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2020 (8) TMI 944 - HC - Indian LawsRepayment of loan - Letter of Comfort - can that Letter of Comfort be fairly read to be a guarantee by the 1st Defendant to repay a loan that the Plaintiff gave to another entity? - Does it accord with the requirements of a guarantee under Section 126 of the Contract Act, 1872? - Does it contain an unequivocal commitment or assumption by the 1st Defendant to repay the loan on the principal borrower's default? - HELD THAT:- In a given case, a letter of comfort may indeed amount to a guarantee. Not every letter of comfort is ipso facto a guarantee. The nomenclature is unimportant, as is the absence of the word 'guarantee' - The ordinary rules of construction and interpretation relating to contracts apply to LoCs - The document is to be construed as a whole, read in a reasonable commercial sense, and in context of events and associated documents - Yet, to be a guarantee, it must conform to the provisions of Section 126 of the Contract Act. Whether the document in question is a guarantee or not depends upon the exact terms to which the guarantor binds himself. In law, no guarantor is liable for more than what the guarantor has undertaken - Where the terms of a written contract are unambiguous and clear, they cannot be altered by addition or subtraction. The terms of a written guarantee cannot be so altered to foist on a party a liability beyond that which the party has undertaken. The contract cannot be rewritten at the instance of one party - The conduct of the parties is a relevant factor in assessing the construction of any contract. Broad allegations of commercial infidelity, immorality or amorality have no role at all to play in the construction of commercial contracts--especially where parties are well-equipped with legal and financial services (as opposed to an uneducated indigent or individual), and the resultant documentation is complex, and has carefully considered, well-defined provisions. A court will look to the nature of the bargain struck and the role that each of the parties was to play, and when, in what manner, and to what extent. The fact that one or more of the contracting parties are interlinked is not necessarily relevant. The Interim Application is utterly without merit. It should be dismissed - Application dismissed.
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