Gajanan Moreshwar v. Moreshwar Madan (1942)

Contract II (Special Contracts) · Indemnity & Guarantee

Facts.

The plaintiff, at the defendant’s request, took on a liability to a builder (a mortgage of leasehold plot), on the defendant’s promise to indemnify him. The defendant did not discharge the liability, and the plaintiff, though not yet out of pocket, faced an absolute liability.

Issue.

Can an indemnity-holder compel the indemnifier to clear the liability before the indemnity-holder has actually paid?

Held.

Yes. Once the indemnity-holder’s liability is absolute and ascertained, he is entitled to be indemnified — he need not first pay and then sue. Section 125 rights are not the only rights of an indemnity-holder; equity supplements them.

Why it matters.

It is the leading Indian authority on the commencement of the indemnifier’s liability and the practical value of an indemnity.

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