Rights of Bailee
1. Right to recover necessary expenses
incurred on bailment (sec. 158)
2. Right to recover the compensation from the
bailor (sec. 164)
3. Right to have a lien on the goods bailed
(sec. 170-171)
4. Right to suit against a wrongdoer (sec. 180)
1. Right to recover necessary expenses
incurred on bailment (sec. 158)
Sec. 158: Repayment, by bailor, of necessary
expenses
Where, by the conditions of the bailment, the
goods are to be kept or to be carried, or to
have work done upon them by the bailee for
the bailor, and the bailee is to receive no
remuneration, the bailors shall repay to the
bailee the necessary expenses incurred by
him for the purpose of the bailment.
2. Right to recover the compensation
from the bailor (sec. 164)
Sec. 164. Bailor's responsibility to bailee
The bailor is responsible to the bailee for any
loss which the bailee may sustain the reason
that the bailor was not entitled to make the
bailment, or to receive back the goods, or to
give directions, respecting them
3. Right to have a lien on the goods
bailed (sec. 170-171)
Lien: is the right to retain the goods and
refuse to deliver them back, until the amount
due is paid.
Indian Contract Act recognises following two
kind of liens:
1. Particular Lien
2. General Lien
1. Particular Lien
The right of particular lien entitles the bailee to
retain only those goods against which the
payment is due.
Sec. 170. Bailee's particular lien: Where the
bailee has, in accordance with the purpose of
the bailment, rendered any service involving
the exercise of labour or skill in respect of the
goods bailed he has in the absence of a
contract to the contrary, a right to retain such
goods until he receives due remuneration for
the services he has rendered in respect of
them.
Example
If A delivers a rough diamond to B, a jeweller
to be cut and polished, which is accordingly
done. B is entitled to retain the diamond till
he is paid for the services he has rendered.
A gives cloth to B, a tailor, to make into a
coat. B promises to A to deliver the coat as
soon as it is finished, and to give a 2 month
credit for the price. B is not entitled to have
any right of lien on the coat.
Eduljee v. Cafe John Bros. AIR 1943
Nag. 249.
A sold a second hand refrigerator to B. And
accordingly delivery has been made even
without taking the price from B.
After sometime problem persists in the
refrigerator, and B take out two parts from
the refrigerator and send the same for repair
to A.
A wanted to exercise lien on these two parts.
Whether he can do so or not??
No, he can not exercise the right of lien. Once
bailee parts with the possession his right to
lien becomes waived, and the same can not
be revived again.
Other related provisions
Apart from sec 170 following are some other
provisions which recognises the right of lien:
1. Lien of finder of goods (Sec. 168)
2. Pawnee’s/ Pledgee’s lien (Sec. 173-174)
3. Agent’s lien (Sec. 221)
4. Unpaid seller’s lien (Sec. 47, Sales of Goods
Act 1930)
5. Partner’s lien (Sec. 52 Indian Partnership
Act, 1932)
2. General Lien
Sec. 171:General lien of bankers, factors,
wharfinger, attorneys and policy Brokers:
Bankers, factor, wharfingers, attorneys of a
High Court and policy brokers may, in the
absence of a contract to the contrary, retain
as a security for a general balance of account,
any goods bailed to them; but no other
person have a right to retain, as a security for
such balance, goods bailed to them, unless
there is an express contract to that effect.
General lien entitles the bailee to retain not
only those goods against which some amount
is due, but he can retain the other goods also
in his possession.
This right is only available to following kind
of bailees;
1. Bankers
2. Factors
3. Wharfingers
4. Attorneys of high court
5. Policy Brokers
Bankers
According to sec. 171 Bankers are privileged
to have general kind of lien.
In K. Sita v. Corporation Bank AIR 1999 AP
367: it was held that gold ornaments pledged
by the petitioner for raising one loan can be
retained until he clears other loans, whether
he has cleared the particular loan for which
the ornaments has been furnished as
security.
Lien over money
Right of Lien is exercisable only against the
goods. Since money is not considered as
goods. Bank can not retain your money
deposited in your account for the purpose of
repayment of any dues.
But following the English law, in India also
some of the courts have decided that banker
can exercise lien over money also. (Punjab
National Bank v. Satyapal AIR 1956 Punjab
118. )
Finally in State Bank of India v. M.P. Iron and
Steel Works AIR 1998 MP 93. court held that
depositing money in a bank does not create
relationship of Bailor and Bailee. Money can
not be traced once deposited in bank. Bank is
the debtor and it has to repay the money.
Lien is something which can be exercised on
other goods but not on money.
Factors
Factor is a mercantile agent within the
meaning of sec. 2(9) of the Sale of Goods Act.
A factor is a agent who have the possession
of the goods on behalf of the owner for
selling purposes.
He the right of general lien over the goods of
owner which has been given to him,
E.H. Parakh v. King Emperor AIR
1926 Oudh 202.
Raja Amarpal Singh, taluqdar of Pratabgarh dist. entrusted
the possession of an American car “Moon” to applicant,
who was the proprietor of a firm of motor engineers.
Mean while Raja’s estate was taken over by court of wards.
And court demanded the possession of car from applicant.
Applicant refused and exercised lien over the car for
money due on Raja for some earlier transactions.
Court issued a notice against the applicant that why he
should not be prosecuted for not following the orders of
court.
It was held that applicant has a right of general lien and
he can not be prosecuted for not handing over the
possession of the car.
Wharfingers
A wharf or quay is a structure on the shore of
a harbour or on the bank of a river or canal
where ships may dock to load and unload
cargo or passenger.
Wharfinger is a person who manages the
wharf, and has the general right of lien.
Attorney of High Court
Attorneys of High Court also has right of
general lien over the goods of their clients.
He can retain the same until his fees for the
professional services is not paid.
But in R.D. Saxena v. Balaram Prasad Sharma
AIR 2000 SC 2912. SC held that files and
documents are not ‘goods bailed’ or ‘saleable
goods’ as defined in the Sale of Goods Act
1930. So advocate has no right of lien over
them.
Policy Brokers
Policy Brokers are Insurance agents and have
general right of lien over the goods of their
clients until the satisfaction of thei.r dues
4. Right to Suit against wrongdoer
(Sec. 180)
Sec. 180: Suit by bailor or bailee against
wrong-doer: If a third person wrongfully
deprives the bailee of the use of possession
of goods bailed, or does them any injury, the
bailee is entitled to use such remedies as the
owner might have used in the like case if no
bailment has been made; and either the
bailor or the bailee may bring a suit against a
third person for such deprivation or injury
Right of third person claiming goods
bailed (sec. 167)
If a person, other than the bailor, claims goods
bailed he may apply to the court to stop
delivery of the goods to the bailor, and to
decide the title to the goods.
Position of Finder of Goods
Sec. 168. Right to finder of goods may sue for
specified reward offered:
The finder of goods has no right to sue the owner
for compensation for trouble and expense,
voluntary incurred by him to preserve the goods
and to find out the owner; but he may retain the
goods against the owner until he receive such
compensation; and where the owner has offered
a specific reward for the return of goods lost,
the finder may sue for such reward, and may
retain the goods until he received it.
Two Rights Under Sec. 168
1. Right of Lien
2. Right to claim the reward if any announced
by the owner
Right to Sell the goods found
Sec. 169 provides for the sale of goods found,
Sec. 169: When finder of thing commonly on sale
may sell it -
When thing which is commonly the subject of sale is
lost, if the owner cannot with reasonable diligence
be found, or if he refuses upon demand, to pay the
lawful charges of the finder, the finder may sell it -
(1) when the thing is in danger of perishing or of
losing the greater part of its value,
or
(2) when the lawful charges of the finder, in respect
of the thing found, amount to two-thirds of its
value.
