A surety is liable to the extent of the loss or damage suffered by the creditor due to the principal debtor's default.

DEBANGSU BASAK, J.:-

The plaintiff was a manufacturer and producer of iron and steel materials. In July/August 1974 the original plaintiff entered into an agreement with the Defendant No. 1 by which the Defendant No. 1 was appointed as the handling and storage contractor for the original plaintiff on various terms and conditions. In consideration of such agreement between the original plaintiff and the Defendant No. 1, the Defendant Nos. 2 and 3 agreed to indemnify the original plaintiff to the extent of a sum of Rs. 10,00,000/- against all loses, charges and expenses that may be suffered by the original plaintiff on account of the Defendant No. 1 with regard to the transactions had between them. The original plaintiff supplied diverse materials to the Defendant No. 1 in terms of the agreement. According to the plaintiff, the Defendant No. 1 was guilty of short delivery amounting to Rs.34,54,726.73p. and, therefore, in terms of the agreement between the parties was liable to pay the plaintiff the said sum together with interest. Since the Defendant Nos. 2 and 3 were liable to the extent of Rs.10,00,000/- each the plaintiff claimed such sum from the Defendant Nos. 2 and 3. The plaintiff claimed that in spite of repeated demands the Defendant No. 1 failed and neglected to pay a sum of Rs.34,54,726.73p. and the Defendant Nos. 2 and 3 failed to pay the sum of Rs.10,00,000/- each.

The original plaintiff was Hindustan Steel Limited. By and under the provisions of the Public Sector Iron and Steel Companies (Restructuring and Miscellaneous Provisions) Act, 1978 the entire undertaking of Hindustan Steel Limited together with all contracts entered into by it was transferred to and vested with the plaintiff on and from May 1, 1978. The plaintiff was, therefore, entitled to proceed with the suit in place and stead of the original plaintiff by virtue of the said Act of 1978. Necessary amendment in that regard was duly carried out in the plaint.

The plaintiff disclosed various documents. The plaintiff produced two witnesses in support of its case. Both the witnesses of the plaintiff were examined in chief. None appeared for the Defendants to contest the suit except the Defendant No. 4. A learned Advocate appeared on behalf of the Defendant No. 4 and sought time. The learned Counsel for the plaintiff submitted that the plaintiff not pressing any claim against the Defendant No. 4.

I have considered the pleadings, the documents exhibited in evidence, the deposition of the two witnesses and the contentions of the plaintiff.

The original plaintiff as the manufacturer and producer of steel materials appointed the Defendant No. 1 as its handling agent at Shibpur under the contract for agency the Defendant No. 1 had agreed to compensate the original for all shortages based on the average rate per tonne (sale value). Pursuant to such terms of the contract the plaintiff from time to time delivered diverse quantities of materials to the Defendant No. 1. The Defendant No. 1 acting as such handling agent was to deal with the materials in accordance with the instructions of the plaintiff. Upon accounts being taken as to the materials supplied by the plaintiff to the Defendant No. 1 and the onward transmission by which the plaintiff supplied to the parties identified by the plaintiff, it was found by the plaintiff that, there were short supplies made by the Defendant No. 1. Demands for compensation were made by the original plaintiff by several letters written to the Defendant No. 1. The Defendant No. 1 did not pay such compensation. The witness of the plaintiff in his evidence proved a chart being Exhibit ‘B’ which showed the quantum and the value of such short delivery, the rates at which such deliveries were made and the dates of the letters by which the original plaintiff had demanded compensation from the Defendant No. 1. Such chart also showed dates of the letters by which the plaintiff had lodged its claim with the Defendant No. 1 for the