JUDGMENT

S.B. Majmudar, J.-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 Division Bench of the Andhra Pradesh High Court at Hyderabad whereby respondent No. 1 s suit against the appellant-insurance company, which was defendant No. 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 No. 1 respondent No. 1 as the plaintiff and respondent No. 2 as defendant No. 2 in the latter part of this judgment.

2. The plaintiff filed a suit for recovery of Rs. 1,25,000/- against both the defendants in the Court of Subordinate Judge, Kakinada East Godavari District in the State of Andhra Pradesh. The plaintiff s case is that by a Deed dated 23rd April 1971 (Annexure A-2) entered into between the plaintiff and defendant No. 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