Legal relevance of indemnity bond
Rahul
(Querist) 19 December 2013
This query is : Resolved
Sir, is an indemnity bond executed between 2 companies for keeping first company compensated/indemnified at all times by the second company against repayment of a loan taken by the second company from a bank by mortgaging assets of the first company valid/maintainable under the Indian legal system.
is there any legal safety measure like a counter guarantee for the second party?
Please suggest.
Devajyoti Barman
(Expert) 19 December 2013
Personal guarantee executed by the Directors of the borrower company should also be executed to safeguard the interest of the creditor company.
V R SHROFF
(Expert) 19 December 2013
Bank must be a consenting/ confirming party
SHIRISH PAWAR, 7738990900
(Expert) 19 December 2013
You can take counter guarantee from second party for repayment of loan taken from bank.
SHIRISH PAWAR, 7738990900
(Expert) 19 December 2013
Yes you can take counter guarantee from second party for not defaulting the repayment of bank loan.
Rajendra K Goyal
(Expert) 19 December 2013
Right of subrogation (entering into the shoe of lender on payment of loan by guarantor) would be available. To ensure adequate security indemnifying company May take personal guarantee of directors and mortgage of other assets of the directors of other company and company.
Kishor Mehta
(Expert) 19 December 2013
Hon.Experts,
As I understand the query, company 'A' mortgages its property to a Bank for the Bank to give a loan to company 'B', company 'B' executes an indemnity bond in favour of company 'A' indemnifying company 'A'against repayment of the loan.
In such a case the lender Bank becomes a third party and has no relation to the indemnity bond, the bond is a private understanding between the companies 'A & 'B'.
While this may be termed valid, this is absolutely against the interests of company 'A', and no right thinking person will agree to it. In the event of something untoward happening, even after due precautions, it will result into a lengthy and frustrating legal battle.
Good Luck,
Kishor Mehta
Raj Kumar Makkad
(Expert) 21 December 2013
Second party should obtain the personal bonds of the directors and all concerned persons of company A to safeguard its interests.
Raj Kumar Makkad
(Expert) 21 December 2013
Second party should obtain the personal bonds of the directors and all concerned persons of company A to safeguard its interests.
