RIGHTS OF INDEMNITY HOLDER
The indemnity holder (i.e. the promisee or the person who is indemnified) has the following rights, when sued (i.e. when a legal action is taken against the person who has indemnified). Example is at the last.
The promisee is entitled to recover from the promisor/indemnifier, in respect of the matter to which the promise to indemnify applies:
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 suit if, in bringing or defending it, he duly followed the indemnifier and acted prudently had there been no contract of indemnity, or if the indemnifier authorized him to bring or defend the suit.
3. All sums paid in compromise, not contrary to indemnity.
4. Right to sue for specific performance – the indemnity holder is entitled to sue for specific performance if he has incurred absolute liability and the contract covers such liability.
EXAMPLE :
Mr John contracts with Sam, that Mike will not sue Sam in respect of ₹ 1,00,000, which Sam owes to Mike. If Mike sues Sam, any consequences of such a suit will be borne by John according to the contract.