What is Subrogation? What do you mean by implied promise to indemnity surety under Section 145 of the Indian Contract Act?
Subrogation: According to Section 140 of the Indian Contract Act, where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety, upon payment or performance of all that he is liable for, is invested with all the rights which the creditor has against the principal debtor, This right of the surety is referred to as subrogation. In other words, it refers to the payment made on the guaranteed debt, or performance of the guaranteed duty, the surety becomes the creditor.
Section 145 of the Indian Contract Act has provided the surety with another right, that is, the right of indemnity, in addition to the right of subrogation According to this right of indemnity, every contract of guarantee contains an implied promise from the principal debtor to indemnify the surety, and the surely is entitled to recover the amount which he has rightfull3 paid under the guarantee from the principal-debtor.