Commercial Contracts

Indemnity Bond / Undertaking

State the value of the stamp paper and the date and place of purchase in the space provided by the vendor. The bond is executed by the indemnifier alone; the indemnified party does not sign, though a countersignature acknowledging receipt is often taken in practice.

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Indemnity Bond

To be executed on non-judicial stamp paper of the value prescribed in the relevant State

KNOW ALL MEN BY THESE PRESENTS that I / We, [NAME OF INDEMNIFIER], [son / daughter / wife of ______, aged ______ years] / [a company incorporated under the Companies Act, 2013 bearing CIN ______], holding PAN [PAN] and [AADHAAR / IDENTITY DOCUMENT NUMBER], residing at / having my / its registered office at [ADDRESS] (hereinafter referred to as the "Indemnifier", which expression shall include heirs, executors, administrators, legal representatives, successors and assigns), do hereby execute this Indemnity Bond in favour of [NAME OF INDEMNIFIED PARTY], [constitution], having its registered office / place of business at [ADDRESS] (hereinafter referred to as the "Indemnified Party", which expression shall include its successors and assigns), as follows:

Whereas

A.The Indemnifier [DESCRIBE THE FACTS GIVING RISE TO THE BOND — e.g. was issued share certificate no. ______ for ______ equity shares of ______ Limited, which has been lost / has requested the Indemnified Party to release the amount of ______ without production of the original document / has requested the Indemnified Party to effect the transfer described in the Schedule].

B.The Indemnifier has requested the Indemnified Party to [DESCRIBE WHAT IS SOUGHT — e.g. issue a duplicate share certificate / release the said amount / effect the said transfer / act on the Indemnifier’s instruction] (the "Requested Act").

C.The Indemnified Party has agreed to accede to the said request solely on the faith of the representations made by the Indemnifier and on the Indemnifier furnishing this Indemnity Bond, and would not otherwise have done so.

NOW THIS INDEMNITY BOND WITNESSETH as follows:

1. Representations

1.1The Indemnifier represents, warrants and confirms that:

(a)the statements made in the recitals above and in the Schedule are true, correct and complete, and no material fact has been suppressed;

(b)the Indemnifier is the person lawfully entitled to make the request set out above and has full capacity and authority to execute this bond;

(c)[the original document has not been sold, pledged, transferred, deposited by way of security or otherwise disposed of, and no other person has any right, title, interest, claim or lien in respect of it];

(d)the Indemnifier has not made any similar request to the Indemnified Party or to any other person in respect of the same subject matter; and

(e)the Indemnifier shall forthwith notify the Indemnified Party in writing, and shall surrender the original, if the original document is at any time found or recovered, or if any of the above representations ceases to be true.

2. Indemnity

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Notes for use

These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.

What this document is

An indemnity bond is a unilateral undertaking by one person to make good the loss of another. It is the standard instrument where an organisation is asked to act without the usual documentary comfort — issuing a duplicate share certificate or policy, releasing funds to a legal heir, effecting a transfer on a lost instrument, releasing goods without the original document of title, or accepting a name or signature variation. Sections 124 and 125 of the Indian Contract Act, 1872 govern contracts of indemnity and the rights of the indemnity holder.

Stamp duty

An indemnity bond is a separately chargeable instrument under the article for indemnity bonds in the applicable State stamp legislation. In most States the duty is a fixed nominal amount, but a few charge ad valorem on the amount secured. Execute on non-judicial stamp paper of the correct value, purchased in the State of execution and in the name of the Indemnifier. An insufficiently stamped bond is not admissible in evidence until duty and penalty are paid, which is exactly the moment you least want a procedural obstacle.

Notarisation and witnesses

Notarisation is not strictly required for validity but is almost universally insisted upon by banks, registrars and transfer agents, and it strengthens proof of execution. Take two witnesses with identity details, and affix and cross-sign a photograph of the Indemnifier.

On demand, without demur

Clause 2.2 is the operative commercial protection. Without it, the indemnified party may be required to establish and quantify its loss before recovering. Do not soften it to "on establishment of loss" unless you are acting for the indemnifier.

Supporting steps before execution

Where the bond relates to a lost document, the indemnified party will normally also require a police complaint or non-cognisable report, a public notice in a newspaper, and an affidavit of loss. Record those in the Schedule — a bond that recites no supporting steps is weaker evidence of good faith.

Where a surety is required

Institutions frequently require the bond to be countersigned by one or two sureties of means, or supported by a bank guarantee, where the amount is significant. Add a surety clause mirroring Clause 2 if that is required, with the surety’s liability expressed as joint and several and as a principal debtor.

Company as indemnifier

If the Indemnifier is a company, confirm that giving the indemnity is within its objects, obtain a board resolution authorising execution, and consider whether the indemnity amounts to a guarantee for the purposes of Section 185 or Section 186 of the Companies Act, 2013.

Common variants

The same structure covers an employee indemnity for company property or advances, an indemnity for release of a deceased holder’s balance to a nominee or legal heir, an indemnity for a duplicate cheque or demand draft, and an indemnity for delivery of goods without the original transport document. Amend the recitals and the Schedule; the operative clauses need little change.

Limitation

The right to sue on an indemnity generally accrues when the indemnified party actually suffers the loss, not when the bond is executed. Clause 2.3 keeps the indemnity continuing, which matters where claims may surface years later.

Current as of

Reflects Indian law current as of {{DATE OF USE}}. Stamp duty on indemnity bonds is State-specific — verify the article and value applicable in your State before executing.

This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, company secretary, or chartered accountant as relevant) before you rely on it.