- (1.) -This appeal on the grant of special leave to appeal under Article 136 of the Constitution of India brings in challenge the judgment and decree passed by the division bench of the A. P. High court at Hyderabad whereby Respondent 1's suit against the appellant insurance company, which was Defendant 1 in the suit, came to be decreed. In order to appreciate the grievance of the appellant against the impugned decree a few background facts deserve to be noted at the outset. We shall refer to the appellant as Defendant I, respondent 1 as the plaintiff and Respondent 2 as Defendant 2 in the latter part of this judgment
(2.) The plaintiff filed a suit for recovery of Rs. 1,25,000. 00 against both the defendants in the court of Subordinate Judge, Kakinada, East Godavari District in the State of A. P. The plaintiff's case is that by a Deed dated 23/4/1971 (Annexure A-2 entered into between the plaintiff and Defendant 2, the 2nd defendant agreed and undertook to pay to the plaintiff a sum of Rs. 1,68,499.32 being the amount settled to be due to the plaintiff. The 2nd defendant also agreed to furnish a guarantee bond from the 1st defendant-insurance company for the due payment of Rs. 1,25,000. 00 from out of the said amount of Rs. 1,68,499.32. Accordingly at the request of the 2nd defendant, the 1st defendant agreed to execute a guarantee bond in favour of the plaintiff for the said amount of Rs. 1,25,000. 00. The 1st defendant executed a guarantee bond dated 26/4/1971 (Annexure A-l) in favour of the plaintiff by and under which the 1st defendant agreed and undertook to pay to the plaintiff at Kakinada the said sum of Rs. 1,25,000. 00 or such lesser amount as may be demanded by the plaintiff on failure of the 2nd defendant to fulfil the terms of the agreement dated 23/4/1971 (Annexure A-2. It is the further case of the plaintiff that the first defendant also unconditionally and irrevocably agreed that the payment due under the guarantee bond, will be made to the plaintiff within ten days after the receipt of a written notice of demand from the plaintiff and without reference to the 2nd defendant. The plaintiff contended that the said guarantee bond provided that it will be valid for a period of one year thereof. The plaintiff contended that as the 2nd defendant failed to perform the terms of the agreement (Annexure A-2 the plaintiff demanded the guaranteed amount of Rs. 1,25,000. 00 from the 1st defendant by registered notice dated 27/3/1972. As it was not complied with, the plaintiff filed the aforesaid suit against both the defendants
(3.) The 2nd defendant remained ex parte and did not file any written statement. But the 1st defendant-insurance company, appellant herein, filed written statement contending that it was not aware of any agreement dated 23/4/1971 (Annexure A-2 said to have been entered into between the plaintiff and the 2nd defendant under which the 2nd defendant agreed and undertook to pay to the plaintiff a sum of Rs. 1,68,499.32 as being the amount settled to be due to the plaintiff. The plaintiff and the 2nd defendant represented that the plaintiff was a wholesaler for the sale of nylon yam andfishing requisites and that he appointed the 2nd defendant as a dealer for the sale of nylon yam and the Fishing requisites and that in connection with credit facilities that were being given by the plaintiff to the 2nd defendant the 1st defendant might give a guarantee for the said sum of Rs. 1,25,000. 00 in respect of the faithful performance of the said dealership. Based on the said representations of the plaintiff and the 2nd defendant, the 1st defendant executed a guarantee bond in favour of the plaintiff in a sum of Rs. 1,25,000. 00 for the sale of nylon yam and fishing requisites etc. The 1st defendant never agreed to furnish any guarantee to the plaintiff in respect of any amount that had been settled to be due to the plaintiff on dissolution of their partnership. The allegation that the 2nd defendant agreed to furnish an insurance guarantee bond for the due amount of Rs. 1,25,000. 00 from out of Rs. 1,68,499.32 from the 1st defendant and at the request of the 2nd defendant the 1st defendant agreed to execute a guarantee bond in favour of the plaintiff for the said sum of Rs. 1,25,000. 00 was therefore not true. The 1st defendant executed a guarantee bond in favour of the plaintiff for a sum of Rs. 1,25,000. 00 in case the 2nd defendant does not account to the plaintiff in respect of the sale of nylon yarn and the fishing requisites etc. that have been entrusted to him by the plaintiff to be sold. The allegation that the 1st defendant executed a guarantee bond under which it agreed to pay Rs. 1,25,000. 00 to the plaintiff at Kakinada or such lesser amount as may be demanded by the plaintiff on failure of the 2nd defendant was not true;