November 04, 2025
5 mins read
An indemnity bond is more than simply a formality. It's like a written promise in which one person agrees to take on the risk of another. The bond tells you who has to pay for the damage if something goes wrong, such as a disagreement, missing papers, or uncertain ownership.
These bonds are common in property deals in India, especially when the original records are lost. They are used by the government to keep track of who is responsible. The names of both parties, the limits of liability, and the conditions that will trigger the bond are all common parts of a bond. It becomes an official document that courts and government offices can use once it has been stamped and signed.
Names of the indemnifier and the indemnified are written down
The scope of indemnity is clearly defined.
There is a list of events or situations that can cause indemnification.
Definition of the period of liability
Must be on stamp paper that is not for court use
Needs the signatures of everyone involved and any witnesses.
Notarisation is also required in some states.
There is always some risk with any property deal. What if you lose the papers? What if someone questions the ownership? If things aren't clear, blame can change all the time. An indemnity bond fills in that vacuum by saying who will pay for it.
It happens a lot when property paperwork are missing or when heirs need to make sure the authorities are okay with the transfer before it happens. It also keeps people from making allegations that no one saw coming. That is why registrars typically ask for it: it keeps things going without a lot of arguing.
Depending on the situation, indemnity bonds can look different. Here are a few examples that explain how they work:
Property transactions—often needed when ownership papers are lost, they safeguard the buyer during the transfer
Companies require these bonds before they will give out duplicate certificates for lost shares.
Banking issues: If deposit receipts or instruments go missing, banks may ask for a bond to cover the risk of abuse.
Employment bonds are used in some jobs when quitting early could imply paying compensation.
Loans: Lenders may ask for these when they don't have the guarantor's information or other important papers.
An indemnity bond is only legal if it has stamp duty. The bond could not be valid in court if you don't have it. Central laws give a general idea of what to do, but each state makes its own rules.
Under Article 34 of the Bombay Stamp Act, Maharashtra, for example, imposes a flat fee of Rs. 500. In Delhi or Karnataka, it could be a set amount or a percentage of the bond's value, depending on what the responsibility is. The duty also depends on other things, like whether the bond is backed by money or has to do with property. Notarisation or even registration is required in several states. Before carrying out the task, the easiest way to be sure you know what you need is to check with the local registrar or stamp office.
It makes it clear who is responsible for property transactions and who pays if there are problems.
Helps when records are lost and serves as a stand-in when original deeds are not available.
Helps with inheritance and mutation by making sure heirs agree to take on the obligation, which makes the transfer go more smoothly.
Reduces delays in government — When accountability is clear, officials move more rapidly
In court, indemnity bonds are generally seen as proof of a previous agreement.
Part | Affidavit | Indemnity Bond |
What kind of document | A sworn statement of the facts | A legal agreement that prevents you from losing money |
People who are involved | Usually signed by one person | The person who is being indemnified and the indemnifier both sign. |
Clause of responsibility | No responsibility is given | Clearly states who is responsible and how much they will pay |
How to Use | Used to make statements | Used to keep transactions safe from risk |
Stamping | Less stamp duty | Higher duty, depending on state restrictions and the value of the bond |
An indemnification bond makes property and financial transactions more organised. Recording liability helps authorities deal with transfers, inheritances, or verification more confidently by making things less confusing. Its fundamental job is easy: to make accountability clear.
Checking the stamp duty laws in your state and taking care of all the paperwork makes sure the bond is legally binding and keeps things from getting complicated later.
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Indemnity bonds can be issued by individuals, legal heirs, company representatives, or any party required to provide an assurance under a legal or administrative process. They are often prepared with legal assistance and executed on stamp paper as per the law.
The indemnifier signs the bond, accepting liability. It may also be co-signed by witnesses or a guarantor. The indemnified party may not be required to sign in all cases.
Yes, indemnity bonds are executed on non-judicial stamp paper. The denomination is determined by the applicable Stamp Act of the respective state.
A surety bond involves a third-party guarantor who agrees to fulfil obligations if the primary party defaults. In contrast, an indemnity bond is a direct commitment between the indemnifier and the indemnified to compensate for loss.
Key terms include the identity of parties, scope of indemnity, specific event or loss covered, liability limits, and applicable legal jurisdiction.
Primarily, there are two: the indemnifier (who promises to compensate) and the indemnified (who may incur a loss). Additional parties may include witnesses or authorities validating the bond.
Risks include potential financial liability for the indemnifier if the covered event occurs. Benefits include legal clarity and smoother administrative processes for the indemnified.
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