BAILMENT
Jagdish Chandra Prikha v. Punjab National Bank, AIR 1998 Del 266: Where a box containing gold jewellery
and ornaments were entrusted to a Bank and the custody of box always remained with Bank, the
ornament and jewellery were found missing when produced before that court, it was held that the Bank
failed to discharge its duties as bailee and the heirs of bailor would be entitled to the price to market
valve of gold ornaments at the time of the institution of the suit alongwith simple interest at the rate of
12% per. annum.
Motilal Hirabhai v. Bai Mani, AIR 1925 PC 8: The Privy Council held that new shares allotted in respect of
old shares pledged by a person are increase or profit within the meaning of section 163 and hence the
pledger can successfully claim them.
Standard Chartered Bank v. Custodian, AIR 2000 SC 1488: When section 163 of the Contract Act really
means is that accretion in respect of the goods bailed cannot be a property of the bailee but must be
returned when the goods themselves baile
Kaliaperumual Pillai Vs. Visalaksmi Achi
The plaintiff had some jewels which she wanted to be remade by a goldsmith who worked in the
defendant’s house as there was better accommodation for this purpose.
Every day in the morning, the plaintiff used to be present at the defendant’s house during the
time the goldsmith worked there.
Every evening when the goldsmith’s work was over, he handed over the half-made jewels to the
plaintiff. The plaintiff put those half-made jewels in a box given by the defendant in a room of
the defendant’s house. Some of the plaintiff’s witnesses also said that the key to the room
remained with the plaintiff.
One morning when the plaintiff went into the room for taking the jewels for continuing the
goldwork she found them missing from the box.
One of the witnesses admits that the defendant had made a complaint of the theft in his house
and the plaintiff was aware of such complaint.
The plaintiff sued the defendant for the stolen jewellery which was kept in one room of his
house.
When the matter reached the lower court, the defendant was made liable for the loss of the
plaintiff. After that, the defendant appealed in the Madras High court.
HELD
The judge said that the defendant cannot be held as the bailee for the said
goods. Because according to the evidence, the gold given to the defendant for
remaking was not considered to be “delivered”, which is an essential element of
bailment. Thus, the defendant could not be held liable.[4]
AGENCY
Chairman L.I.C v. Rajiv Kumar Bhaskar
In this case, as per the salary saving scheme of L.I.C, the employer was supposed to deduct the premium
from the employee’s salary and deposit it with L.I.C. Upon the death of the employee, it was found by his
heirs that the employer has defaulted in doing so, causing the policy to lapse. A clause in the acceptance
letter was referred to, in which the employer had said that he would act as the agent of the employee
and not as that of L.I.C. It was held that the employer was acting as the agent of the company, thereby
making the company (L.I.C) responsible as a Principal due to the fault of the Agent (the employer).
Mahendra Pratap Singh v Padam Kumar Devi, AIR 1993, ALL 143 When a client gives a power of
attorney to his counsel, while he is in good state of health and mental understanding, but subsequently
the client becomes old, feeble, weak, unable to comprehend under a mental incapacity, the power of
attorney becomes worthless after the change in the state of health and metal infirmity of the client.
Madanlal Dhariwal v Bherulal AIR 1965 272.
If the principal is a minor or of unsound mind, he is incapable of being bound through the acts of his
agent. Although a minor himself cannot appoint an agent, there is nothing in sec 183, which prohibits
the guardian of a minor form appointing an agent for him.
PLEDGE
The Morvi Mercantile Bank Ltd. And Anr. v. Union of India, 1965
Facts of the case
In this case, a firm operating in Mumbai entrusted their goods worth INR 35,500 to Railways for its
delivery to Delhi. The firm got their receipt for these goods from the Railways. In
order to get an advance of INR 20,000 from the plaintiff, the firm pledged these receipts as collateral
for the same.
The goods were lost by the railways and they offered to compensate with certain parcels to the
plaintiff. The plaintiff rejected this and claimed that those weren’t the goods that were pledged to
them. The plaintiff, hence, sued the railways to recover INR 35,500 against the value of goods pledged
to them including the damages.
Issues involved in the case
1. Whether railway receipts can be considered as valid goods under contract of
pledge?
2. Whether the plaintiff was the pawnee of the goods or the documents of the good’s
title?
3. Whether the plaintiff could sue for the entire value of the goods or only what was
advanced by him?
Judgement of the Court
The Supreme Court of India ruled in favour of the plaintiff. It was held that railway receipts can be
valid as goods under a contract of pledge. It was also held that the plaintiff was the pawnee of the
goods and not merely its documents of title. It was stated that since the pawnee in a contract of
pledge has the authority as the owner of the goods, the plaintiff will be allowed to sue for the entire
value of the goods and not just the amount he has advanced.
K. M. Hidayathulla v. the Bank of India, 2001
Facts of the case
In this case, on 10th December, 1993, the petitioner pledged certain gold jewels with the
respondent. These jewels were pledged against a certain amount. The petitioner failed to
repay the amount within the agreed time. The bank held an auction for the jewels on 20th
May, 1997 to recover the debt. The petitioner claimed that as per Section 176, the bank had
the right to either file a suit against him for recovery or sell the jewels via an auction aftergiving
reasonable notice to the petitioner, however, it must have taken place within the
prescribed time for filing the suit.
Issues involved in the case
1. Whether any such condition was mentioned in Section 176 of the Act?
2. Whether the pawnee could auction the goods after the prescribed period?
Judgement of the Court
The judgement passed by the Madras High Court was in the favour of the bank. It was held
that the bank had two remedies; either to file a suit for recovering the debt or selling the
goods after reasonable notices to the pawnor. It was found that there was no connection
between the two remedies. Merely because the period for filing a suit had passed, it did not
mean that the other alternatives could not be used. It was held that if the pawnee resorted to
any alternate course of sale, the prescribed period should be extended for the same.
