Indian Contract Act,1872
Act No : 9
Section : implid promise to indemnify surety
145.implid promise to indemnify surety.-In every contract ofguarantee there is an implied promise by the principal debtor toindemnify the surety; and the surety is entitled to recover from theprincipal debtor whatever sum he has rightfully paid under theguarantee, but, no sums which he has paid wrongfully. Illustrations (a)B is indebted to C, and A is surety for the debt. C demandspayment from A, and on his refusal sues him for the amount. A defendsthe suit, having reasonable grounds for doing so, but is compelled topay the amount of the debt with costs. He can recover from B theamount paid by him for costs, as well as the principal debt. (b)C lends B a sum of money, and A, at the request of B, acceptsa bill of exchange drawn by B upon A to secure the amount. C, theholder of the bill, demands payment of it from A, and, on A's refusalto pay, sues him upon the bill. A, not having reasonable grounds forso doing, defends the suit, and has to pay the amount of the bill andcosts. He can recover from B the amount of the bill, but not the sumpaid for costs, as there was no real ground for defending the action. (c)A guarantees to C, to the extent of 2,000 rupees, payment forrice to be supplied by C to B. C supplies to B rice to a less amountthan 2,000 rupees, but obtains from A payment of the sum of 2,000rupees in respect of the rice supplied. A cannot recover from B morethan the price of the rice actually supplied.
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