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Stamp Paper & Legal Documents

Indemnity Bond: Meaning, Components, Stamp Paper and Uses

An indemnity bond is a written promise to cover another party's loss from a stated event, under Section 124 of the Contract Act, usually on stamp paper.

PN

Written by Priya Nair

Published 27 September 2026·6 min read

On this page9 sections
Credsir Stamp Paper & Legal Documents guide cover with a stamp icon

An indemnity bond is a signed promise to make good any loss another party suffers because of a stated event, such as a lost share certificate turning up later. Section 124 of the Indian Contract Act, 1872 defines the contract behind it. Most bonds are printed on non-judicial stamp paper, and the stamp value depends on your state: ₹500 in Maharashtra, for example.

Key facts

Item Detail
Law Sections 124 and 125, Indian Contract Act, 1872
Parties Indemnifier (who promises) and indemnity holder (who is protected)
Stamp duty Set by each state’s Stamp Act; the central schedule links it to the security bond rate
Common uses Duplicate share certificates, IEPF claims, transmission of securities, electricity connection transfers
Plain paper allowed SEBI allows a plain-paper undertaking for duplicate securities worth up to ₹10,000

Indemnity in law: Sections 124 and 125

Section 124 of the Indian Contract Act, 1872 says a contract of indemnity is one where “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”. An indemnity bond is simply that promise put in writing, usually as a formal deed.

Section 125 sets out what the protected party (the promisee) can recover from the promisor when sued over the matter covered:

  • all damages it is made to pay in the suit;
  • costs of the suit, if it acted prudently and did not go against the promisor’s instructions;
  • sums paid under a reasonable compromise of the suit, or one the promisor authorised.

The Act uses the words “promisor” and “promisee”. Banks, companies and share registrars call them the indemnifier and the indemnity holder.

Components of an indemnity bond

Formats differ, but a usable bond has these parts:

Part What it contains
Indemnifier Full name, parent’s or spouse’s name, address and often PAN of the person giving the promise
Indemnity holder The company, bank, utility or authority being protected
Recitals The background: what was lost, what is being claimed, folio or account numbers
Event covered The specific risk, such as a third party producing the original certificate
Amount The value of the claim or the cap on the indemnity
Undertaking The promise to compensate for loss, costs and claims
Surety A third person who backs the promise, where the holder asks for one
Execution Signatures of all indemnifiers, date and place, and two witnesses with names and addresses
Attestation Notary’s seal and registration details, where required

Common uses

Lost or damaged share certificates

SEBI’s circular of 24 December 2025 standardised the Affidavit-cum-Indemnity bond (Form A) that listed companies and registrars accept for duplicate securities:

  • Value up to ₹10,000: an undertaking in the Form A format on plain paper, with no notarisation.
  • Value above ₹10,000 and up to ₹10 lakh: the Affidavit-cum-Indemnity bond on non-judicial stamp paper. The circular raised this limit from ₹5 lakh.
  • Value above ₹10 lakh: the same bond plus a copy of an FIR, e-FIR, police complaint or court document giving the certificate details. The company also advertises the loss in a newspaper.

The stamp paper value is the higher of the state’s duty on an affidavit and on an indemnity bond, in the state where the claimant lives.

Claims from the IEPF

When you claim shares or dividends from the Investor Education and Protection Fund through Form IEPF-5, the MCA portal generates an indemnity bond after you submit the form. You sign it and post the original to the company. Dividend-only claims below ₹10,000 can use plain paper, according to company guidance; share claims need stamp paper.

For smaller holdings, companies and share registrars accept an indemnity bond, with no-objections from the other heirs, in place of a succession certificate. Check the company’s or registrar’s published document list for the value limit. See claiming a deceased relative’s assets for the wider process.

Utility connection transfers

BESCOM’s Form 13 for transferring an electricity installation requires the new owner to sign an indemnity bond in its Annexure-9 format. The bond protects the utility against disputes over the transfer. Other distribution companies have their own forms.

Stamp paper value and notarisation

Under Article 34 of Schedule I of the Indian Stamp Act, 1899, an indemnity bond pays “the same duty as a Security bond (No. 57) for the same amount”. States have their own schedules. These are the rates we confirmed on official pages:

State Article Stamp duty on indemnity bond
Maharashtra Article 35, Maharashtra Stamp Act, 1958 ₹500
Karnataka Article 29 read with Article 47, Karnataka Stamp Act, 1957 ₹2 per ₹100 if the amount secured is up to ₹1,000; ₹500 otherwise (since 3 February 2024)
Uttar Pradesh Article 34 read with Article 57, Schedule I-B ₹10 if the amount is up to ₹100; ₹100 otherwise

Other states differ, and rates change by amendment, so check the current rate with your state’s registration department or an e-stamp vendor before you buy. Our stamp duty by state page covers property rates.

Buy the stamp paper in the name of the person signing the bond. Notarisation is not required by the Contract Act itself; the party asking for the bond decides. SEBI’s Form A, for example, must be signed before a notary when the securities are worth more than ₹10,000.

Indemnity vs guarantee

Point Indemnity (Section 124) Guarantee (Section 126)
Parties Two: promisor and promisee Three: surety, principal debtor and creditor
Promise To save the other from loss To perform the promise or pay the debt of a third person if that person defaults
Liability Primary, arises when the covered loss happens Secondary, arises on the principal debtor’s default
Form Usually a written bond on stamp paper May be oral or written

Sample clauses explained

ItemDetails
“In consideration of…”names what the holder is giving you, such as issuing duplicate shares or paying a claim.
“…do hereby agree and undertake to indemnify…”is the core promise. Check who is protected and whether any cap applies.
“…against all claims, losses, costs and expenses…”sets the scope. Wider wording means wider liability.
“…not sold, pledged or transferred…”is a declaration that nobody else has rights in the asset. A false declaration can void the claim.
“Signed in the presence of…”is where the witnesses sign. Their names, addresses and the date and place must be filled in.

An indemnity can make you liable for large sums years later, so read the scope before signing. For high-value or disputed matters, have a lawyer review the bond.

Frequently asked questions

What is the meaning of an indemnity bond?

A written promise to compensate another party for loss caused by a stated event. Section 124 of the Indian Contract Act, 1872 defines the underlying contract.

How much stamp paper is needed for an indemnity bond?

It depends on the state. Maharashtra charges ₹500, Karnataka ₹500 for amounts above ₹1,000, and Uttar Pradesh ₹100 for amounts above ₹100.

Does an indemnity bond need to be notarised?

Only if the party asking for it requires notarisation. SEBI requires it for duplicate securities worth more than ₹10,000.

Can an indemnity bond be on plain paper?

Sometimes. SEBI allows a plain-paper undertaking for duplicate securities worth up to ₹10,000; otherwise use stamp paper of the right value.

Who signs an indemnity bond?

Every indemnifier, such as all joint holders, plus two witnesses. A surety signs too if the holder asks for one.

What is the difference between indemnity and guarantee?

An indemnity is a two-party promise to cover loss. A guarantee involves three parties and covers a third person’s default.

Sources

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