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Report No. 13

Section 125A.- After section 125 of the Principal Act, the following section shall be inserted, namely:-

"125A. Rights of indemnity-holder.

(1) The promisee in a contract of indemnity acting within the scope of his authority may, where a liability has arisen against him in favour of a third party, obtain against the promisor, in an appropriate case, a decree compelling the promisor to set apart a fund out of which the promisee may meet such liability or directing the promisor to discharge such liability himself.

(2) The promisee may institute a suit under this section even where no such suit as is referred to in section 125 has been instituted, and irrespective of whether any actual loss has been sustained by the promisee or not.

Explanation.-The promisee is not precluded from obtaining relief under this section merely on the ground that the promisee's liability to the third party cannot be effectively enforced against him".

Indian Contract Act, 1872 Back

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