INDEMNITY BOND

Given by the Seller in favour of the Buyer, against defects in title, undisclosed encumbrances, third-party claims, unpaid dues and misrepresentation

Place: __________

Date: __________

1. Who is giving this Bond

1.1 This Indemnity Bond is executed by:

Seller 1

• Name: __________
• Son / daughter / wife of:
• Address: __________
• PAN:

1.2 In this Bond, "the Seller" means the person named above and, where more than one person is named, all of them together and each of them separately. Their liability is joint and several: the Buyer may recover the whole of any amount due from any one of them, and it is then for the Sellers to settle the shares between themselves.

2. Who this Bond is given to

2.1 This Bond is given in favour of:

Buyer 1

• Name: __________
• Son / daughter / wife of:
• Address: __________

2.2 In this Bond, "the Buyer" means the person named above and, where more than one person is named, all of them together and each of them separately. Any one Buyer may make a claim under this Bond for the whole of the loss.

2.3 The benefit of this Bond runs with the Property. Anyone in whom the Property later vests through the Buyer — the Buyer's legal heirs, successors, and any person who buys it from the Buyer — may enforce this Bond against the Seller in the same way the Buyer could. This follows the pattern of Section 55(2) of the Transfer of Property Act, 1882, under which the seller's covenant for title is annexed to the interest transferred and may be enforced by every person in whom that interest afterwards vests.

3. The Property

3.1 This Bond relates to the following immovable property ("the Property"):

__________

3.2 Where the description above is a summary, the schedule to the Sale Deed described in Clause 4 governs, and this Bond covers the whole of what that Sale Deed conveyed, including any parking space, terrace, store, undivided share in the land, and every right, easement and appurtenance that passed with it.

4. The sale this Bond supports

4.1 The Seller has sold the Property to the Buyer for a total price of __________, by a Sale Deed (bainama) dated __________, registered or presented for registration at the office of the __________.

4.2 The Seller's title to the Property arises as follows:

__________

4.3 The Buyer has paid the price and completed the purchase on the strength of what the Seller said about the Property and its title. The Seller knows that, and gives this Bond so that the Buyer is not left out of pocket if any of it turns out to be wrong.

5. Why this Bond is being given

5.1 The law already gives the Buyer something. Section 55(1)(a) of the Transfer of Property Act, 1882 required the Seller to disclose any material defect in the Property or in the title of which the Seller was aware and the Buyer was not, and which the Buyer could not have found with ordinary care. Section 55(1)(g) required the Seller to clear all public charges, rent and interest on encumbrances up to the date of sale, and to discharge encumbrances then existing. Section 55(2) contains an implied covenant that the interest the Seller professed to transfer subsists and that the Seller had power to transfer it.

5.2 Those protections are real but slow, narrow in what they cover, and argued about. This Bond states in plain terms what the Seller stands behind, what the Seller will pay for, how a claim is to be made, and by when — so that the Buyer does not have to litigate the meaning of a statute in order to be reimbursed.

5.3 This Bond is in addition to, and does not replace, cut down or discharge, the Seller's obligations under the Sale Deed, under the Transfer of Property Act, 1882, or under any other law. Where a term of this Bond and a term of the Sale Deed cover the same ground, whichever gives the Buyer more protection prevails.

6. What the Seller confirms

The Seller confirms each of the following to be true, both as on the date of the Sale Deed and as on the date of this Bond. Each is a statement the Buyer has relied on in paying the price.

6.1 Ownership. The Seller was the sole and absolute owner of the Property, in lawful and peaceful possession of it, with a clear and marketable title, and had full right, power and authority to sell it and to give vacant possession (kabza) of it to the Buyer.

6.2 Chain of title. The chain of title set out in Clause 4.2 is true, complete and genuine. Every document in that chain was properly executed by the person who appears to have executed it, is adequately stamped, and was registered wherever the law required registration. No document in the chain is forged, fabricated, antedated, cancelled, rescinded or set aside, and nothing in the chain has been suppressed.

6.3 No encumbrance. The Property is free from every encumbrance — mortgage, whether registered or by deposit of title deeds, charge, lien, hypothecation, security interest, gift, exchange, trust, court attachment, injunction or prohibitory order, attachment or recovery proceeding by any tax or revenue authority, acquisition or requisition notification, land-ceiling proceeding, easement, right of way, or claim for maintenance — except anything set out in Clause 8.

6.4 No pending proceeding. There is no suit, appeal, arbitration, revenue proceeding, partition action, execution, insolvency or criminal proceeding pending or, so far as the Seller knows, threatened in respect of the Property or the Seller's title to it. No proceeding was pending when the Sale Deed was executed which would bind the Buyer under the rule of lis pendens in Section 52 of the Transfer of Property Act, 1882.

6.5 No prior dealing. Before the Sale Deed, the Seller had not sold, agreed to sell, gifted, exchanged, mortgaged, leased, licensed, taken bayana on, made a will of, or otherwise dealt with the Property or any part of it with any other person, and no other person holds any subsisting agreement to sell, option, booking, right of pre-emption or right of first refusal in respect of it.

6.6 No tenancy or occupation. The Property is not in the occupation of any tenant, licensee, caretaker, watchman, employee, relative or trespasser, and no person has any subsisting right to occupy any part of it.

6.7 Family and heirship rights. No other person has any right, share or interest in the Property as a co-owner, coparcener, member of a Hindu Undivided Family, legal heir, beneficiary under a will or trust, or otherwise. In particular, no daughter, son, widow or other coparcener holds a share by birth or by succession, including under the Hindu Succession Act, 1956 as amended in 2005, which has not been accounted for; and no share belonging to a minor has been sold without the court permission required by Section 8 of the Hindu Minority and Guardianship Act, 1956.

6.8 Dues cleared. Property tax and house tax, land revenue, municipal and corporation dues, development, betterment, conversion and enhancement charges, society or apartment-owners association maintenance, sinking fund and transfer charges, and electricity, water, sewerage and gas bills in respect of the Property have been paid in full for the entire period up to the date the Buyer took possession, and no demand for any of them is outstanding or under dispute.

6.9 Construction and permissions. Any construction on the Property is in accordance with the sanctioned plan and the applicable building bye-laws. The completion or occupancy certificate, where one was required, has been obtained. No notice of unauthorised construction, deviation, encroachment, demolition, sealing or compounding is pending or threatened. No part of the Property encroaches on any adjoining land, road, drain, government land or common area, and no adjoining owner has raised any boundary dispute.

6.10 Nature of the land. The Property is not agricultural land whose sale required a permission that was not obtained; is not subject to a restriction on transfer under any tenancy, land-reform, land-ceiling, or Scheduled Caste or Scheduled Tribe protection law; and is not evacuee, wakf, trust, endowment, gram sabha, forest or government land.

6.11 Leasehold and transfer permission. Where the Property is held on lease from a development authority, housing board, co-operative society or any other lessor, the lease subsists, all lease rent and dues are paid, no breach of the lease has been alleged, and every no-objection certificate, transfer permission and consent required for this sale and for mutation has been obtained.

6.12 Income tax. No proceeding is pending or completed against the Seller under the Income-tax Act, 1961 which could make this sale void as against the tax department under Section 281 of that Act, and there is no outstanding tax demand against the Seller for which the Property could be attached or sold.

6.13 Not benami, not tainted. The Property is not benami property within the meaning of the Prohibition of Benami Property Transactions Act, 1988, is not the proceeds of crime and is not liable to attachment under the Prevention of Money-Laundering Act, 2002, and this sale is not a transfer made to defeat or delay any creditor within the meaning of Section 53 of the Transfer of Property Act, 1882.

6.14 Full disclosure. The Seller has disclosed to the Buyer every material defect in the Property and in the title to it that the Seller knows of. Everything the Seller has told the Buyer, or stated in the Sale Deed or in any document, declaration or reply given to the Buyer, the Buyer's advocate or the Buyer's lender, is true and complete. Nothing material has been concealed.

7. The indemnity — what the Seller will pay for

7.1 The Seller undertakes to keep the Buyer fully indemnified and at all times harmless against every loss, damage, cost, expense, liability, claim, demand, penalty, interest, fine and legal fee that the Buyer suffers or incurs, directly or indirectly, on account of any of the matters set out below.

7.2 Defect in title. Any defect in the Seller's title or in the chain of title; any finding that the Seller was not the owner, or not the sole owner, or had no power to sell; any document in the chain being forged, invalid, inadequately stamped, unregistered where registration was required, or later cancelled or set aside; and the loss of the Property, or of any part of it, or of possession of it, to a person with a better title.

7.3 Undisclosed encumbrance. Any encumbrance of the kind listed in Clause 6.3 which existed on the date of the Sale Deed and was not set out in Clause 8, including the whole cost of having it redeemed, satisfied, released, vacated or removed from the record.

7.4 Third-party claim. Any claim, demand, notice, suit or proceeding brought against the Buyer or against the Property by any person — a co-owner, coparcener, legal heir, family member, earlier owner, holder of a prior agreement or bayana, mortgagee, tenant, licensee, occupant, neighbour, society, development authority, government department or anyone else — in respect of the Property, the Seller's title to it, or anything the Seller did or failed to do before the Buyer took possession.

7.5 Unpaid dues. Every tax, charge, levy, bill, maintenance amount, penalty and interest in respect of the Property relating to any period up to the date the Buyer took possession, whenever the demand is raised, including a demand raised on the Buyer as the present owner or occupier, and a demand arising from a reassessment, revision or reopening for that earlier period.

7.6 Misrepresentation. Any statement in Clause 6, in the Sale Deed, or in any document, declaration, affidavit or reply the Seller gave to the Buyer, the Buyer's advocate or the Buyer's lender, turning out to be untrue, incomplete or misleading; and any material fact the Seller failed to disclose.

7.7 What the indemnity covers. The Seller's liability extends to the whole of the Buyer's loss, and in particular to: the amount the Buyer has to pay to any third party or authority; the amount of any decree, award, settlement or compromise; court fees, advocate's fees and expert's fees actually incurred, whether the claim succeeds or fails, so long as it was not frivolous; the cost of perfecting the Buyer's title, including stamp duty and registration charges on any deed of rectification, confirmation or fresh conveyance; the fall in the value of the Property caused by the matter complained of; the price paid for any part of the Property lost, together with the stamp duty and registration charges the Buyer paid on it; and interest under Clause 11.7.

8. What is not covered

8.1 The Seller is not liable under this Bond for:

(a) anything the Seller disclosed to the Buyer in writing before the Sale Deed was executed and which is recorded in this Clause 8;

(b) any encumbrance, due or liability created by the Buyer, or arising out of anything the Buyer did or failed to do, after the Buyer took possession;

(c) any change in law, tax rate or municipal levy taking effect after the date of the Sale Deed and applying only to periods after that date;

(d) any part of a loss which the Buyer caused or increased by failing to defend a claim after declining to hand its defence to the Seller under Clause 11.3.

9. How long this Bond lasts

9.1 Title, encumbrances and third-party claims — no time limit. The Seller's liability under Clauses 7.2, 7.3 and 7.4 continues for as long as the Buyer, or anyone claiming through the Buyer, owns the Property or can be made liable in respect of it. Those matters go to the root of what the Buyer paid for, and a defect in title can surface decades after a sale.

9.2 Dues and taxes — until the authority can no longer demand them. The Seller's liability under Clause 7.5 continues until the last date on which the authority, department or body concerned can lawfully raise, revise or reopen a demand for a period ending on or before the date the Buyer took possession. This is tied to the authority's own power rather than to a fixed number of years on purpose: a municipal reassessment or an income-tax reopening for an old year can arrive long after the sale, and a fixed period would expire just before the demand does.

9.3 Everything else — __________ years. For any claim under this Bond which does not fall within Clause 9.1 or Clause 9.2, the Seller's liability continues for __________ years from the date of the Sale Deed.

9.4 A claim notified to the Seller under Clause 11.1 within the period that applies to it survives until it is finally settled, withdrawn or decided, even if that period ends in the meantime.

9.5 The periods in this clause fix how long the Seller's promise lasts. They do not shorten any period of limitation which the law allows the Buyer for going to court, and they are not intended to extinguish, and shall not be read as extinguishing, any right of the Buyer before the law would.

9.6 Death does not end this Bond. It binds the Seller's legal heirs, executors, administrators and estate, to the extent of the estate that comes to their hands, and may be enforced against the assets the Seller leaves behind.

10. Limit on the Seller's liability

10.1 The parties have agreed the following limit on what the Seller can be made to pay under this Bond: __________.

10.2 No limit applies, and the Seller's liability is unlimited, where the loss arises from the Seller's fraud, forgery, wilful concealment or deliberate misstatement.

10.3 A limit on the amount is not a limit on the Buyer's other remedies. The Buyer may still sue on the Sale Deed, sue for damages, ask for the sale to be set aside and the price refunded, or take any other step the law allows.

11. Making a claim

11.1 Notice. The Buyer will inform the Seller in writing of a claim, or of a demand, notice or proceeding that may lead to one, within 30 days of the Buyer becoming aware of it, giving such particulars as the Buyer then has.

11.2 Late notice. A claim is not lost because notice was given late. The Seller's liability is reduced only to the extent the Seller can show that the delay actually caused the Seller additional loss.

11.3 Defending a claim. The Seller may, within 15 days of receiving notice, ask in writing to take over the defence of a third-party claim at the Seller's own cost, through an advocate the Buyer is content with. If the Seller does so, the Buyer will give reasonable assistance and the Seller will keep the Buyer informed at every stage. If the Seller does not do so, or having done so does not pursue the defence diligently, the Buyer may defend, settle or compromise the claim as the Buyer thinks fit, and the Seller will bear the cost.

11.4 No settlement that binds the Buyer. The Seller will not settle or compromise any claim on terms which require the Buyer to admit anything, pay anything, or give up any part of or right in the Property, without the Buyer's written consent.

11.5 Payment. The Seller will pay the Buyer the amount due within 15 days of a written demand, by bank transfer or account payee cheque.

11.6 The Buyer need not pay first. The Buyer is not required to pay a third party, or to satisfy a decree or demand, before calling on this Bond. Once the Buyer's liability is ascertained, the Buyer may require the Seller to put the Buyer in funds to meet it. This reflects the settled Indian position that an indemnity holder may compel the indemnifier to meet the liability before the indemnity holder is actually out of pocket, and Sections 124 and 125 of the Indian Contract Act, 1872 do not cut that down.

11.7 Interest. Any amount not paid within the 15 days in Clause 11.5 carries simple interest at 12% a year from the date of the demand until it is actually paid.

11.8 Set-off. If any part of the price, or any other amount, is still payable by the Buyer to the Seller, the Buyer may deduct from it whatever the Seller owes under this Bond, after telling the Seller in writing what is being deducted and why.

12. What else the Seller will do

12.1 The Seller will, at the Seller's own cost and whenever the Buyer reasonably asks, do whatever is needed to perfect the Buyer's title: sign and register a deed of rectification or confirmation, correct an error in the Sale Deed or in the revenue, municipal or society record, obtain a no-objection certificate or permission, have an entry of mortgage, charge or attachment removed, appear before the Sub-Registrar, the municipal office, the society or the revenue authority, and give evidence in any proceeding.

12.2 The Seller has handed over to the Buyer every original title document, receipt, permission, sanctioned plan and certificate relating to the Property in the Seller's possession or power, except as recorded in Clause 12.4, and has not created and will not create any charge, lien or claim over any of them.

12.3 If the Seller does not do something required under Clause 12.1 within 30 days of being asked in writing, the Buyer may do it, and the whole cost of doing it is recoverable from the Seller under this Bond.

13. Notices

13.1 A notice under this Bond must be in writing and sent to the other side at the address in Clause 1 or Clause 2, by registered post with acknowledgement due or by a reputed courier. It may in addition be sent by email or WhatsApp.

13.2 A notice sent by registered post is treated as delivered on the seventh day after posting, even if it is refused or returns unclaimed.

13.3 A change of address takes effect only when notified in writing to the other side. Until then, a notice sent to the last notified address is good service.

14. Stamp duty, registration and costs

14.1 The stamp duty on this Bond is payable by the Seller, and the Seller has paid it.

14.2 If this Bond is later found to be insufficiently stamped, the Seller will pay the deficient duty and any penalty immediately, and if the Buyer pays it instead, the Buyer may recover it from the Seller under this Bond. The Seller will not take the point that this Bond is inadmissible for want of proper stamping. The parties understand that Section 35 of the Indian Stamp Act, 1899 binds the court whatever they agree between themselves, which is precisely why the duty must be paid correctly at the outset.

14.3 This Bond does not create any charge, mortgage, lien or other interest in any immovable property. It is a personal obligation of the Seller.

15. General

15.1 This Bond is governed by Indian law.

15.2 The courts at __________ have jurisdiction over any dispute under this Bond. Any suit concerning the Property itself must be filed in the court within whose local limits the Property is situated, as Section 16 of the Code of Civil Procedure, 1908 requires.

15.3 This Bond is irrevocable. The Seller cannot cancel, withdraw or revoke it.

15.4 A failure or delay by the Buyer in enforcing any part of this Bond is not a waiver of it and does not prevent the Buyer enforcing it later.

15.5 If any part of this Bond is found to be unenforceable, the rest of it continues to apply.

15.6 No change to this Bond is valid unless it is in writing and signed by the Seller and the Buyer.

SIGNATURES

The Seller has read and understood this Bond, has had the opportunity to take independent legal advice on it, and executes it on __________ at __________.

SELLER 1 — the person giving this Bond

Signature: ______________________________

Name: __________

Address: __________

PAN:

WITNESS 1

Signature: ______________________________

Name: ______________________________

Son / daughter / wife of: ______________________________

Address: ______________________________

Phone: ______________________________

WITNESS 2

Signature: ______________________________

Name: ______________________________

Son / daughter / wife of: ______________________________

Address: ______________________________

Phone: ______________________________

ACCEPTED BY THE BUYER

The Buyer accepts this Bond and agrees to the claims procedure in Clause 11.

BUYER 1

Signature: ______________________________

Name: __________

Address: __________

Execute this Bond on stamp paper or an e-stamp certificate of the value your State prescribes for an indemnity bond — it is a separate instrument from the Sale Deed and the conveyance duty does not cover it. Every Seller must sign each page as well as the signature block. Notarise it if a bank, society or authority asks. Keep the original with the Buyer, a signed copy with the Seller, and file the original alongside the registered Sale Deed and the original title documents.

[Space for the notary's seal, register entry number and endorsement, if the Bond is notarised]