Case Note & Summary
The plaintiff, M/s. Ashwin Industrial Corp., filed a suit for recovery of Rs.1,90,914.14 with interest against Globe Steerings Ltd (defendant no.1) and another defendant (defendant no.2). The plaintiff supplied tools and alloy steels to defendant no.1 for manufacturing steel gears for defendant no.2. In May 1981, a tripartite arrangement was made where defendant no.2 guaranteed payment for goods supplied. The plaintiff supplied goods but payment was not made. The court found that defendant no.2, as guarantor, is liable to pay the principal amount of Rs.1,29,574.18 with interest at 18% per annum from the date of suit till realization. The suit was decreed against defendant no.2.
Headnote
A) Contract Law - Guarantee - Tripartite Agreement - Liability of Guarantor - The plaintiff supplied goods to the first defendant based on the assurance that the second defendant would pay. The court held that the second defendant, having guaranteed payment, is liable to pay the outstanding amount with interest. (Paras 1-3)
Issue of Consideration
Whether the second defendant is liable as a guarantor for the payment of goods supplied by the plaintiff to the first defendant under a tripartite arrangement.
Final Decision
Suit decreed against defendant no.2 for Rs.1,29,574.18 with interest at 18% p.a. from date of suit till realization.
Law Points
- Guarantee
- Tripartite Agreement
- Liability of Guarantor
- Recovery of Debt
- Interest
