"Contract of indemnity" defined
Section 124 of the Indian Contract Act, 1872 deals with "Contract of indemnity" defined. A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a contract of indemnity. The Act came into force on 01 Sep 1872.
A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a contract of indemnity.
Illustration
A contracts to indemnify B against the consequences of any proceedings which C may take against B in respect of a certain sum of 200 rupees. This is a contract of indemnity.
Section 124, The Indian Contract Act, 1872 (Act 9 of 1872).
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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State Bank of India v. Mula Sahakari Sakhar Karkhana Limited
Court's Decision & Legal Precedent
Judgment of Main Case order-11.pdf 2006-07-06 DATE VERIFIED. CA 2801/2006. S.B. Sinha / P.K. Balasubramanyan. Reportable. Isolates Contract 124: the instrument is a contract of indemnity (s.124), not an unconditional bank guarantee; the High Court misread it as a guarantee. Map contract-act 124 cited only. Do not pad contract-act 126 (already filled by A. Shakunthala).
On this section: An instrument that indemnifies against loss is a Contract 124 indemnity, not an unconditional bank guarantee (SBI / Mula Sahakari). Do not pad contract-act 126 (already filled).
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Anuj Jain Interim Resolution Professional for Jaypee Infratech Limited vs Axis Bank Limited
Court's Decision & Legal Precedent
Mortgage transactions executed by a subsidiary to secure loans of its holding company constitute preferential transactions under Section 43 of the Insolvency and Bankruptcy Code 2016 when: (1) the transactions transfer the subsidiary's property for benefit of the holding company (a related party and creditor of the subsidiary) for antecedent debts owed by the subsidiary to the holding company; (2) the transactions put the holding company in a beneficial position compared to other creditors in liquidation distribution; (3) the transactions fall within the two-year look-back period for related party transactions; and (4) the transactions are not made in the ordinary course of business or financial affairs of the subsidiary, which requires reading the word 'or' in Section 43(3)(a) as 'and' to ensure both the subsidiary's and transferee's ordinary course of business are considered. Furthermore, lenders of a holding company cannot be categorized as financial creditors of a subsidiary merely by holding mortgages on the subsidiary's assets because financial debt requires disbursal against consideration for time value of money to the corporate debtor, and mortgage debt does not satisfy this essential requirement. The distinction between secured creditor and financial creditor must be maintained, with financial creditors being those with direct engagement in the corporate debtor's functioning from inception, involvement in assessing viability, and role in restructuring.
On this section: Contract by which one party promises to save other from loss caused by conduct of promisor or any other person
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… That apart, Mr. Rao would argue that the present contract is a contract of indemnity and the term indemnity has to be understood in terms of Section 124 and 125 of the Indian Contract Act, 1872 which read as under: > ―124. "Contract of indemnity" defined.-A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a "contract of indemnity." …
Questions about Section 124
What have the courts held on Section 124 of the Indian Contract Act?
State Bank of India v. Mula Sahakari Sakhar Karkhana Limited (06 Jul 2006) is the leading judgment on this section among those set out below: An instrument that indemnifies against loss is a Contract 124 indemnity, not an unconditional bank guarantee (SBI / Mula Sahakari). Do not pad contract-act 126 (already filled). Another 1 judgment on this section is set out below, all of them from the Supreme Court. They run from 2006 to 2020.
How do I find court cases under Section 124 of the Indian Contract Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Contract Act 124, section 124 Contract Act, section 124 of the Indian Contract Act. People searching for it also type indian contract act 124 and indian contract act section 124 to 238. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 2 reported judgments on this section are set out on this page, beginning with State Bank of India v. Mula Sahakari Sakhar Karkhana Limited (06 Jul 2006).
When did Section 124 of the Indian Contract Act come into force?
Section 124 of the Indian Contract Act, commonly called indemnity, and cited as Contract Act 124, came into force on 01 Sep 1872, having been enacted on 25 Apr 1872. It is in force as at the date shown on this page.
Other sections of this Act
- 73. Compensation for loss or damage caused by breach of contract1822 words
- 23. What considerations and objects are lawful, and what not596 words
- 74. Compensation for breach of contract where penalty stipulated for577 words
- 28. Agreements in restraint of legal proceeding void512 words
- 25. Agreement without consideration, void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law423 words
- 16. "Undue influence" defined397 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.