Introduction 

This case sets out the principle for indemnity that indemnity is not always conferred upon repayment after payment while, Indemnity demands that the indemnified party never be required to pay under Section 124 and Section 125 of the Indian Contract Act, 1872. 

Facts 

• The Plaintiff Company and the defendant entered inti a contract that the plaintiff company would act as a commission agent for defendant in sale and purchase of goods and the defendant shall indemnify the plaintiff company from all the losses against such transactions. 
• It was pleaded by the plaintiff company that the company purchased some goods from Maliram Ramjidas for the defendant. 
• The defendant failed to receive the delivery of such goods due to which vendor sold the goods to some other purchaser at less than contract price and the rest of the amount was demanded from Plaintiff company. 
• The plaintiff company went under liquidation and the and the amount has to be paid by them to Maliram Ramjidas. 
• The plaintiff company in the present case is claiming indemnity against the loss as well as the commission amount from the defendant. 
• Whereas the defendant contended that the plaintiff company in this case has not acted as an agent but as a principle when he bought goods from the company through the broker, and it is further added that in actual the amount has not been paid by the defendant no question of indemnity arises. 

Issues Involved

• Whether the defendant company would indemnify the plaintiff company for the losses? 
• Whether the plaintiff company was acting as an agent of the defendant company? 

Observations 

• The Calcutta High Court determined the terms of the contract to determine the liability of the defendant to pay the plaintiff company such amount which the plaintiff company has paid for the sale and purchase of goods for the defendant as its commission agent. 
• The Calcutta High Court also added that the defendant giving the indemnity is concerned with the application of the money which he pays. The defendants may be liable as undisclosed principal. 
• It is inferred by the Calcutta High Court that contract of indemnity does not necessarily, means that the indemnifier needs to pay when the payment has been made by the indemnity holder instead the indemnifier has to pay when the loss is incurred by the indemnity holder from the precedent Richardson Re, Ex pare The Governors of St. Thomas's Hospital, (1911). 

Conclusion 

• The Calcutta High Court passed the order in favour of the plaintiff company and held that the defendant shall pay it the indemnity amount along with the commission charges.