1. A agrees to to indemnify ‘B’, a newspaper proprietor against claims arising out of the libel printed in the newspaper concerning a person of repute. Is this a valid agreement?

1. Facts of the Case

• A, an individual, agrees to indemnify B, a newspaper proprietor, against all claims or damages that may arise from libelous statements printed in B’s newspaper concerning a person of repute.
• The publication contains defamatory material against a third person, which is a violation of law (i.e., civil wrong and criminal offence under defamation laws).
• The issue arises as to whether A’s promise to indemnify B against the consequences of publishing libelous content is legally enforceable or void under Indian Contract Law.

2. Issues in the Case

1. Whether an agreement to indemnify another person against the consequences of an unlawful or illegal act (such as libel) is valid under the Indian Contract Act, 1872.
2. Whether A’s indemnity in favour of B can protect B from liability arising from an act prohibited by law.
3. Whether a contract of indemnity can include protection for illegal or immoral acts.
4. Whether such an indemnity is void under Section 23 of the Indian Contract Act, 1872, as being opposed to public policy or unlawful.

3. Legal Principles Covered

a) Definition of Contract of Indemnity

• Section 124 of the Indian Contract Act, 1872 defines a contract of indemnity as:
  “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.”
• Example: If A agrees to save B from loss caused by C’s conduct, it is a valid contract of indemnity if the act is lawful.

b) Lawfulness of Object and Consideration

• Section 23 of the Indian Contract Act, 1872 states that:
  “The consideration or object of an agreement is unlawful if— it is forbidden by law, or is of such a nature that, if permitted, it would defeat the provisions of any law, or is fraudulent, or involves or implies injury to the person or property of another, or the Court regards it as immoral or opposed to public policy.”
• Publishing libel (defamation) involves injury to the reputation of another person and is, therefore, an unlawful act.

c) Indemnity for Unlawful Acts

• An indemnity cannot legally protect a person from the consequences of an illegal act.
• Case Reference:
  • Osman Jamal & Sons Ltd. v. Gopal Purshottam (1928) ILR 56 Cal 262 – An indemnity agreement related to an illegal act is void and unenforceable.
  • Jamnadas v. Ram Avtar (1913) ILR 35 All 63 – The court held that a promise to indemnify for illegal or immoral conduct is void ab initio.
• Thus, if the act (libel) itself is unlawful, the indemnity cannot be valid.

d) Public Policy and Illegality

• Courts in India will not enforce an indemnity that seeks to protect a person from the consequences of an offence or a tort (civil wrong).
• Allowing such agreements would encourage illegal acts and go against public policy.
• The indemnity is, therefore, void under Section 23 and unenforceable in law.

4. Possible Judgement

• The agreement between A and B is void and unenforceable under the Indian Contract Act, 1872.
• Since the purpose of the indemnity is to protect B from the consequences of libel, which is an illegal and wrongful act, the agreement’s object is unlawful.
• Section 23 clearly invalidates any agreement whose object or consideration is opposed to public policy or involves injury to another’s reputation.
• The court would therefore hold that:
  • A’s promise to indemnify B is not a valid contract.
  • B cannot claim indemnity from A for any damages or legal costs arising from the publication of the libel.
  • The indemnity being against the consequences of an unlawful act, is void ab initio.

About lawgnan:

Understand how contracts of indemnity and legality of object work under the Indian Contract Act, 1872 with clear examples and case laws at Lawgnan.in. Explore detailed analyses of landmark cases like Osman Jamal & Sons Ltd. v. Gopal Purshottam and Jamnadas v. Ram Avtar, and learn why indemnity for unlawful acts such as libel is void under Section 23. Lawgnan offers comprehensive LLB notes, exam-ready case briefs, and simplified explanations of core commercial law concepts. Visit Lawgnan.in now to strengthen your understanding of Contract Law and master your legal syllabus with confidence.