Rights of Indemnifier

Introduction

The Indian Contract Act, 1872 mainly explains the rights of the indemnity holder. It does not expressly (clearly) state the rights of the indemnifier. However, the law recognises that the indemnifier also has certain rights.

These rights are understood from general legal principles and related provisions of the Act.

Meaning / Definition

An indemnifier is the person who promises to compensate another for loss. After making payment, the indemnifier gets certain rights against the indemnity holder.

This right is based on the principle that a person who has compensated another should be allowed to recover or use all legal remedies available to that person.

Modes or Types

Right of Subrogation

After paying the loss, the indemnifier gets all the rights which the indemnity holder had against third parties.

This means the indemnifier can step into the position (place) of the indemnity holder and recover the loss from others responsible.

Right to All Remedies

The indemnifier can use all legal methods and protections which the indemnity holder could have used to avoid or recover the loss.

Important Case Law

• Simpson v. Thomson
  It was held that after making payment, the indemnifier is entitled to all the rights and remedies of the indemnity holder against third parties.

Practical Example

A promises to indemnify B for any loss caused by C. B suffers loss due to C and A pays B. After payment, A can recover the amount from C by using the same rights which B had.

Summary

• Rights of indemnifier are not expressly stated in the Act
• They are derived from general legal principles
• Main right is subrogation (stepping into the place of indemnity holder)
• Indemnifier can use all remedies available to indemnity holder
• Rights arise only after payment of loss
• Ensures fairness between indemnifier and indemnity holder