Soum Bhatt (Company Secretary) 26 November 2011

Indemnity bond

There are two documents on the same subject matter. One is Indemnity Letter in company's letterhead and one is indemnity bond on Rs. 100 Stamp Paper. Both are signed by the same Authorised Signatory. But the liability mentioned in the Indemnity letter is perpetual or to some unascertained period and in indemnity bond the liability is for 5 years only. Which one shall prevail?

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6 Replies

pratik (self working) 26 November 2011

good question i also want to known also with the case law if any

Thanks

V. VASUDEVAN (LEGAL COUNSEL) 26 November 2011

Indemnity cannot be perpetual and it should be for a specfic period. Hence in the instant case the 5 year term as set out in thebond would prevail.

vasudevan

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Kishor Mehta (CEO) 27 November 2011

Dear Mr. Soum Bhatt,

I beg to differ, Indemnity Bond can be perpetual. The liability of a person offering indemnity for any reason/cause has to be perpetual else it will prove useless.

Kishor Mehta

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Soum Bhatt (Company Secretary) 28 November 2011

Thank You sir. Please provide some case laws in support of this. In my case, the indemnity letter in letter head of the company is till the contingency of some event whereas the indemnity bond in stamp paper is with respect to the same issue but only for 5 years. I need some case laws in support of the claim that the indemnity bond in stamp paper shall prevail which is only for 5 years. After the expiration of the said 5 years, the indemnity bond expires and the company is under NO obligation to renew this, even if the contingence does not arise within that 5 years. Am I right?