Shiam Lal vs Abdul Salam
AIR 1931 ALL 754
Case Summary
[Cause of Action of Indemnifier]
Facts
Abdul Salam executed a mortgage for two shops (borrowed money and offered parts of the shops as security). Later, he sold the entire property to Shiam Lal but left a sum of money with Shiam Lal for him to pay off the mortgage debt with the original lenders. However, Shiam Lal did not pay the mortgage. The lenders filed a suit, and the Court granted them a decree allowing them to sell some of Abdul Salam’s property. Abdul Salam sued Shiam Lal to recover the balance due after the decree.
Issues
Whether Abdul Salam had a valid Cause of Action against Shiam Lal for indemnification since the lenders had not yet executed the deed.
Key Legal Provisions Summarized
Indian Contract Act, 1872:
Section 73 – [Damages for Breach of Contract] When a contract is broken, the party suffering the breach is entitled to compensation for any loss or damage caused by the breach.
Section 124 – [Contract of Indemnity] The obligation to indemnify arises when one party agrees to compensate another for loss or liability that may arise from a contract.
Judgment
The Court of First Instance dismissed Abdul Salam’s petition declaring it premature. The Subordinate Judge reversed this decision, and the High Court upheld this decision. It was stated that Abdul Salam suffered injury from the decree being passed against him.
The Court’s reasoning was that the decree for sale constituted sufficient grounds for Abdul Salam to seek damages despite the absence of immediate financial loss. It was clarified that a party could claim compensation before incurring actual loss when a breach of indemnity has occurred. Shiam Lal had was liable to indemnify Abdul Salam.
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