A guarantor’s right to occupy mortgaged property is subject to unconditional surrender upon notice after the property is sold.

JUDGMENT

Petitioner is the guarantor in respect of a loan availed by his brother from the South Indian Bank Limited. On the loan account turning into a Non Performing Asset, the portfolio was assigned to the respondent-Asset Reconstruction Company, on 17.03.2017. Petitioner has also mortgaged his property for the purpose of securing repayment of the loan.

2. When this matter is taken up for consideration today, learned counsel appearing for the petitioner submits that the petitioner is a retired defence personnel and the only relief now sought for is for a direction to the respondent to permit the petitioner to continue in occupation of the premises in question till the same is brought to sale by the respondent. It is submitted with reference to the affidavit dated 01.01.2023 that, on the sale being confirmed and on intimation from the respondent, the petitioner will hand over vacant possession to the authorised officer of the respondent.

3. Learned counsel appearing for the respondent would submit that if the petitioner were to unconditionally surrender vacant possession of the secured asset on the sale being confirmed, the respondent has no objection in permitting the petitioner to continue in occupation of the premises. It is submitted that the surrender must be unconditional and immediately on the request made by the authorised officer of the respondent bank. The learned counsel also pointed out that despite an earlier undertaking to vacate the premises by 15.12.2021, the petitioner did not do so.

4. Having heard the learned counsel appearing for the petitioner and the learned counsel appearing for the respondent and having regard to the contents of the affidavit dated 01.01.2023, it is directed that the petitioner shall be permitted to continue in occupation of the secured asset till the asset is sold in auction. The petitioner shall hand over vacant possession of the secured asset immediately on a request being made by the authorised officer of the respondent, after the property has been sold. It is made clear that the surrender shall be unconditional and the petitioner will not be granted any further time to vacate the premises. If the petitioner fails to hand over possession as undertaken, it will be open to the respondent to initiate proceedings under the Contempt of Courts Act in addition to any other remedy that may be available to them. It will also be open to the respondent to bring to the notice of intending bidders the terms of this judgment. The petitioner shall also not obstruct or hinder the inspection of property by any intending bidders.

The writ petition is disposed of as above.