Court Orders Training Institute Owner and Guarantor to Pay BD181,000 for Unpaid Diamond Purchase

TDT | Manama

The Daily Tribune - www.newsofbahrain.com

The High Commercial Court has ordered the owner of a training institute and his guarantor to pay BD 181,000 to a Bahraini bank for an unpaid diamond purchase. The institute owner had purchased a diamond for BD 250,000 in 2015 but defaulted on the payments after five years. The court also ordered them to jointly cover the legal costs and attorney fees.

According to the court documents, the bank, acting as the plaintiff, stated that the institute owner, who was the sole proprietor of the training and development institute, had purchased a diamond from the bank on February 11, 2015, under a Murabaha sales contract.

The second defendant, acting as the guarantor, co-signed the agreement. The diamond was purchased for BD 250,000, including agreed-upon profits, and the repayment was structured as 54 installments of BD 5,131 each, with the final installment being BD 5,119.5. The payments were due from September 11, 2015, to February 11, 2020.

However, the institute owner failed to make the required payments, resulting in an outstanding debt of BD 181,148.334. Despite repeated notices, both the owner and the guarantor refused to settle the debt.

The bank sought a court order to compel the defendants to jointly pay the outstanding amount, along with a 10% interest rate from the date of filing the lawsuit until full payment, legal costs, and attorney fees.

The court ruled in favour of the bank, citing the institute owner's failure to pay the full purchase price of the diamond and the agreed-upon profits. The court also noted that the owner did not appear before the court or the case management office. Furthermore, the payment deadline had passed on February 11, 2020, making the full purchase price of the diamond due and payable by the owner.

Regarding the guarantor's liability, the court referred to Article 742 of the Civil Code, which defines a guarantee as an agreement whereby a person assumes the responsibility of a debtor in fulfilling their obligation. The guarantor undertakes to pay the creditor if the debtor fails to do so.

The court emphasised that a guarantee agreement creates a direct liability for the guarantor, making them jointly responsible with the debtor for the debt. The creditor can claim the entire debt from the guarantor alone without first pursuing the original debtor.

Based on these findings, the court ordered both the institute owner and the guarantor to jointly pay BD 181,148.334 to the bank, along with legal costs and attorney fees.