Validity of Personal Indemnity & Undetaking
sachin
(Querist) 12 June 2010
This query is : Resolved
Dear Friends,
My client has advanced money to a Pvt. Ltd. construction company as loan but shown as advance towards booking of the premises to be constructed by the said company.
The said company has two persons A and B as its shareholders and Directors.
My client knows A and hence on his word are making the said investment. However, B does not want to give any commitment on behalf of the company to my client about the completion of the construction and handing over of the premises to my client.
Can A in his personal capacity indemnify my client against any probable loss and execute an undertaking to reimburse the loan amount out of his own personal assets?
Will execution of the Indemnity and Undertaking be tenable in law?
If not then what documents need to be executed to secure the amount advanced by my client?
I shall be grateful if you could enlighten me on this queries.
Best regards,
Sachin
Raj Kumar Makkad
(Expert) 12 June 2010
As the pvt. limited company having only 2 directors has to work on its seal and authority and one of the directors is not ready to undertake anything so it is better to provide loan personally and take all safety measures like Promissory note, blank cheques, signature on some blank papers and written undertaking on behalf of one of the directors taking loan.
