Home Loan default and recovery

I have availed home loan on under construction property in Noida extension through a PSU Bank. This loan was availed by me as principal debtor and by my wife as co-applicant as asked by the bank. I paid EMIs for few years. But unfortunately my wife is now separated from me and I am giving maintenance to my wife and my son as per court orders. There are other litigations as well. Also the under construction property got stalled due to bad finances of the builder who has declared himself bankrupt. I am living on rent and as stated above I have to provide monthly maintenance to my Wife. This has led to heavy financial crunch. Due to sudden changes, I was unable to pay EMI for quite some time. When bank contacted me, I told the truth and told them I am ready to give up my under-construction property to bank which they can auction in future when it is ready and will give huge appreciation. Bank refused to take the same and told me that they will file suit against me. I am Govt. employee with limited means. Can they recover the loan through my salary as that is the only earning source for me?? Can they recover loan from guarantor when the collateral asset i.e. the property for which loan was given still exits. Can I defend my case in case of suit initiated by bank when I am already willing to give my under construction unit to bank. The structure is ready with finishing work done for the building. This loan was given as per tripartite agreement between builder, buyer and bank and loan was directly disbursed to builder's account by the bank. In fact the project was approved by the bank.