to challenge the measures taken under Section 13 (4) on the plea that it is the secured asset of the guarantor and not that of the borrower, therefore, measures under Section 13 (4) (a) cannot be taken which speaks about the secured assets of the borrower and not of guarantor.

Thus you may have to pursue the matter legally as per provisions of law by approaching DRT citing all the irregularities/deficiencies that you had observed now by which the bank had taken such actions.

As per the provisions contained in Section 17 (1), providing the right to appeal, which reads thus:-

17. Right to appeal.– (1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, may make an application along with such fee, as may be prescribed to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measure had been taken: Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower. Explanation : For the removal of doubts it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery  11 Tribunal under sub-section (1) of Section 17.

In United Bank of India v. Satyawati Tondon and others1 , the Supreme Court has held that the expression ‘any person’ used in Section 17 (1) is of wide import. It takes within its fold, not only the borrower but also the guarantor or any other person who may be affected by the action taken under Section 13 (4) or Section 14.

The Supreme Court in Jagdish Singh v. Heeralal and others2 has referred with approval the principle laid down in Satyawati Tondon

The legal position which emerges from a reading of Sections 13 & 17 of the Act, 2002 and the above cited judgments of the Supreme Court is that when the secured creditor proceeds to take any measure under Section 13 (4), in addition to the borrower, the guarantor may also prefer an appeal. It is nowhere provided, as has been interpreted by the DRAT in the impugned order, that when secured asset belongs to the guarantor, only the guarantor can prefer an appeal and not the borrower. In drawing the above conclusion

If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in subsection (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management of the secured assets to the borrower or restoration of possession of the secured assets to the borrower, it may by order, declare the recourse to any one or more measures referred to in sub-section (4) of section 13 taken by the secured assets as invalid and restore the possession of the secured assets to the borrower or restore the management of the secured assets to the borrower, as the case may be, and pass such order as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of section 13.

You may resort to legal course of action by approaching DRT and then DRAT for relief.

You have to give reply to 13(2) notice within 60 days. If they were unable to serve notice on the party through the address available with them, they can affix on the property. There are so many presumptions in your query which can't be answered without knowing the entire facts. 

are you holding any equity in the company since you say that you are heavily invested in it?

a guarantor's liability is co-terminus with the principal borrower

if you say that you did not sign any papers for being a guarantor then how were your property papers given to the bank as a collateral? i am not able to understand that...can you please elaborate

there is no novation of contract between the company and the bank. the loan terms are the same. only the management of the company has changed. that does not absolve the guarantor of his liability

the creditor can move against the guarantor without touching the property of the borrower, under section 13(11) of Sarfaesi act 

Dear client,

As you say, the assets are twice the loan you can file a written objection before the DRT for the auction of your properties.

Thank you