Dear Sir, I am working as a Legal Executive in Mumbai and require advice on Section 60 of The Multi-State Co-operative Societies Act, 2002. The brief facts are as follows:
An employee working in our company stood as a guarantor to the borrower for an amount of Rs. 31,00,000/- before her marriage.
Understanding Section 60 of the Multi-State Co-operative Societies Act, 2002
As per Section 60 of the Multi-State Co-operative Societies Act, 2002, if the borrower defaults on repayment of the loan, the concerned bank has the right to recover the loan amount from the guarantor. Therefore, the bank can instruct the employer to deduct a certain amount from the salary/wages of the employee and remit it to the bank monthly or as required. Thus, the company is legally obligated to comply.
In the current situation, the borrower has failed to repay the loan. The conciliation officer of the co-operative bank issued an award directing our company to deduct Rs. 10,000/- per month from the salary/wages of the employee (guarantor) and remit it to the bank. The employee's gross monthly salary is approximately Rs. 28,000/-.
Deduction Calculation as per Section 60 of the Civil Procedure Code
According to Section 60 of the Civil Procedure Code, after a standard deduction of Rs.1,000/- and allowing for 2/3rd of the amount for basic necessities, the deductible amount from the employee's wages would be Rs. 8,000/-.
Employee's Objection and Financial Obligations
The employee has written to the bank through her advocate stating that her name is not correctly specified in the award (her maiden name is mentioned instead of her married name), therefore she believes she is not liable to make payments to the bank. She has also informed our company that out of her gross monthly salary of Rs. 28,000/-, she is paying a home loan installment of Rs. 23,000/-.
Could you please advise whether the company can deduct the amount from the employee's salary/wages each month and remit it to the bank in this scenario?
Thank you.
From India, Mumbai
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An employee working in our company stood as a guarantor to the borrower for an amount of Rs. 31,00,000/- before her marriage.
Understanding Section 60 of the Multi-State Co-operative Societies Act, 2002
As per Section 60 of the Multi-State Co-operative Societies Act, 2002, if the borrower defaults on repayment of the loan, the concerned bank has the right to recover the loan amount from the guarantor. Therefore, the bank can instruct the employer to deduct a certain amount from the salary/wages of the employee and remit it to the bank monthly or as required. Thus, the company is legally obligated to comply.
In the current situation, the borrower has failed to repay the loan. The conciliation officer of the co-operative bank issued an award directing our company to deduct Rs. 10,000/- per month from the salary/wages of the employee (guarantor) and remit it to the bank. The employee's gross monthly salary is approximately Rs. 28,000/-.
Deduction Calculation as per Section 60 of the Civil Procedure Code
According to Section 60 of the Civil Procedure Code, after a standard deduction of Rs.1,000/- and allowing for 2/3rd of the amount for basic necessities, the deductible amount from the employee's wages would be Rs. 8,000/-.
Employee's Objection and Financial Obligations
The employee has written to the bank through her advocate stating that her name is not correctly specified in the award (her maiden name is mentioned instead of her married name), therefore she believes she is not liable to make payments to the bank. She has also informed our company that out of her gross monthly salary of Rs. 28,000/-, she is paying a home loan installment of Rs. 23,000/-.
Could you please advise whether the company can deduct the amount from the employee's salary/wages each month and remit it to the bank in this scenario?
Thank you.
From India, Mumbai
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Validity of Guarantor's Name in Recovery Orders
The plea that the guarantor's post-marriage name is not mentioned in the order is not a valid argument to stop recoveries. Indeed, your organization has hardly any choice in the matter. There is a valid and binding order on you to recover, and it takes precedence over others.
Recovery of Housing Loan from Salary
The housing loan, is it being recovered from salary? As per Section 60 of CPC, the amount due could be recovered (Rs 8000 as stated) from salary and deposited to make a self-explanatory submission to the authority concerned. It is for the employee to take legal recourse and get the order impugned before the higher judicial authorities.
From India, Mumbai
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1593The plea that the guarantor's post-marriage name is not mentioned in the order is not a valid argument to stop recoveries. Indeed, your organization has hardly any choice in the matter. There is a valid and binding order on you to recover, and it takes precedence over others.
Recovery of Housing Loan from Salary
The housing loan, is it being recovered from salary? As per Section 60 of CPC, the amount due could be recovered (Rs 8000 as stated) from salary and deposited to make a self-explanatory submission to the authority concerned. It is for the employee to take legal recourse and get the order impugned before the higher judicial authorities.
From India, Mumbai
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