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Nirali Nayak   23 June 2021

Contract of indemnity

  1. Dear learned counsel.

There is a company Bell Corporations. Every employee at the Bell Corporations Pvt. Ltd. Has to mandatorily enter into a contract of indemnity with the company. One such employee is my brother Ankit. He defaulted and was liable to indemnify the company. Due to certain reasons, he could not carry out the needful. The company contracted our father demanding that he indemnify on Ankit’s behalf and cited the contract to substantiate its claim. Could you please tell me whether the company is within the right to do so? And is our father liable to indemnify?



 6 Replies

G.L.N. Prasad (Retired employee.)     24 June 2021

You have not informed the type of such business, why your brother failed and amount involved.  Unless your father is a co-obligant, the Bell Corporation can not bring pressure on him, and in all probability, your father should have been a co-obligant or mortgaged some properties.  Contact with a local advocate and if your father is in no way involved, he will issue a legal notice threatening the corporation of harassment and further filing a criminal complaint against BC.

Shashikant V. Patil (Lawyer)     24 June 2021

This is company seems to be very particular and signing indemnity bond/contract from each employee mandatorily .So employee became bounded by their terms and conditions. Their side becomes strong and if you done any thing harm to the companies business due to your own default, then there is no way to represent your grievances.

G.L.N. Prasad (Retired employee.)     24 June 2021

The query was on "harassment" to the employee's father.

M V Gupta (Advocate)     24 June 2021

Generally companies obtain indemnities from employees to compensate the company for any loss or damage it sustains on account of any willful commission or omission on the part of the employee in discharge of his duties.If your brother has not committed or omitted to do any thing willfully, the company cannnot invoke the indemnity and demand compensation form your brother. So you have to see whethr there was any willful commission or omission on your brother's part. At any rate the Company cannot compell your father to give indemnity on behlaf of your brother. He may refuse to give such indemnity.

T. Kalaiselvan, Advocate (Advocate)     26 June 2021

The company has employed an adult and not a person minor by age, hence the company cannot ask the employee's father to indemnify the company.

If the employee is not willing to indemnify the company as per the company's rules and regulations then the company can very well terminate the employee for not abiding by the conditions of the employment.

 

Vasundhara Singh (Student)     29 June 2021

Hello!  

Section 124 of the Indian Contract Act, 1872 deals with indemnity contracts. An indemnity contract is one where one party promises to make good the losses or recover the losses caused to any third party by the acts of the first party or any other party.   

Your brother signed a contract of indemnity with the company and in case if he fails to do something and causes damages to the company, he will be liable to indemnify them. If he is unable to do so, then the company can claim damages from the party who promised to pay the damages on behalf of your brother and will be mentioned in the terms of the contract. If in the contract, it has been mentioned that it will be the responsibility of your father to indemnify the company in case your brother fails to do so, then the company can sue the father for recovery of damages. But if there is no such condition and some other third party is liable to indemnify, then your father cannot be forced to pay the damages.  

Regards  

Vasundhara Singh  


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