Indian Contract Act, 1872 · Chapter VI: Of the Consequences of Breach of Contract · Of indemnity and guarantee
Section 125: Rights of indemnity-holder when sued
In plain words
The person protected by an indemnity (the indemnity-holder), acting within their authority, can recover from the promisor the damages, costs and settlement amounts they have to pay in a suit covered by the indemnity.
- Damages: all damages they are made to pay in such a suit.
- Costs: if they did not disobey the promisor's orders and acted as a prudent person would without an indemnity, or if the promisor authorised the suit.
- Settlement sums: if the compromise did not go against the promisor's orders and was prudent, or if the promisor authorised it.
A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.
Official text
The promise in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor—
(1) all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies;
(2) all costs which he may be compelled to pay in any such suit if, in bringing or defending it, he did not contravene the orders of the promisor, and acted as it would have been prudent for him to act in the absence of any contract of indemnity, or if the promisor authorized him to bring or defend the suit;
(3) all sums which he may have paid under the terms of any compromise of any such suit, if the compromise was not contrary to the orders of the promisor, and was one which it would have been prudent for the promisee to make in the absence of any contract of indemnity, or if the promisor authorized him to compromise the suit.
Source: India Code (indiacode.gov.in), the consolidated text published by the Legislative Department, Government of India. Text as updated on India Code on 15 October 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.
Supreme Court judgments citing the section 125
No Supreme Court judgment in our database cites this section yet.