Indemnity

Indemnity

Position in English Law
1. A plaintiff, having acted on request of a defendant, is entitled to assume that if the act was wrongful, he will be indemnified by the defendant.
  1. Adamson v. Jarvis
    1. Plaintiff sold defendant's cattle, which did not belong to him.
      1. Auctioneer held liable by original owner.
        Plaintiff having acted on the request of the defendant, was entitled to assume that he would be indemnified by the defendant.
  2. Indemnity wide enough to include loss arising any cause whatsoever.
  3. Dugdale v. Lovering
    1. Plaintiffs were in possession of trucks claimed by two defendants and K.P. Co.
      1. Plaintiffs delivered trucks to defendant after asking for indemnity and getting no reply.
        Entitled to recover on an implied promise, by demanding indemnity, made clear that no intention to deliver without.
  4. Sheffield Corporation v. Barclay
    1. Corporation Registered transfer of Stock on request of banker.
      1. Transfers were discovered to be forgeries.
        Entitled to recover from banker.
Position in Indian Law
1. Section 124
  1. Definition
    1. Scope is much narrower than in English Law
      1. Loss arising from accidents excluded in definition.
        Situations involving instructions from wrongful owner, like Adamson v. Jarvis, will fall under Section 223. (Principle-Agent indemnity)
    2. One party promising to save the other due to loss caused by the promisor, or any other party.
      1. Secy of State for India in Council v. Bank of India Ltd.
        A person delivered a forged endorsement to a Bank, which received it in exchange for money.
        Bank sent the note to Public Debt Office to renew in their name.
        True owner of the note recovered compensation from the State.
        State was allowed to recover from the Bank on an implied promise of indemnity.
2. Section 125
  1. Rights of Indemnity Holder when sued.
    1. When does liability commence?
      1. Gajanan Moreshwar v. Moreshwar Madan Mantri
        Explained the departure from the idea that action was not maintainable until actual loss was incurred.
        The indemnified had to wait till a judgement and satisfy it before he could use on his indemnity.
        Sometimes threw an intolerable burden on indemnity holder.
        Might not be in a position to satisfy judgement, but could not avail of indemnity until he had done so.
        Court of Equity stepped in and said that the indemnified was entitled to sue as soon as his liability became absolute.
      2. Richardson Re, Ex Parte the Governors of St. Thomas's Hospital.
        Indemnity is not given by repayment after payment, it requires that the indemnified shall never be called upon to pay.
        Indian Cases on this principle.
        Osman Jamal v. Gopal Purshottam
        A company was the commission agent for the defendant firm, and it bought certain goods in that capacity.
        Supplier was entitled to recover from the company, but it went into liquidation before paying.
        Held that Official Liquidator could recover from defendants, even though the company had never paid. Money had to be set aside for full payment to vendors.
        Abdul Hussain v. Bombay Metal Syndicate
        Plaintiffs had sold goods to defendants. Defendants provided a letter indemnifying plaintiff from sales tax.
        When asked to pay tax, plaintiff asked defendants to do so, they did not.
        Plaintiff deposited money himself, filed suit to recover money more than 3 years after getting tax notice.
        Plaintiff is entitled to wait and institute suit after damnification and sufferance of loss. Within period of limitation as period starts from date of payment of tax.

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