Supreme Court: Army Must Prove Disability Was Unrelated to Service to Deny Pension  ||  SC: Grant of Fishing Rights by Deed is a Transfer of Immovable Property, Qualifies as Lease  ||  Gujarat HC: Waqf Board Inquiry into Religious Character Not Barred by Places of Worship Act  ||  Gauhati HC Rejects Failed Candidates’ Challenge to Law Officers’ Appointment Procedures  ||  Kerala HC Grants Pre-Arrest Bail to Woman Accused of Throwing Newborn, Cites Lack of Intent  ||  P&H HC Quashes Case, Holds 'Heart Lung Pack' was not a Notified Drug in 2010  ||  Kerala HC: Illegal Arrest Entitles Accused to Release, Not Bail  ||  Allahabad HC Explains: Does Conversion Automatically Strip a Person of Scheduled Tribe Status?  ||  Delhi HC Rejects Vimal Elaichi Plea against FDA Notice to Shah Rukh Khan, Ajay Devgn, Tiger Shroff  ||  Calcutta HC Upholds Jail Term for Owner Over Unauthorised Construction under Roof-Repair Permit    

Bonifacio and Another vs. Lombard Insurance Company - (04 Jun 2024)

Liability on the guarantee could be avoided, if there was fraud on the part of the beneficiary

Insurance

Present appeal considers whether the first Appellant, Jorge Alexandre Da Costa Bonifacio, and the second Appellant, Sergio Rui Da Costa Bonifacio (Appellants), are liable to indemnify the Respondent, Lombard Insurance Company Limited (the Respondent), for a payment it made to DBT Technologies (Pty) Ltd (DBT). The payment was made in respect of a guarantee which the Respondent had issued for the due performance of the obligations of Tubular Construction Projects (Pty) Ltd (TCP) to DBT. The high court) found that, the Appellants were so liable.

The only basis upon which liability on the guarantee could be avoided, would be if there was fraud on the part of the beneficiary. That would require proof that DBT had presented a written demand, which it knew misrepresented the true facts when it submitted the demand drawing on the guarantee. As has been said, fraud, if established, ‘unravels everything’. No court will give effect to a fraud.

The Supreme Court of Appeal in its judgment confirmed the autonomous nature of a performance guarantee. Liability based on such guarantee depends on compliance with the terms of the guarantee and is not affected by any alleged breach of the terms of the underlying agreement in respect of which it was issued, unless the demand for payment was tainted by fraud.

It found that, there was no legal impediment to Lombard compromising on its liability to DBT. It also found that notwithstanding Lombard’s settlement of DBT’s demand, the Bonifacios had appropriate procedures available to them to have raised the issue of fraud on the part of DBT for determination, but that they had failed to do so. No evidence of fraud on the part of Lombard had been adduced before the court, and that the issue of any fraud on the part of DBT, had not been properly raised for determination. Finally, it concluded that the claim for an indemnity was, based on the terms of the indemnity and a proper interpretation of the affidavits, not conditional. Appeal dismissed.

Tags : PAYMENT   INDEMNITY   CLAIM  

Share :        

Disclaimer | Copyright 2026 - All Rights Reserved