What is indemnity bond?
Also called: indemnity, kshatipurti bandhpatra
A written promise to cover another party's loss if they suffer for having relied on you, for instance when a society issues a duplicate share certificate or a municipal office records a mutation on the heirs' word.
Section 124 of the Indian Contract Act defines a contract of indemnity as a promise to save the other party from loss caused by the promisor's conduct or someone else's. In property work it turns up whenever an office or a buyer is asked to act on incomplete proof and wants protection if things go wrong.
The situations are fairly predictable. Legal heirs applying for mutation with the Municipal Corporation of Delhi, or for a khata transfer in Bengaluru, sign one saying they'll bear the consequences if another heir turns up. A Mumbai member who has lost the original share certificate gives the society an indemnity before a duplicate is issued. A seller who can't find an old link document indemnifies the buyer against claims arising from it, and a lender may want one before accepting a certified copy of a lost sale deed.
The bond is typed on non-judicial stamp paper or an e-stamp of the value the state prescribes, signed before witnesses and usually notarised. Some offices also want a surety, a second person who agrees to cover the loss if the main signatory can't.
Its practical value depends entirely on who gives it. A bond from a seller who is emigrating to Canada the week after registration is worth very little. Where a resale has a real gap in the paper chain, lawyers pair the indemnity with a portion of the price held back in a fixed deposit or escrow and released after an agreed period.
When a Bengaluru flat owner dies without a will, his wife and two sons apply for a khata transfer. The ward revenue office asks each heir for an affidavit and a joint indemnity bond before recording the flat in their names.
Signing an open-ended indemnity with no cap or time limit because the other side's lawyer drafted it. Read what you're indemnifying against and limit it to the specific document or claim.
Questions people ask about indemnity bond
Is an indemnity bond legally enforceable?
Yes. It's a contract under Section 124 of the Contract Act, and the protected party can sue to recover the loss it covers. What it's worth in practice depends on whether the signatory can actually pay.
How is an indemnity bond different from an affidavit?
An affidavit is a sworn statement of facts, and lying in it is an offence. An indemnity bond is a promise to make good a loss; it may recite facts, but its force is financial.