AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1963 (4) TMI 110
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....arisingh executed an entry in the account book of the plaintiff for having received a sum of Rs. 7500/- in cash on 18-12-1953. The Lt. Col. signed this entry stating that he was responsible for the repayment of this amount of money. Other items consisting of the sum of Rs. 175/- and Rs. 21/- which remained due on the basis of the previous accounts together with another sum of Rs. 3/- were also claimed. A credit was given in this Khata for Rs. 1298/7/6 from some separate account of the It. Col. and thus the total claim made by the plaintiff came to Rs. 9058/- inclusive of interest at the rate of Rs. 1/4/- per cent per mensem. 3. Harishigh admitted the existence of the previous accounts between him and the plaintiff and pleaded that it was settled and cleared. He denied having executed the entry in the sum of Rs. 7500/- and contended that he had never borrowed this amount. The claim for interest was also disputed. He pleaded that he used to deliver his entire agricultural produce to the plaintiff's firm and in fact he had paid the plaintiff's dues five times over. Some other legal pleas were also raised which are no longer in controversy and need not be mentioned. 4. Th....
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....2 is supported by consideration? 2. Whether the appellant's claim for interest ought to have been decreed? 8. According to Section 126 of the Indian Contract Act, "A 'contract of guarantee' is a contract to perform the promise, or discharge the liability, of a third person in case of his default." Guarantee is, therefore, in the nature of "a collateral engagement to answer for the debt, default or mis-carriage of another as distinguished from an original and direct engagement for the parties own act." (Chitty on Contracts, Vol. II, 22nd (1961) Edition). On the question of consideration necessary to support an engagement of guarantee the relevant section of the Indian Contract Act is 127, which reads as follows : "Anything done, or any promise made, for the benefit of the principal debtor may be a sufficient consideration to the surety for giving the guarantee." For the validity of a contract of guarantee it is adequate consideration if "anything is done or any promise made for the benefit of the principal debtor." The nature of the things done which constitutes such consideration can be gleaned from some decided cases to which reference has been ....
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....s given at the time of the execution of the guarantee or even a past benefit can constitute a valid consideration for the sustenance of such an engagement. In order to appreciate the question whether in the present case there is adequate consideration or not it will be profitable to recall the circumstances in which the guarantee in the case before me was given. In para-graph 3 of the plaint the plaintiff stated that the defendants, namely, Harisingh and the Lt. Col. began their money dealings [ ^^ysu nsu 'kq: fd;k** ] and the Lt. Col. undertook the responsibility for the repayment of the loan of Rs. 7500/-. In Ex. 2 dated 18-12-1953 it is stated that Harisingh received cash amounting to Rs. 7500/-. On this entry the Lt. Col. has stated " ^^bl [kkrs ds ysu nsu dk ftesokj eS gwa** and he has signed these words. If the plaintiff had succeeded in proving the case that the sum of Rs. 7500/- was given in cash to Harisingh, the principal debtor, by the creditor and the Lt. Col. guaranteed the performance of this contract then the contract of guarantee was obviously supported by consideration, and would have been enforceable against the Lt. Col. The facts as they transpired at t....
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....ord 'done' in Section 127 is indicative of the inference that past benefit to the principal debtor can be good consideration. With great respect, I regret, I am unable to agree with the interpretation put oy their Lordships in this judgment. It is giving the word 'done' an unnatural meaning. In Kali Charan's case AIR 1918 PC 226 the circumstances were that though the agreement was executed subsequently but it was in pursuance to an earlier agreement. Illustration (c) to Section 127 completely negatives a consideration which the Oudh Court has chosen to give to Section 127 of the Indian Contract Act. Apart from this the case originally set out by the plaintiff was that Ex. 2 had for its consideration cash. The Lt. Col. had challenged this fact in his written statement and the plaintiff changed his case in the course of trial. No consideration qua Harisingh passed from the plaintiff at the time of execution of Ex. 2 nor was anything done for his benefit on that day. The contract of guarantee, therefore, in my opinion, has been rightly held by the learned District Judge to be one without consideration. 15. So far as the claim of Interest is concerned evidently n....