Home  /  Indian Contract Act  /  Section 145

Section 145: Implied promise to indemnify surety

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1872
Section 144 All 266 Sections of Indian Contract Act Section 146

Legal Commentary & Landmark Judgments: Section 145

Section 145 of the Indian Contract Act, 1872 enacts the statutory doctrine of indemnity in favor of a guarantor, implying an automatic promise by the principal debtor to indemnify the surety for all sums rightfully paid under the guarantee. It confers an independent cause of action upon the surety to seek reimbursement from the borrower once the surety has discharged the creditor's debt.

  • Statutory Implied Indemnity: Does not require an express indemnity deed; the moment a contract of guarantee is executed at the debtor's request, the law implies an absolute promise by the debtor to indemnify the surety.
  • Rightful Payment Requirement: The surety is entitled to recover whatever sums he has 'rightfully paid'—meaning payments made in discharge of a legally enforceable obligation of the principal debtor.
  • Exclusion of Wrongful Payments: The surety cannot recover sums paid 'wrongfully', such as payments made on a debt known to be void, un-incurred, or payments made after a complete legal defense was available without consulting the debtor.
Key Landmark Precedents:
  • State Bank of India v. Indexport (1992) 3 SCC 159: The Supreme Court observed that the guarantor, upon satisfying the creditor's decree or debt, steps into the shoes of the creditor and is vested with the statutory right of indemnity under Section 145 to recover the entire amount from the principal debtor.
  • Kundanlal v. Naraindas AIR 1928 Lah 376: The court held that under Section 145, the surety's right of indemnity arises upon actual payment, and the surety is entitled to recover interest and necessary legal costs reasonably incurred in defending or settling the creditor's claim.
Courtroom Practice & Strategic Litigation Guidance:

When advising a guarantor who has satisfied a bank's debt (or settled under an OTS), file an immediate summary suit under Order XXXVII of the CPC or a recovery suit against the principal debtor under Section 145. Annex the bank's 'No Dues Certificate', receipt vouchers, and the original guarantee deed to establish the undisputed right of indemnity.

Section 144 All 266 Sections of Indian Contract Act Section 146