Citation : (1942) 44 BOMLR 703

Court: Bombay high court

Bench : Chagla J


This is a contract law case relating to indemnity. In this case, the court held that sections 124 and 125 of the Indian contract act are not exhaustive.

A contract of indemnity is the one where one person  (indemnifier) promises or agrees to make good The losses incurred or to be incurred by him in pursuance of a contract to the other ( indemnity holder).


Plaintiff brought a plot of land in Bombay from the municipal corporation of Bombay on lease. At the defendant’s request, the plaintiff allowed him to possess the land and erected a building over the land, thus rendering the plaintiff to mortgage the land twice for rupees five thousand. The lease of the plot was also transferred into the defendant’s name on the consideration that plaintiff would be discharged of all the liabilities arising out of the land. But The defendant did not discharge the plaintiff of the liabilities due to which the plaintiff filed a suit. The plaintiff submitted that defendant shall indemnify him in respect of all liability under the mortgage and deed of further charge.

Now the issue here arises that whether the suit for indemnity is premature as the plaintiff had not yet incurred any loss?


The court held in the favour of the plaintiff stating that section 124 and 125 of the Indian contract Act 1872 are not exhaustive of the law of indemnity and the courts would apply equitable principles as are applied in courts of England. The court did not accept the defendant’s stance that the plaintiff has not suffered any loss and thus couldn’t claim. And held that indemnity holder has rights apart from those mentioned within the sections.

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