Indemnity bond to banks, companies, or courts for issuing duplicate documents, releasing payments, or replacing instruments.
Civil court with jurisdiction over the contract territory. Arbitral Tribunal if clause exists.
3 years from the date indemnity obligation arises — Limitation Act 1963.
This coverage is provided by a practicing advocate. Specific sections cited depend on the facts you provide during drafting.
An indemnity bond is a legal agreement by which one party (the indemnifier) promises to compensate another party (the indemnified) against any loss, damage, or liability arising from a specific event or transaction. It is widely used in India for lost document replacements, share transfers, bank transactions, government contracts, and as security for performance of obligations. An indemnity bond is backed by the Indian Contract Act, 1872.
Use an indemnity bond when: applying for a duplicate share certificate (required by companies), opening a bank account for a minor, submitting indemnity to a bank for issuing a duplicate fixed deposit receipt, as a surety document for government contractors, or when a person has lost an original document and the issuing authority needs protection against future claims from someone who might misuse the original.
Sections 124–125 of the Indian Contract Act, 1872 govern contracts of indemnity. Section 124 defines an indemnity contract as one where one party promises to save another from loss caused by the promisor's conduct or a third person's conduct. Section 125 entitles the indemnified party to recover damages, costs of legal proceedings, and sums paid under compromise from the indemnifier. Stamp duty on indemnity bonds varies by state and value of indemnity.
An indemnity bond is a binding contract — if the indemnifier fails to indemnify the indemnified against a covered loss, the indemnified can sue for breach of contract and recover all damages, litigation costs, and consequential losses.
In an indemnity contract (Section 124 ICA), the indemnifier's obligation is primary and independent — they must compensate for the specified loss regardless of a third party's default. In a guarantee (Section 126 ICA), the surety's obligation is secondary — it arises only when the principal debtor defaults.
While not always mandatory, having two witnesses sign the indemnity bond strengthens its enforceability and reduces the risk of future challenges to its authenticity. The bond should also be notarised for official submissions.
Stamp duty on indemnity bonds varies by state and the value of the obligation being indemnified. In most states, ₹100–₹500 non-judicial stamp paper is used. For large-value indemnities (corporate transactions), consult a stamp duty expert for the correct value.
Indemnity bonds are not typically used as standalone collateral for loans. Banks prefer tangible security (property mortgage, pledge of shares). However, an indemnity bond from a creditworthy individual or institution can sometimes supplement other security.
Banks often require a 'letter of indemnity' when issuing duplicate fixed deposit receipts, demand drafts, or other instruments — the customer undertakes to indemnify the bank against any loss if the original instrument is presented by a third party. This is effectively an indemnity bond in letter format.
An indemnity bond remains valid until the obligation it covers is extinguished — either by fulfilment of the condition, expiry of a fixed term (if specified), or by mutual agreement to terminate it. Some bonds are 'perpetual' and cover the indemnifier's estate even after death.
Unlike a guarantee, an indemnity contract cannot usually be revoked unilaterally once acted upon by the indemnified party. If the indemnifier has already suffered loss under the bond, the indemnifier cannot escape liability by purporting to revoke it.
Yes. E-stamp paper generated through the Stock Holding Corporation of India (SHCIL) or state-approved portals is legally valid and admissible in court. Most banks and government authorities accept e-stamped documents.
Please confirm all of the following before proceeding with your Indemnity Bond document:
Please confirm all eligibility conditions above to proceed. If you are unsure about any point, you may not be eligible for this type of notice.