Section 145 The Indian Contract Act, 1872
Section 145 – The Indian Contract Act, 1872
"Implied promise to indemnify surety."
Bare Act Language:
"In every contract of guarantee, there is an implied promise by the principal debtor to indemnify the surety; and the surety is entitled to recover from the principal debtor whatever sum he has rightfully paid under the guarantee."
Explanation:
Section 145 establishes the right of the surety (guarantor) to be reimbursed by the principal debtor for any amount the surety has rightfully paid under the terms of a guarantee.
✅ Key Points:
Implied Promise: Even if not written, the law assumes that the principal debtor promises to indemnify the surety.
Rightful Payment: The surety must have made the payment lawfully and as per the guarantee's terms.
Claim by Surety: The surety can sue the principal debtor to recover the amount paid on their behalf.
Example:
A guarantees to B that C will repay a loan.
C fails to pay, and A repays B.
Now, A (surety) has the legal right to recover that amount from C (principal debtor) under Section 145.
Important Case Law:
P.N. Bank v. Bikram Cotton Mills
The court held that a surety who has paid the debt on behalf of the principal debtor is entitled to full indemnity from the principal debtor under Section 145.
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