Affidavit of Indemnity (Draft)

An Affidavit of Indemnity is a powerful legal document that combines two distinct legal concepts: an Affidavit and an Indemnity Contract. It is used to secure a promise of compensation against loss, backed by a sworn statement made under oath.

1. Deconstructing the Term

Affidavit: This is a written statement of facts, confirmed by the oath or affirmation of the person making it (the deponent), sworn before a person having authority to administer such an oath (like a Notary Public or a Magistrate). The legal sanctity comes from the Indian Oaths Act, 1969. Lying in an affidavit is punishable under the Indian Penal Code, 1860 (IPC), for giving false evidence (Section 191) and fabricating false evidence (Section 192).
Indemnity: In simple terms, to "indemnify" means to "secure against loss" or to "compensate for a loss." A contract of indemnity is defined under Section 124 of the Indian Contract Act, 1872. It states:
"A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a 'contract of indemnity'."

Combined Meaning: Therefore, an Affidavit of Indemnity is a sworn, written undertaking where one party (the indemnifier) promises to protect another party (the indemnified) from any financial or legal losses arising from a specific event or the indemnifier's own actions. The "affidavit" part gives it evidentiary value in court, making it harder for the indemnifier to later deny their commitments.

Basic Structure and Key Clauses

Using the provided document as a reference, the typical structure of an Affidavit of Indemnity includes:

Title & Parties: Clearly identifies the document as an "Affidavit of Indemnity," naming the Indemnifier (the person giving the undertaking, e.g., the employee) and the Indemnified (the person being protected, e.g., the bank/company).
Preamble/Introduction: The deponent (indemnifier) introduces themselves and their capacity (e.g., "I am employed with...").
Recitals/Background: This section, often starting with "Whereas...", sets out the facts and circumstances leading to the need for the indemnity. In our example, it explains that the bank has taken a property on lease for the employee's residence.
Solemn Undertakings and Promises (The Indemnity Core): This is the heart of the document. The indemnifier makes specific, binding promises. Common undertakings include:
To Vacate: A promise to vacate the premises upon termination of employment or the license agreement.
To Not Transfer Possession: A promise not to sublet or part with possession of the property.
To Adhere to the Main Agreement: A promise not to breach the terms of the primary lease/license agreement between the bank and the property owner.
Indemnity Clause: The explicit promise to "indemnify and keep indemnified" the bank against all losses, damages, costs, etc., incurred due to the indemnifier's failure to comply (e.g., not vacating on time, causing damage to the property).
Trigger Events: The document specifies the events that will activate the indemnity obligation. In our example:
Termination of employment (resignation, retirement, etc.).
Transfer of the employee to another city.
Breach of the main lease agreement.
Binding on Heirs and Representatives: A crucial clause stating that the obligations are not personal but extend to the indemnifier's family, heirs, and legal representatives. This ensures the obligation continues even after the indemnifier's death.
Right to Take Legal Action: This clause reserves the right of the indemnified party to initiate civil or criminal proceedings against the indemnifier for any breach.
Validity Period: Specifies that the document remains in force as long as the indemnifier is occupying the premises or until the risk exists.
Verification and Oath: The final part where the deponent solemnly declares the contents to be true and signs it before a competent authority, mentioning the date and place.

Legal Doctrines and Essentials

For an Affidavit of Indemnity to be legally sound and enforceable, it must satisfy certain essentials:

A. Essentials of a Valid Affidavit (Under Indian Oaths Act, 1969)

It must be a statement of fact, not an expression of opinion or a promise for the future (though indemnity clauses are future promises, they are presented as a current undertaking).
It must be made voluntarily and without coercion.
It must be sworn before a legally authorized officer (Notary, Oath Commissioner, Magistrate).
The deponent must personally sign it.

B. Essentials of a Valid Indemnity Contract (Under Indian Contract Act, 1872)

Offer and Acceptance: The indemnifier makes an offer to indemnify, which is accepted by the indemnified party (often by accepting the document).
Lawful Consideration: The bank providing the residential accommodation as a perquisite is the consideration for the employee's promise to indemnify.
Competent Parties: The indemnifier must be of the age of majority, of sound mind, and not disqualified from contracting.
Free Consent: The consent of the indemnifier must not be caused by coercion, undue influence, fraud, misrepresentation, or mistake.
Lawful Object: The purpose of the indemnity must be lawful. Indemnifying someone for an illegal act is void.

Key Legal Doctrines Applied

Uberrimae Fidei (Utmost Good Faith): Contracts of insurance (a form of indemnity) are contracts of utmost good faith. While a standard indemnity may not always be held to this highest standard, the affidavit component demands full and honest disclosure from the deponent.
Doctrine of Contra Proferentem: In case of any ambiguity in the clauses of the indemnity document, the courts may interpret them against the party who drafted it (usually the company/bank). This is why these documents are often carefully vetted by legal teams.

Relevant Indian Laws and Acts

While an Affidavit of Indemnity is a standalone document, its enforceability is derived from several statutes:

The Indian Contract Act, 1872: This is the primary law governing the indemnity part.
Section 124: Defines a "Contract of Indemnity."
Section 125: Details the rights of the indemnity-holder (the protected party) when sued. They can compel the indemnifier to pay the damages and legal costs.
The Indian Oaths Act, 1969: This gives the "affidavit" its legal sanctity as a sworn testimony.
The Indian Stamp Act, 1899: An Affidavit of Indemnity may be considered an "agreement" or a "indemnity bond" and may attract a stamp duty, depending on the state in which it is executed. Failure to properly stamp a document can affect its admissibility as evidence in court.
The Code of Civil Procedure, 1908 (CPC): This law comes into play when the indemnified party files a suit to enforce the indemnity and recover losses.
Order XXXVII: Summary Procedure: For debts or liquidated demands, a plaintiff can use this faster-track procedure to sue based on a written contract (which the affidavit is).
The Indian Penal Code, 1860 (IPC): As mentioned, giving false statements in an affidavit can lead to charges under Sections 191 and 192 for perjury.

Conclusion

In essence, an Affidavit of Indemnity is a robust risk-management tool. It legally compels one party to bear the financial consequences of their actions (or inactions), and the sworn affidavit component makes it a formidable piece of evidence in any legal dispute. For the individual signing it, it is a document of significant legal responsibility and should not be executed without fully understanding its long-term binding implications.

Disclaimer: This information is for educational purposes only and does not constitute legal advice. You should consult with a qualified legal professional for advice on your specific situation.

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