. According to the law; a security contract is therefore a tripartite agreement between the „guarantor“, the „principal debtor“ and the „creditor“. Such an itripartite contractual obligation arises between. Payment.5. Accordingly, on March 28, 1925, a guarantee of Madanlal was implemented and executed a guarantee, the official translation of which is worded as follows: „To the court of the second. Additional District Judge, Akola.Andhani et co. – Plaintiff, Tikamdas Tejmal and company – Defendant, guarantee granted by Madanlal Motilal Marwadi Saha, domiciled at. In a case study between Punjab National Bank Ltd. v. Bikram Cotton Mills and Anr[vi] and Gajan Moreshwar vs Moreshwar Madan, the difference between guarantee and compensation is clearly visible. There are three parties here, in the case of the National Bank of Punjab, where only two parties in Gajan Moreshwar. Here, Moreshwar Madan was the compensator and therefore the only one who could recover the money, while in the case of the National Bank of Punjab, the debtor, which is the first defendant company, is the main liable and the secondary liability belongs to the guarantor who is the defendant.
The Privy Council in Gajan Moreshwar decided that the compensation holder had rights other than those mentioned in the above-mentioned sections. If the indemnification holder has accepted a liability, he may ask the indemnification to do the liability properly, and Moreshwar Madan has been ordered by the Privy Council to properly charge the indemnification holder, Gajan Moreshwar. In the case of the Punjab National Bank, there was no risk, but there is an existing obligation to repay the debt, as mentioned in the sections on the guarantee. Regardless of the existence of a risk, the principal debtor and the guarantor must therefore repay the creditor`s debt. In the Gajan Moreshwar case, Gajan Moreshwar cannot sue K.D. Mohan because it is a compensation contract. He can only prosecute Moreshwar Madan. But in the case of the National Bank of Punjab, the guarantee can be sued in addition to the main debtor. The creditor should disclose to the guarantor the facts that may affect the guarantor`s liability. The guarantee must not be obtained by mis presenting the facts with regard to the surety.
Illustration On Priya`s guarantee, Anita Sita lent 100,000 rupees. This debt is also secured by a guarantee for the debt which is the rental of Sita`s house. Sita is in arrears in paying the debt and Priya has to pay the debt. After the payment of Sitas` commitments, Priya is entitled to obtain the rental deed in its favor. A guarantee contract can be revoked in two ways: a tripartite agreement provides for three separate contracts, one for each of the parties concerned, all three parties agreeing. Contracts exist as: „Indemnification and warranty are two sides of the same coin“ – This means that indemnification and warranty differ on many issues, while they are similar on the issue, they are both types of compensation and they are similar in certain principles such as unjustified enrichment and good faith business. Despite their fundamental similarities, indemnification contracts are inherently different from warranty contracts. We will first explain what compensation and warranty means. Next, we will discuss the differences and similarities between warranty and indemnification.
Foundations of a contract in force: like any other framework contract, it maintains the legitimate free consent, consideration, determination and jurisdiction of the parties as essential elements of an existing contract. Under Article 146, co-guarantors are obliged, in the absence of contracts to the contrary, to make an equal contribution. This principle also applies when the liability of co-guarantees is solidary, whether they are identical or different contracts and, with or without knowledge, of each other. . . .