BAILMENT - Prof Chetna

SECTION 148-171
DEFINITION OF BAILMENT
The word ‘bailment’ means a sort of handing over possession.
Under the ICA, the word ‘bailment’ implies a sort of relationship in which
the personal property of one person temporarily goes into the possession
of another.
The circumstances in which this sort of a relationship may arise could be
numerous: (a) Delivering a cycle, watch or other article for repair, (b)
leaving a cycle, car etc. at a stand, (c) Depositing luggage in a cloakroom,
(d) delivering garments to a drycleaner, (e) delivering gold to a goldsmith
for making ornaments, among others
Note: Bailment is necessarily dealt with by the Contract Act so far as it
is a kind of contract, but there can be a bailment and relationship of a
bailor and a bailee in respect of specific property without an enforceable
contract.
SECTION 148: DEFINED
BAILMENT , BAILOR &
BAILEE
A ‘bailment’ is the delivery of goods by one person to another for
some purpose, upon a contract that they shall, when the purpose is
accomplished, be returned or otherwise disposed of, according to
the directions of the person delivering them. The person delivering
the goods is called the ‘bailor’. The person to whom they are
delivered is called the ‘bailee.
SECTION 148: DEFINED
BAILMENT , BAILOR &
BAILEE
A ‘bailment’ is the delivery of goods by one person to another for
some purpose, upon a contract that they shall, when the purpose is
accomplished, be returned or otherwise disposed of, according to
the directions of the person delivering them. The person delivering
the goods is called the ‘bailor’. The person to whom they are
delivered is called the ‘bailee.
Explanation: If a person already in possession of the goods of
another, contracts to hold them as a bailee, he thereby becomes
the bailee, and the owner becomes the bailor of such goods,
although they may not have been delivered by way of bailment.
Meaning of “Delivery”: To constitute bailment, goods must be
vacated by the owner (bailor) in favor of another person (bailee).
SECTION 149: DELIVERY TO
BAILEE , HOW MADE.
Section 149 must be read with Section 148 to construe the exact
meaning of “delivery”.
Section 149 :The “delivery” to the bailee may be made by doing
anything which has the effect of putting the goods in the
possession of the intended bailee or of any person authorized to
hold them on his behalf.
SECTION 149: DELIVERY TO
BAILEE , HOW MADE.
Section 149 must be read with Section 148 to construe the exact
meaning of “delivery”.
Section 149 :The “delivery” to the bailee may be made by doing
anything which has the effect of putting the goods in the
possession of the intended bailee or of any person authorized to
hold them on his behalf.
“Delivery” under Section 148 / Section 149 may therefore be done
in two ways: (a) Actual delivery, (b) Constructive delivery.
SECTION 149: DELIVERY TO
BAILEE , HOW MADE.
Section 149 must be read with Section 148 to construe the exact
meaning of “delivery”.
Section 149 :The “delivery” to the bailee may be made by doing
anything which has the effect of putting the goods in the possession of the
intended bailee or of any person authorized to hold them on his behalf.
“Delivery” under Section 148 / Section 149 may therefore be done in two
ways: (a) Actual delivery, (b) Constructive delivery.
Actual delivery takes place when the bailor hands over to the bailee,
physical possession of the goods
Constructive delivery takes place when there is no change of physical
possession, but something is done which has the effect of putting them in
the possession of the bailee.
CONTINUATION..!
Note: Constructive delivery may be required where it is
practically impossible to give possession, viz. goods are
bulky, or where the goods remain in the possession of the
bailor for some special purpose, as above.
CONTINUATION..!
Note: Constructive delivery may be required where it is
practically impossible to give possession, viz. goods are
bulky, or where the goods remain in the possession of the
bailor for some special purpose, as above.
Constructive delivery may be effected by some symbolic act, such
as the delivery of a key of the warehouse in which goods are
stored.
 To secure constructive possession, the essential test is, whether
the dominion & control over the goods is retained by the bailee or
whether the physical possession of the goods by the bailor, is under
the delegated authority of the bailee.
CONTINUATION..!
Note: Constructive delivery may be required where it is
practically impossible to give possession, viz. goods are bulky, or
where the goods remain in the possession of the bailor for some
special purpose, as above.
Constructive delivery may be effected by some symbolic act, such as the
delivery of a key of the warehouse in which goods are stored.
 To secure constructive possession, the essential test is, whether the
dominion & control over the goods is retained by the bailee or whether
the physical possession of the goods by the bailor, is under the delegated
authority of the bailee.
Meaning of “upon a contract”: Section 148 is very clear when it says the
following, “A bailment is the delivery of goods…upon a contract… that
they shall, when the purpose…”.
CONTINUATION..!
Section 148 only covers matters of “contractual bailment.” This
does not mean that bailment cannot exist without a contract. It can
exist, though, not under the ICA.
 The essence of bailment is possession. It may arise even when
the owner of the goods has not consented to their possession by
the bailee at all.
CONTINUATION..!
Section 148 only covers matters of “contractual bailment.” This
does not mean that bailment cannot exist without a contract. It can
exist, though, not under the ICA.
 The essence of bailment is possession. It may arise even when
the owner of the goods has not consented to their possession by
the bailee at all.
 It follows that a bailment may very well exist without the creation
of a contract between the parties and it essentially gives rise to
remedies which, in truth and substance, cannot be said to be
contractual. That is why it is asserted that ‘bailment’ may also arise
in a tortious relation.
CONTINUATION..!
Section 148 only covers matters of “contractual bailment.” This does not
mean that bailment cannot exist without a contract. It can exist, though, not
under the ICA.
 The essence of bailment is possession. It may arise even when the owner of
the goods has not consented to their possession by the bailee at all.
 It follows that a bailment may very well exist without the creation of a
contract between the parties and it essentially gives rise to remedies which, in
truth and substance, cannot be said to be contractual. That is why it is
asserted that ‘bailment’ may also arise in a tortious relation.
Meaning of “be returned or otherwise disposed of, according to the directions
of the person delivering them”: Bailment of goods is always made for some
purpose and is subject to the condition that when the purpose is
accomplished, the goods will be returned to the bailor or disposed of
according to his mandate.
CONTINUATION..!
If the person to whom the goods are delivered is not bound to
restore them to the person delivering them or to deal with them
according to his directions, their relationship will not be that of a
bailor and a bailee.
CONTINUATION..!
If the person to whom the goods are delivered is not bound to
restore them to the person delivering them or to deal with them
according to his directions, their relationship will not be that of a
bailor and a bailee.
It is this condition that differentiates ‘bailment’ from many other
sorts of transactions.
ESSENTIAL OF BAILMENT
Contract :The first condition is that there must be a contract
between the two parties for the delivery of goods. Such contract
may be expressed or implied, written or oral.
Delivery of Possession : Possession of goods from one person to
another and mere custody of goods does not amount to change in
possession Case: Kaliaperumal vs. Visalakshmi AIR 1938 Mad 32
Jewels kept in a box with the jeweller, locked by the the plaintiff
herself. Goldsmith not a bailee here.
Delivery should be made upon a contract : There is no bailment
where the delivery of goods is without contract
Delivery for specific purpose
Return of goods.
QUESTIONS.
One truck was impounded by the Forest officials for carrying illicit
timber from a forest. The owner of the truck was required to pay a
fine of Rs. 10,000 for the release of the truck. The owner of the
truck was out of India and therefore could only manage to pay the
fine three months later. By that time, the major engine parts of the
truck were stolen by miscreants as the truck was parked outside
the office of the Forest officials and there was no one on guard at
night. The owner of the truck now sues the Forest officials /
department alleging that there existed a relationship of a bailor and
bailee between them. Is he right?
QUESTIONS.
A person was travelling from Ambala to Delhi on a Haryana
Roadways bus. Given that there was no space inside, this person
put all his luggage on the roof of the bus. After some time, this
person’s back started paining and he came down and sat inside the
bus on one of the seat’s. He left the luggage on the rooftop though.
After the bus reached Delhi, this person could not locate his
luggage on the rooftop. This person now sues Haryana Roadways
alleging that there existed a relationship of a bailor and bailee
between them. Is he right?
QUESTIONS.
A and B enter into a written agreement for a long term rental of a
car. The agreement states that Rs. X will be due from B to A at the
end of every month. The lease period is to run for five years. The
agreement also states that B will have an option to purchase the
car after paying the 40th installment for a price of Rs. Y. Is there a
relationship of Bailment between A and B?
TYPE OF BAILMENT
Bailment may be classified from two angles

From benefit viewpoint.

TYPE OF BAILMENT
Bailment may be classified from two angles

From benefit viewpoint.

From reward viewpoint.
TYPE OF BAILMENT
Bailments from benefit viewpoint: It may be relevant to think as
to for whose benefit has the bailment been done. From this
viewpoint, there can be three kinds of bailment:
- For the benefit of bailor only: An example would be the bailment in
safe possession of bailor’s goods without any charges by the bailee.
- For the benefit of bailee only: An example would be bailment of
goods for use of bailee without bailor charging anything.
- For the benefit of bailor and bailee both: This happens in most cases
of bailment when one person receives benefit of service and the
other gets benefit of payment, e.g. bailments for repairs, conversion,
hire, transportation, storage etc.
CONTINUATION..!
Gratuitous bailment: The word ‘gratuitous’ means ‘free of
charge’. So, a gratuitous bailment is one wherein the provider of
service does it gratuitously i.e. free of charge. This type would
include all the examples of bailments which fall under the first two
categories above, i.e. bailments for benefit of either bailor or
bailee.
CONTINUATION..!
Gratuitous bailment: The word ‘gratuitous’ means ‘free of
charge’. So, a gratuitous bailment is one wherein the provider of
service does it gratuitously i.e. free of charge. This type would
include all the examples of bailments which fall under the first two
categories above, i.e. bailments for benefit of either bailor or
bailee.
Non-gratuitous bailment or bailment for consideration: This
category would include all bailments where the provider of service
gets paid for this, i.e. where bailment is for the benefit of both the
bailor and the bailee.
CONTINUATIONS:
4. To indemnify Bailee ; A gives B’s car for use to C without the
permission of B. Later on, B gets compensation from C. Now C’ has
legal right to be indemnified by A.
 DUTY OF BAILEE
Under section 151, 152 To take reasonable care of the goods
Under section 153 To not to do an act which is inconsistent with
the t/c of the bailment
Under section154 To not to make unauthorized use of goods
Under section 155 - 157 Not to mix bailor’s goods with his own
Under section159 – 161 To restore goods to the bailor
Under section163 To return increase of profits to bailor
SECTION 151: BAILEE’S DUTY TO TAKE CARE OF
GOODS (AS A MAN OF ORDINARY PRUDENCE)

Section 151
In all cases of bailment, the bailee is bound to take as much care of the
goods bailed to him as a man of ordinary prudence would, under similar
circumstances, take of his own goods of the same bulk, quality and value as
the goods bailed.
This section provides that the bailee is bound to take as much care of the
goods bailed, as a man of ordinary prudence would take care of his own
goods under similar circumstances.
Section 151 prescribes a uniform duty of care. It is applicable to “all cases
of bailment”! i.e. the kind of bailment does not matter. It could be a
gratuitous one, for hire or for gain.
Note: The onus is on the bailee to prove that he had taken necessary
precautions and care required of him under the law.
EXAMPLE
Mr. A has given his car for repair to a workshop. The owner of the
workshop, after completing all the repairs asks one of his workers
(who does not have a driving license) to take a test drive of the car
and drop it to Mr. A’s place. However, the worker meets with an
accident while on his way to Mr. A’s place. Is there a relationship of
a bailor and bailee here? Do you think the owner of the workshop
took as much care of the car, as a man of ordinary prudence would
under similar circumstances? Would your answer change if the
same worker would have been working with the workshop for the
last three years and was solely responsible for the delivery of cars
ever since?
QUESTIONS.
It is March, 2018 and Mr. A has given his Maruti car for repair to an
authorized Maruti Suzuki workshop in Rohtak. The owner of the
workshop, after completing all the repairs parks the car outside the
workshop for delivery. However, its 5:30pm and no worker is ready to
deliver the car to Mr. A. He lets the car be outside the workshop
overnight. During the day, while watching News Channels, the owner of
the workshop comes to know that Jats will be once again holding
dharnas the very next day, to peacefully protest against the Supreme
Court judgment that invalidated the reservation given to them a year
earlier. Early morning next day, the car is destroyed by a riotous mob.
Rest of the cars which were parked inside the showroom survived. Is
there a relationship of a bailor and bailee here? Do you think the owner
of the workshop took as much care of the car, as a man of ordinary
prudence would under similar circumstances?
SECTION 152: AS A MAN OF
ORDINARY PRUDENCE
The bailee, in the absence of any special contract, is not
responsible for the loss, destruction or deterioration of the thing
bailed, if he has taken the amount of care of it described in Section
151.
SECTION 152: AS A MAN OF
ORDINARY PRUDENCE
The bailee, in the absence of any special contract, is not
responsible for the loss, destruction or deterioration of the thing
bailed, if he has taken the amount of care of it described in Section
151.
The section also lays down that the bailee can give up his rights
under Section 151 by way of a contract! Therefore, if the bailee has
agreed to be liable absolutely i.e. in spite of taking due care, then
such bailee will continue to remain liable nonetheless. Essentially
speaking, this section has been interpreted to mean that the care
enjoined on a bailee under Section 151 is subject to a “contract to
the contrary.”
SECTION 153 :(NOT TO DO ANYTHING WHICH IS
INCONSISTENT WITH THE T/C OF THE BAILMENT)
(TO NOT TO MAKE UNAUTHORIZED USE OF GOODS)

A contract of bailment is voidable at the option of the bailor, if the

bailee does any act with regard to the goods bailed, inconsistent
with the conditions of bailment.
SECTION 154: LIABILITY OF
BAILEE MAKING
UNAUTHORIZED USE OF
GOODS
 BAILED.
If the bailee makes any use of the goods bailed, which is not
according to the conditions of the bailment, he is liable to make
compensation to the bailor for any damage arising to the goods
from or during such use of them.
Note: In a situation where the use of the goods is in contravention
of the terms of the bailment, then the liability of the bailee is
absolute. i.e. the amount of care that the bailee takes does not
matter.
SECTION 154: LIABILITY OF
BAILEE MAKING
UNAUTHORIZED USE OF
GOODS
If the bailee makes BAILED.
any use of the goods bailed, which is not according
to the conditions of the bailment, he is liable to make compensation to
the bailor for any damage arising to the goods from or during such use of
them.
Note: In a situation where the use of the goods is in contravention of the
terms of the bailment, then the liability of the bailee is absolute. i.e. the
amount of care that the bailee takes does not matter.
The essence of these two sections is that the bailee must use the goods
only for the purpose for which they were bailed, and according to the
conditions of the bailment. If however, the bailee fails to do so, the
bailment becomes voidable at the option of the bailor under Section 153;
and under Section 154 the bailee becomes liable to make compensation
to the bailor for any damage done to the goods by such use.
CONTINUATION..!
Question: A lends a horse to B for his own riding only. B allows C, a
member of his family, to ride the horse. C rides with care, but the
horse accidentally falls and is injured. Can A claim compensation
from B?
Question: A hires a horse in Calcutta from B expressly to march to
Banaras. A rides with due care, but marches to Cuttack instead.
The horse accidentally falls and is injured. Is A liable to make
compensation to B for the injury to the horse?
SECTION 155: EFFECT OF MIXTURE
WITH BAILOR’S CONSENT OF HIS
GOODS WITH BAILEE’S.
If the bailee, with the consent of the bailor, mixes the goods of the
bailor with his own goods, the bailor and the bailee shall have an
interest, in proportion to their respective shares, in the mixture
thus produced.
Not to mix bailor’s goods with his own.
SECTION 156: EFFECT OF MIXTURE
WITHOUT BAILOR’S CONSENT , WHEN
THE GOODS CAN BE SEPARATED.
If the bailee, without the consent of the bailor, mixes the goods of
the bailor with his own goods, and the goods can be separated or
divided, the property in the goods remains in the parties
respectively; but the bailee is bound to bear the expense of
separation or division, and any damage arising from the mixture.
SECTION 157: EFFECT OF MIXTURE ,
WITHOUT BAILOR’S CONSENT , WHEN
THE GOODS CANNOT BE SEPARATED
If the bailee, without the consent of the bailor, mixes the goods of
the bailor with his own goods, in such a manner that it is impossible
to separate the goods, bailed from the other goods and deliver
them back, the bailor is entitled to be compensated by the bailee
for the loss of the goods
SECTION 160: RETURN OF GOODS
BAILED, ON EXPIRATION OF TIME OR
ACCOMPLISHMENT OF PURPOSE.
It is the duty of the bailee to return, or deliver according to the
bailor’s directions, the goods bailed, without demand, as soon as
the time for which they were bailed has expired, or the purpose for
which they were bailed has been accomplished.
SECTION 160: RETURN OF GOODS
BAILED, ON EXPIRATION OF TIME OR
ACCOMPLISHMENT OF PURPOSE.
It is the duty of the bailee to return, or deliver according to the
bailor’s directions, the goods bailed, without demand, as soon as
the time for which they were bailed has expired, or the purpose for
which they were bailed has been accomplished.
As iterated in Section 148, there is an implied contract in a
bailment to return the goods in a reasonable time after the purpose
is served, even if no time is stipulated therein.
SECTION 160: RETURN OF GOODS
BAILED, ON EXPIRATION OF TIME OR
ACCOMPLISHMENT OF PURPOSE.
It is the duty of the bailee to return, or deliver according to the
bailor’s directions, the goods bailed, without demand, as soon as
the time for which they were bailed has expired, or the purpose for
which they were bailed has been accomplished.
As iterated in Section 148, there is an implied contract in a
bailment to return the goods in a reasonable time after the purpose
is served, even if no time is stipulated therein.
It is important to note that in the very nature of the contract of
bailment, the duty is normally on the bailee to deliver back the
goods bailed, even if the purpose of bailment is not accomplished.
CONTINUATION..!
Also note that where the goods are found unfit for the purpose for
which they were sought in the first place and accordingly the
purpose for which they were bailed is not accomplished, the
consequences are not provided in the Contract Act. It appears that
all that the bailee is bound to do is to give notice of default to the
bailor.
QUESTIONS.
A borrows B’s phone to make a phone call. After an hour, B asks
for his phone, when A says that he still hasn’t made a call. After
another hour, B asks for his phone, when A again says that he still
hasn’t made a call. After another 5 hours, B asks for his phone,
when A again says that he still hasn’t made a call. Will Section 160
stand to the rescue of A as factually speaking “the purpose for
which they [a mobile phone here] were bailed has not been
accomplished”?
SECTION 161: BAILEE’S
RESPONSIBILITY WHEN
GOODS ARE NOT DULY
RETURNED.
If, by the default of the bailee, the goods are not returned ,
delivered or tendered at the proper time, he is responsible to the
bailor for any loss, destruction or deterioration of the goods from
that time.
SECTION 161: BAILEE’S
RESPONSIBILITY WHEN
GOODS ARE NOT DULY
RETURNED.
If, by the default of the bailee, the goods are not returned ,
delivered or tendered at the proper time, he is responsible to the
bailor for any loss, destruction or deterioration of the goods from
that time.
 This section lays down the Common Law rule that a bailee who
retains goods after a period for which it has been bailed does so at
his own risk and is liable for loss, destruction or deterioration of the
goods, irrespective of whether he was at fault.
 Essentially speaking, the “due care” argument under Section
151 / 152 expires with the expiration of the “proper time”!
CONTINUATION..!
Note: The word “deterioration” refers to physical and actual
deterioration of the goods, and damages cannot be claimed for a
fall in market price of the goods due to delayed delivery of the
goods by the bailee.
 Note: In an action for damages, the full value of the goods bailed
at the time is the measure of damages. If the goods have no
market, then its cost of replacement are the damages.
 Note: The only condition in this section is that the bailed goods
are not returned to the bailor by default of the bailee. Therefore,
when the loss takes place while the bailee’s wrongful act is in
operation, there is no question of any defense like “act of God” or
“inevitable accident” being set up. The bailee is liable in any case.
SECTION 162: TERMINATION
OF GRATUITOUS BAILMENT
BY DEATH
A gratuitous bailment is terminated by death either of the bailor or
of the bailee.
SECTION 163: BAILOR
ENTITLED TO INCREASE OR
PROFIT FROM GOODS
BAILED.
In the absence of any contract to the contrary, the bailee is bound
to deliver to the bailor, or according to his directions, any increase
or profit which may have accrued from the goods bailed.
Example: If A borrowed B’s hen / chicken for therapeutic purposes
for a month and in the meanwhile, the chicken lays an egg, then A
is liable to deliver the hen / chicken along with the egg (profit from
the bailed goods).
SECTION 150: BAILOR’S
DUTY TO DISCLOSE FAULTS
IN GOODS BAILED.
The bailor is bound to disclose to the bailee faults in the goods
bailed, of which the bailor is aware, and which materially interfere
with the use of them, or expose the bailee to extraordinary risks;
and if he does not make such disclosure, he is responsible for
damage arising to the bailee directly from such faults.
SECTION 150: BAILOR’S
DUTY TO DISCLOSE FAULTS
IN GOODS BAILED.
The bailor is bound to disclose to the bailee faults in the goods
bailed, of which the bailor is aware, and which materially interfere
with the use of them, or expose the bailee to extraordinary risks;
and if he does not make such disclosure, he is responsible for
damage arising to the bailee directly from such faults.
 If the goods are bailed for hire, the bailor is responsible for such
damage, whether he was or was not aware of the existence of such
faults in the goods bailed
SECTION 150: BAILOR’S
DUTY TO DISCLOSE FAULTS
IN GOODS BAILED.
The bailor is bound to disclose to the bailee faults in the goods
bailed, of which the bailor is aware, and which materially interfere
with the use of them, or expose the bailee to extraordinary risks;
and if he does not make such disclosure, he is responsible for
damage arising to the bailee directly from such faults.
 If the goods are bailed for hire, the bailor is responsible for such
damage, whether he was or was not aware of the existence of such
faults in the goods bailed.
Section 150 merely incorporates a rule of common sense/logic.
CONTINUATION..!
According to Section 150, the Bailor has a duty to disclose faults in
the goods only if:
(1) The bailor is aware of those faults, and
(2) The fault is such that it materially interferes with the use of
them or expose the bailee to extraordinary risks.
If, however, the bailor fails to disclose such a disclosure, he is
responsible for all direct damages arising to the bailee.
Note: If the bailor is not aware of the fault, whereas the bailee is
aware of such a fault, then in that case the bailor will not be liable
to the bailee for damages.
CONTINUATION..!
Question: A lends a horse, which he knows to be vicious, to B. He
does not disclose the fact that the horse is vicious. The horse run
away. B is thrown and injured. Is A responsible to B for the damage
sustained?
Question: A hires a carriage of B. The carriage is unsafe, though B
is not aware of it, and A is injured. Is B responsible to A for the
injury?
CONTINUATION..!
Meaning of ‘if the goods are bailed for hire, the bailor is
responsible for such damage, whether he was or was not
aware of the existence of such faults in the goods bailed’:
Section 150 essentially draws up a distinction between a gratuitous
bailment and a non-gratuitous bailment. This part of the section
imposes a higher duty of care when it comes to non-gratuitous
bailment. The logic behind the same being that the bailor is making
profit from his profession and therefore, it is his duty to see that the
goods which he delivers are reasonably safe for the purposes of
bailment.
QUESTION?
A and B are friends. A asks B if he could borrow his car for a day
as he wanted to take his family for a picnic. B agrees. The car had
not gone to a service center in the last 1 year and was lying in B’s
garage ever since. A is not aware of this. Now, during this last one
year, rats in B’s house in fact chewed away the braking wire in the
car, which resulted in the brake being weakened to a great extent.
Neither A, nor B is aware of this development. In fact, when A took
the car from B’s place, the car’s brake failed immediately there
after and A collided with another car resulting in injuries to him. A is
now suing B under Section 150. Will he succeed?
QUESTION?
A (a rental car company) gives a Maruti 800 for hire to Mr. B for 3
days at a rate of Rs. 1000 per day. This car was taken by Mr. B as
soon as it was returned to A by Mr. C (who had rented the car for 7
days). Mr. C returned the car at 4:30pm and on the same day at
4:35pm Mr. B took the car on rent. While with B, all four nuts from
the front tire gave way so that Mr. B met with an accident. His
hospital bills are Rs. 1 lakh. He sues A for damages under Section
150. Can he succeed?
SECTION 158: REPAYMENT
BY BAILOR
Where, by the conditions of 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 bailor shall
repay to the bailee the necessary expenses incurred by him for the
purposes of bailment.
Note: This provision only applies to gratuitous bailment! In case
there’s money being exchanged for services ; this provision does
not apply.
QUESTION.
A and B are friends. A asks B if he could keep 400 Kg of Apple in
his warehouse, as A had to go out of country on an emergency visit.
B agrees. A was to return from his visit in 3 days, however, A’s trip
got extended by two weeks. Accordingly, B (without asking A),
fearing that apples might rot in the open, hired a refrigerator in the
warehouse to store these apples for a price of Rs. 1000 per day.
Upon A’s return, B asks for the money he spent on the refrigerator.
A refuses to pay. Can B force him to pay under Section 158?
SECTION 164: BAILOR’S
RESPONSIBILITY TO BAILEE
The bailor is responsible to the bailee for any loss which the bailee
may sustain by reason that the bailor was not entitled to make the
bailment, or to receive back the goods, or to give directions,
respecting them.
 To be read along with Section 166 & 167
SECTION 164: BAILOR’S
RESPONSIBILITY TO BAILEE
The bailor is responsible to the bailee for any loss which the bailee
may sustain by reason that the bailor was not entitled to make the
bailment, or to receive back the goods, or to give directions,
respecting them.
 To be read along with Section 166 & 167
Note : This Section is stating the obvious by saying that in every
bailment, there is an implied undertaking on the part of the bailor
that the goods being bailed are his own, or that he has the authority
to bail them, or that he has the authority to give directions,
respecting them. In case the bailor does not have any such
authority regarding the goods and if the bailee suffers any loss due
to this, the bailor is liable to compensate the bailee for his losses.
SECTION 166: BAILEE NOT
RESPONSIBLE ON RE-
DELIVERY TO BAILOR
WITHOUT
 TITLE.
If the bailor has no title to the goods, and the bailee, in good faith,
delivers them back to, or according to the directions of, the bailor,
the bailee is not responsible to the owner in respect of such
delivery.
 Once the bailee in good faith delivers the bailed goods to the
bailor, and it transpires that a bailor had no title to the goods, the
bailee is not responsible to the owner in respect of the delivery.
Where, however, the bailee had notice that the bailed goods
rightfully in fact belong to another person, Section 166 then will
NOT come to the rescue of the bailee.
SECTION 167: RIGHT OF
THIRD PERSON CLAIMING
GOODS BAILED.
If a person, other than the bailor, claims goods bailed, he may
apply to the court to stop the delivery of the goods to the bailor,
and to decide the title of the goods.
SECTION 167: RIGHT OF
THIRD PERSON CLAIMING
GOODS BAILED.
If a person, other than the bailor, claims goods bailed, he may
apply to the court to stop the delivery of the goods to the bailor,
and to decide the title of the goods.
The remedy of a bailee, from whom rival claimants demand the
goods bailed, is to file an inter-pleader suit against the claimants
and protect himself. However, if he fails to do that, and retains the
goods for the bailor, or delivers it to him, then he must stand or fall
by the bailor’s title.
FINDERS OF GOOD
Section 71: A person who finds goods belonging to another, and
takes them into his custody, is subject to the same responsibility as
a bailee.
The duties and liability of a finder of goods is treated as par with
the bailee. The finder’s position, is therefore being considered
under this topic of bailment.
Duty of a finder of goods aka bailee: (1) To take as much care of
the goods as a person of ordinary prudence would, had the goods
been his own, (2) to try and make reasonable efforts in finding out
the true owner of the goods, (3) to return the goods to the rightful
owner, among others.
CONTINUATION..!
Note: The wording “and takes them into his custody” indicate that
a person who finds goods in a public place is not bound to take
charge of it! Therefore, the law imposes only on such a finder that
finds the goods and thereafter, also takes them into his custody.
Note: See Section 403 of Indian Penal Code which talks about the
offence of Dishonest Misappropriation as follows, “Whoever,
dishonestly misappropriates or converts to his own use any
movable property, shall be punished with an imprisonment of either
description for a term which may extend to two years, or with fine,
or with both.”
SECTION 168: RIGHT OF THE
FINDER OF GOODS, MAY SUE
FOR THE SPECIFIC REWARD
OFFERED
The finder of goods has no right to sue the owner for
compensation for trouble and expense voluntarily incurred by him
to preserve the goods and to find out the owner; but he may retain
the goods against the owner until he receives 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 receives it.
SECTION 168: RIGHT OF THE
FINDER OF GOODS, MAY SUE
FOR THE SPECIFIC REWARD
OFFERED
The finder of goods has no right to sue the owner for
compensation for trouble and expense voluntarily incurred by him
to preserve the goods and to find out the owner; but he may retain
the goods against the owner until he receives 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 receives it.
The finder of goods has no right to sue the owner of such goods
for any compensation / reimbursement because the trouble and
expense were incurred by him voluntarily and accordingly, is not
entitled to any remuneration of service without request from the
owner.
CONTINUATION..!
The finder though has the right to: (a) retain the goods until he
receives such compensation, and, (b) to sue for any reward offered
by the owner of the good, and retain the goods till he receives such
reward.
The finder of goods is entitled to possession of the goods found, as
against everyone except the true owner
SECTION 169: WHEN FINDER
OF THING COMMONLY ON
SALE SELL IT
When a 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.
CONTINUATION..!
The finder of goods may sell the goods if:
(a) The thing is commonly the subject of sale, and
(b) The owner cannot be found with reasonable diligence, or if
found, he refuses to pay the lawful charges of the finder, and
(c) Either the goods are in danger of perishing or losing their value;
or the lawful charges of the finder amount to two thirds of their
value.
QUESTION.
A found 1kg of tomatoes (worth Rs. 20) in the society park. He
goes to the only shopkeeper in the society and asks him if he
recalls who bought these. The shopkeeper does not recall as there
are more than 200 families living there. A then calls up the society
chairman to figure who these tomatoes belong to. The society
Chairman responds to A saying, “Its just tomatoes and that too only
1 kg. Nobody cares. Just take them home and enjoy the Rs. 30 gift
that God has given you.” What should A do?
 WHAT IS LIEN?
Lien is in its primary sense a right of one man to retain that which
is in his possession belonging to another, until certain demands of
the person in possession are satisfied. In this primary sense, it is
given by law and not by contract.
 WHAT IS LIEN?
Lien is in its primary sense a right in one man to retain that which
is in his possession belonging to another, until certain demands of
the person in possession are satisfied. In this primary sense, it is
given by law and not by contract.
There are no pre-conditions attached for the right of lien to vest
with a person. i.e. there is no need of any special agreement,
written or oral to create the right of lien. The right of lien arises by
operation of law!
 WHAT IS LIEN?
Lien is in its primary sense a right in one man to retain that which is
in his possession belonging to another, until certain demands of the
person in possession are satisfied. In this primary sense, it is given by
law and not by contract.
There are no pre-conditions attached for the right of lien to vest with
a person. i.e. there is no need of any special agreement, written or
oral to create the right of lien. The right of lien arises by operation of
law!
In case of ‘bailment’, the bailee has the right to keep the possession
of the property of the bailor until the bailor pays lawful charges to the
bailee. Thus, right of lien is probably the most important of rights of a
bailee because it gives the bailee the power to get paid for his
services
CONTINUATION..!
By giving the right of lien to bailee’s, the idea is to give some
leverage to these people to secure their money. In essence, this
also helps reduce the burden on the courts.
Under the ICA, there are two kinds of lien: (a) General Lien, (b)
Particular Lien.
SECTION 171 : GENERAL
LIEN
Bankers, factors, wharfingers, attorneys of 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 to them; but
no other persons have a right to retain, as a security for such
balance, goods bailed to them, unless there is an express contract
to that effect.
SECTION 171 : GENERAL
LIEN
Bankers, factors, wharfingers, attorneys of 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 to them; but
no other persons have a right to retain, as a security for such
balance, goods bailed to them, unless there is an express contract
to that effect.
This section enumerates the persons who are entitled to a general
lien as a security for a general balance of accounts, unless
excluded by contract.
 A general lien merely gives a right to “retain” the goods!
CONTINUATION..!
 A general lien is the right to retain the property of another for a
general balance of accounts; but a particular lien is a right to retain
it only for a charge on account of labor employed or expenses
bestowed upon the identical property detained.
 A general lien, along with a particular lien confers only a right to
retain the property of another. It does not confer a right to sell the
said property.
CONTINUATION..!
Meaning of “any goods bailed to them”: The language of this
section limits the right of Bankers (along with others) to retain as a
security only to goods that are bailed to them. As under Section
148 (that defines bailment) that Banks are not obliged to return the
same cash deposit / money that was deposited with them. i.e.
money is not “returned” as prescribed by Section 148 (that defines
bailment). Therefore, the statutory law in India does not expressly
refer to Banker’s lien in respect of cash deposit / money. Also, the
definition of “goods” under the Sale of Goods Act clearly excludes
“money” from being counted as a good.
BANKERS LIEN
A banker’s lien is a lien on all bills received from a customer in the
ordinary course of banking business in respect of any balance that
may be due from such customer.
The RBI’s website RBI Guidelines also clearly states, “Banks have
a right to exercise lien under Section 171 of the ICA against the
dues from customers. However, the banks cannot exercise lien over
the personal account of a customer on the ground that money was
due to the bank in another account where he acts in a different
capacity…”
SECTION 170: PARTICULAR
LIEN
Where the bailee has, in accordance with the purpose of bailment,
rendered any service involving the exercise of labor 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 service, he has rendered in respect of them.
 Note: The right of particular lien is also limited to “retain” such
goods.
SECTION 170: PARTICULAR
LIEN
Where the bailee has, in accordance with the purpose of bailment,
rendered any service involving the exercise of labor 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.
 Note: The right of particular lien is also limited to “retain” such
goods.
The right of lien is available only in a bailment where the bailee
rendered any service involving the exercise of labor or skill in
respect of the goods bailed; the custody must involve exercise of
labor and skill.
CONTINUATION..!
Essential point :
(a) First, the labour or skill must have been spent in accordance with
the purpose of bailment,
(b) Second, the labour or skill must have improved or added value to
the goods bailed,
(c) Thirdly, the lien applies only to such goods over which the bailee
has bestowed his labour and expense, and not other goods.
Note: A bailee’s right of lien is lost with the loss of possession.
Note: The right of lien may be excluded by a contract to the contrary.
There will be no lien where the contract provides that goods will be
returned without waiting for remuneration.
QUESTION.
A is going out of country. Being concerned for the safe custody of
his car, he leaves it in a paid parking lot. By the time he’s back, he
goes bankrupt. He has nothing left, not even a penny on him.
However, the ownership of the car still vests with him, along with
whatever fuel is left in the tank. The parking lot people do not allow
the car to get out as A cannot pay. They contend that they have a
particular lien on the car for the payment of money. Are they right?
CASES I
State of Gujarat v. Memon Mahomed Haji AIR 1967 SC 1885
Facts:
Custom Authorities had seized some vehicles belonging to the
Respondent on the suspicion of carrying on smuggling and other
economic offences under the then Customs Act.
 When the respondent filed a plea against such seizure in the Revenue
Tribunal, the Tribunal directed the Custom Authorities to return the
vehicle.
When the respondent asked the Custom Authority to return the
vehicles, he was told that the vehicles were disposed of under an order
of a Magistrate passed under Section 523 (now Section 457) of the Code
of Criminal Procedure.
CONTINUATION..!
The respondent now files the present suit seeking the value of the vehicles
from the State Government.
Evidence on trial indicated the following:
That the seized vehicles were kept in an open space in a police station and
were totally uncared from 1947 to 1951; Greater part of the machinery of the
vehicles and tyre’s were taken away by thieves; No entry was ever made in
the Police Station as to how these vehicles came into their possession; An in-
charge of the police station informed his superiors that the unclaimed
vehicles were lying in the open; These superiors then made an application
(ironically, mentioning the name of the respondent) to the Magistrate to
dispose off these vehicles as they were unclaimed property; Magistrate never
issued a notice to the respondent, but only issued a public notice regarding
the unclaimed vehicles; The vehicles were sold while an appeal against such
seizure was going on in the Tribunal;
CONTINUATION..!
Issue:
Whether or not the concept of ‘Bailment’ exist even without a
valid contract?
Decision:
The court held in favor of the respondent.
Rationale:
Bailment is dealt with by the Contract Act only in cases where it
arises from a contract, but it is not correct to say that there cannot
be a bailment without an enforceable contract.
CONTINUATION..!
There can be bailment and the relationship of a bailor and a bailee in respect of
specific property without there being an enforceable contract.
The Court also stated that the State Government was aware that if the said order
was set aside, the property would have to be returned to the owner thereof in the
same state in which it was seized except as to normal depreciation. In spite of this
clear position, while the appeal was still pending before the Revenue Tribunal and
without waiting for its disposal, it allowed its police authorities to have it disposed
of as unclaimed property. The State Government was fully aware, firstly, by
reason of the pendency of the appeal and secondly because the application under
Section 523 expressly mentioned the person from whom the said vehicles were
seized, that the vehicles were and could not be said to be unclaimed property.
 In the circumstances, the State Government was during the pendency of the
appeal under a statutory duty to take reasonable care of the said vehicles which
on the said appeal being decided against it were liable to be returned to their
owner.
CONTINUATION ..!
With respect to the Magistrate order, the Court held that given
that it was obtained by misrepresenting facts, it had no effect in
this case
CASE II
Kaliaperumal Pillai v. Visalakshmi Achi AIR 1938 Mad 32
Facts:
Plaintiff wanted to get jewelry made from certain goldsmiths which
were working out in Defendant’s house.
The Plaintiff handed over two old jewels for the purpose of being
melted into gold and being utilized for the making of new jewels.
The work on the making of new jewels started and the Plaintiff made
it a ritual to go to the Defendant's house to receive the half made
jewels from the goldsmith, put them into a box which the Defendant
had given her for her use and put the box in a room in the Defendant’s
house. The key of this room was at all times kept with the Plaintiff.
CONTINUATION..!
One fine day when the Plaintiff opened the box in which the
jewelry was kept, she couldn’t find the jewelry.
Therefore, the Plaintiff is now suing the Defendant arguing that
the Defendant was the bailee of the ornaments and that it was his
duty to return back the goods.
The Defendant argues that “delivery” of goods under Section 148
never took place.
CONTINUATION..!
One fine day when the Plaintiff opened the box in which the jewelry was
kept, she couldn’t find the jewelry.
Therefore, the Plaintiff is now suing the Defendant arguing that the
Defendant was the bailee of the ornaments and that it was his duty to return
back the goods.
The Defendant argues that “delivery” of goods under Section 148 never took
place.
ISSUE
Whether or not “delivery” of goods took place under the given
circumstances?
CONTINUATION..!
Decision:
The Court held in favor of the Defendant.

Rationale:
The Court stated, “Every day when the unfinished jewels were
handed back by the goldsmith to the Plaintiff, the jewels came back
to her possession and if at the later stages she desires to throw
upon the Defendant the onus of exonerating himself from the
obligations of a bailee, she must prove some acts whereby the
articles could be held to have gone into the Defendant’s
possession.”
CASE III
R.D. Saxena v. Balram Prasad Sharma (2000) 7 SCC 264
Facts:
The Appellant was an Advocate who was retained by the MP State
Cooperative Bank as a legal advisor.
One fine day, the Bank terminated the retainership of the
Advocate and asked him to return its case files.
The Advocate did not do so and instead presented a consolidated
bill to the Bank seeking Rs. 97,100 as the balance owing to him for
legal services rendered. He also informed the Bank that he would
return the files only after his dues were settled.
CONTINUATION..!
The Bank denied that any amount in respect of fees was owed to the
Advocate.
After fruitless correspondence, the Bank filed a complaint before the State
Bar Council accusing the Advocate of professional misconduct.
The matter then went up to the Bar Council of India under the Advocates
Act. The Bar Council of India held an inquiry and concluded that the
Advocate was guilty of professional misconduct; as punishment, the
Advocate was debarred from practicing law for a period of 18 months and
fined Rs. 1000.
The matter is now in the Supreme Court and the main argument of the
Advocate is that he had a “lien” over the case files (the alleged goods in this
case), so much so that he could retain them until the Bank paid his dues.
The Bank of course denies any such right with the Advocate.
CONTINUATION..!
ISSUE
Whether or not an Advocate has a ‘lien’ over case files / records
handed over to him by a client, so much so that he can retain them
until his dues are fully paid?
CONTINUATION..!
ISSUE
Whether or not an Advocate has a ‘lien’ over case files / records handed over to him
by a client, so much so that he can retain them until his dues are fully paid?
Decision:
 The Court answered this question in the negative.
Rationale:
Files containing records cannot be equated with the “goods” referred to in Section
171 of the Contract Act. The word “goods” mentioned in Section 171 is to be
understood in the sense in which that word is defined in the Sale of Goods Act. Thus
understood, “goods” to fall within the purview of Section 171 of the Contract Act
should have marketability and the person to whom they are bailed should be in a
position to dispose off them in consideration of money. Given that there is no scope
for converting the case files into money, nor can they be sold to any third party, they
are not “goods” under Section 171 of the ICA.
CONTINUATION..!
The Court also laid emphasis on the following points:
1. The Bar Council of India Rules (framed under the Advocates Act)
prohibit an Advocate to not do anything whereby he abuses or
takes advantage of the confidence reposed in him by his client.
2. In the conditions prevailing in India with lots of illiterate people
among the litigant public, it may not be advisable to permit the
counsel to retain the case bundle for his fees.
3. The cause of the litigant in a court / tribunal is far more
important for all concerned than the right of the legal practitioner
for his remuneration in respect of the services provided.
CONTINUATION..!
4. If a medical practitioner is allowed a legal right to withhold the
papers relating to the treatment of his patient which he thus far
administered to him for securing the unpaid bill, that would lead to
dangerous consequences for the uncured patient who is wanting to
change his doctor.
5. If a client does not want to continue engaging a particular
Advocate, it would be a professional requirement consistent with
the dignity of the profession that he should return the brief to the
client. The obligation is not only a legal duty, but a moral
imperative.
THANK YOU - Prof Chetna