CONTRACTS CASES [Module 1]

In GAJAN MORESHWAR vs. MORESHWAR MADAN, it was decided that law relating to

indemnity is by no means exhaustive and thus, the Courts in India shall follow the English Law.

In the same case, English equity law was discussed; whether requiring an indemnity holder to

actually pay and clear the damages before claiming them from the indemnifier places an undue

burden on the indemnity holder. Thus, if the liability of an indemnity holder became absolute, he

was held entitled to get the indemnifier to pay off the claim or to pay the court sufficient amount

of money for making a fund to pay the claim as and when it was made.

Charter Reinsurance Co. v. Fagan R.

The re-insurers appealed against a finding that they were liable to make payment under a

contract which required them to pay ‘sums actually paid.’ They said that the company having

become insolvent, no payment would in fact be made.

Held: The contract had to be construed as a whole. Under the contract, the sum became payable

when the insurance claim itself became payable and not only when it was actually paid out. The

complex layering arrangements envisaged by the contract required this interpretation.

Anand Sarup v. Khurana