Recently, in VPS Healthcare Private Limited and Another v. Prabhat Kumar Srivastava and Another, the Supreme Court has held that an indemnity clause in a contract (including where it forms part of a consent award) creates an immediate and absolute obligation to make good the loss, and its enforceability is not contingent on the final outcome of an appeal or confirmation by a higher court.

The Court set aside a Delhi High Court order that had deferred enforcement of a Singapore International Arbitration Centre (SIAC) consent award between the appellants and respondents merely because the award was subject to approval by the Singapore Court of Appeal. 

In interpreting the indemnity provisions, the Court held that, “..The present case is one of discharge of a crystallised liability, and it is not a case of indemnity that matures only upon the confirmation by the Highest Court of Appeal.”

The Court unequivocally held that an indemnity clause forming part of a consent award gives rise to an immediate obligation and does not depend on the decision of the highest court of appeal. 

The judgment reinforces that parties cannot, by implication, shelter indemnity obligations behind the pendency or outcome of appellate proceedings unless the clause unmistakably so provides.