#guarantor liability

The court held that a guarantor's security cheque is not automatically exempt from Section 138 prosecution merely because it was given as collateral; the existence of an enforceable debt must be tested at trial. This clarifies that guarantors cannot escape cheque bounce proceedings at the threshold without a full evidentiary inquiry into the underlying liability.

NCLAT ruled that guarantors remain liable for total debt despite deed clause limiting liability to mortgaged property value, upholding DRT’s crystallised debt and confirming that guarantee provisions override security clauses under IBC Section 114.

The Uttarakhand CDRC held that recovering dues from a guarantor-legal heir is not deficiency in service under CPA 2019. This lets banks pursue such guarantors without consumer-forum liability, impacting lenders and guarantors in loan-account disputes.

Jammu & Kashmir and Ladakh High Court holds that pension credited to a bank account loses exemption under Section 11 of Pensions Act, 1871 when used to discharge guarantor liability.

Bombay High Court holds that notifying CIBIL of NPA status does not equate to declaring guarantors as willful defaulters, affirming statutory obligations under the CICR Act.

Kerala High Court holds that banks can exercise general lien over salary accounts under Section 171 of Indian Contract Act, overriding CPC exemptions.