Rights of Indemnity holder

The contract of indemnity refers to “when one person promises the other to save from any damages”.According to English law “indemnity means a promise to save a person harmless from the consequence of an act “.

Adamson vs Jarvis

Adamson is an auctioneer and Jarvis is the offeror. Defendant came to the plaintiff requested to sell the cattle through auction. (but the. The real fact was the cattle never belonged to the defendant ) Adamson agreed and in his auction, an 3rd party purchased the cattle, after-sale was completed later Plaintiff came to know that Jarvis was not the owner of the cattle. And the real owner of the cattle came to know that Adamson sold his cattle. Later the real owner filed case against Adamson and Adamson has to pay the real owner as a compensation, later on, Adamson recovered the money from Jarvis, it’s an implied contract and hence Jarvis is liable.

Rights of indemnity holder

Section 125 of Indian contract gives a provision for rights of indemnity holder, As per section 125” promisee is entitled to recover from the promiser “;

• “All damages which the promisee may be compelled to pay in any suit all passed which the promisee may be compelled to pay in bringing or defending the suite”.
• “All sums which he may have paid under the terms of compromise of any suit”.
• “For all the above the indemnity owner should seek the permission take consents of indemnifier “.

Commencement of Liability

When does the indemnifier become liable to pay?

As per the English law, you must be domified before you claim to be indemnified. One should suffer injury before claiming for the damages, indemnity is payable only after the indemnity holder suffered actual laws. As soon as the liability of the indemnified becomes absolute the indemnified can claim the damages from indemnifier. Present law says you need not wait till the execution of the case when the case becomes absolute the indemnified can claim the damages. For example, A is the insurer and B is the policyholder now B has suffered the actual laws after further investigation when it is proved that B has suffered a loss then if B has to pay to C the insurer can directly pay to C.

Osmal Jomal and sons limited vs Gopal Purushotham.

Plaintiff Company was acting as a commission agent for defendant’s firm. Regularly they supply goods to the defendant’s firm, but the defendant company failed to accept the goods. The Supplier that had supplied the goods to the plaintiff’s firm files case against the Plaintiff as soon as the supplier files case against the company, the company goes into liquidity and shuts down, declared as insolvent .now the appointed liquidator that is being appointed by the government to deal with the process of insolvency should take the money directly from the defendant and pay it to the supplier.As soon as it was proved that the defendant's company is liable to pay and the real damage has occurred to the plaintiffs firm the liability of the defendant starts from there.