Guarantor ordered to pay Dh500,000 dues to Solico Co.

DUBAI — The Dubai Court of Cassation has upheld the verdict of the lower courts in asking Al Khaleej Ready Concrete Blocks to make good Dh500,000 to Solico Contracting Company for standing guarantee to the amount owed to the former by Al Tadamun Contracting Association.

By A Staff Reporter

Published: Mon 27 Jun 2005, 10:54 AM

Last updated: Thu 2 Apr 2015, 3:46 PM

According to the case history, Solico entered into a contract with Al Tadamun, owned by Rashed Ganem Al Gaith, for construction of villas. The company was to be paid Dh1,043,424 on completion of the job. Al Khaleej was also involved in the contract as a sponsor. However, when the payments were delayed, Solico filed a case against Al Tadamun, and won it. The Court ordered Al Tadamun to pay the entire amount due to Solico plus interest of nine per cent.

Rashed Ganem, meanwhile, negotiated with Solico to lower the due amount to Dh1,000,000, and made Al Khaleej a party to the agreement as guarantor. Of the Dh1,000,000 dues, Dh200,000 was to be paid within 60 days and the rest in instalments. The payment of Dh200,000 was made as per the agreement besides another Dh249,438.

Subsequently, the remaining amount was not paid despite repeated requests, forcing Solico to seek legal recourse. The Court of First Instance assigned an expert to verify facts of the case including the amount due, Al Khaleej’s involvement as guarantor and fulfilment of the contract by Solico. The Court, on the basis of the expert’s report, directed Al Khaleej to pay Dh500,000 to Solico and interest at the rate of 9 per cent.

Al Khaleej, however, contested the verdict and filed an appeal which was rejected by the Appeals Court. As a last resort, Al Khaleej approached the Court of Cassation, which too dismissed his case on the basis of the expert’s report which clearly stated that Al Khaleej had taken on the role of a guarantor for the dues. The report also said that the dues amounted to Dh550,910, based on which, the Court upheld the verdict asking Al Khaleej to pay Dh500,000 to Solico.

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