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5. S.124 Dugdale v Lovering- when an act has been done by the plaintiff under the
express directions of the defendant which occasions and injury to the rights of third persons, yet if
such an act is not apparently illegal in itself, but is done honestly and bona fide in compliance with
the defendants directions, he shall be bound to indemnify the plaintiff against the consequences
thereof. (basically implied contract of indemnity).
of the guarantee is defeated if the creditor is asked to postpone his remedies against
the surety. A creditor is not bound to exhaust his remedy against the principal debtor before
suing the surety and that when a decree is obtained against a surety, it may be enforced in the
same manner as a decree for any other debt.
15.
S.128; 140- State Bank Of India v. Indexport Registered And Ors.- (same as
previous case) A surety's liability to pay the debt is not removed by reason of the
creditor's ommission to sue the principal debtor. The creditor is not bound to exhaust
his remedy against the principal before suing the surety, and a suit may be
maintained against the surety though the principal has not been sued.
16.
S. 128 - Charan Singh v Messrs Security Finance Pvt. Ltd. and
Others (Co-extensive Liability)
17.
S.131- Durga Priya Chowdhury v. Durga Pada Roy- The death of the surety will
result as a revocation of a continuing guarantee so far as regards to future transactions unless
there is a contract to the contrary.
18.
S. 128 - Syndicate Bank v Channaveerappa Beleri and Others
(Co-extensive Liability)
19.
S. 129 - Radha Kanta Pal v United Bank Of India Ltd.
(Guarantee)
20.
S. 129 - Aziz Ahmad v Sher Ali and Others (Continuing
Liability)
21.
S. 129 - Margaret Lalita Samuel v Indo Commercial Bank
Limited (Continuing Liability)- Contention that each of the entries on the debit
list is a separate guarantee is wrong. In continuing guarantee, if the account is live and
the guarantor does not refuses his obligation then limitation period will not
commence. It commences only from the date of the breach.
22.
S. 132(Namburi) Venkata Kristnayya v. Karnedan Kothari- Evidence Law in
India Codified. A person(A) who executes a joint and several promissory note with another
person(B) in favour of someone(C) will not be allowed to claim later that he made that
promise in capacity of a guarantor, even if it was known to the person in whose favour it was
made (C). (for more clarity see the illustration of S. 132)
23.
S. 129 - M. S. Anirudhan v The Thomco'S Bank Ltd
24.
S. 129 - H.B. Basavaraj v Canara Bank- In the absence of a specific
written document by basavraj revoking the guarantee, the guarantee stands.
25.
S. 129 - Craythorne v Swinburne (Guarantee)- Doctrine of
Principal & surety rests on Equity not contract(also arises out of
natural justice). In equity, if a party has agreed to be co-surety then
he will be liable equally as the other person. In this case, however,
Defendant was collateral security not co-surety and is exempt from
principles of equity. Also, others were not privy to the contract
between lenders and Swinburne.
26.
S. 140,141 - State of Madhya Pradesh v Kaluram- If the
creditor looses or parts with the security deposited by the debtor
then the surety is discharged to the extent of the price of that
security(exact S.141). In this case, M.P. govt failed to stop the
debtor from removing the security when they had the right to do so
which led to the discharge of surety.
27.
Hamilton v Watson- House of Lords concluded that if it was necessary for a
banker to disclose everything that is material for a surety to know, no banker could ever
be satisfied that they had proper security. Disclosure ought to be made voluntarily where
there is anything that might not naturally be expected to take place between the parties,
but the lender is not obliged to disclose other matters which might be material for the
guarantor to know. A guarantee is not like an insurance contract which is uberrimae fidei,
where the insured is required to disclose all material facts to the risk.
28.
29.
2 joint and several promisors to undertake a certain liability with a third person (first) and also
contract with each other (second) that one of them shall be liable at the default of another,
third person not being a party even if the existence of contract is known to the 3 rd person, it
will not affect the liability of those 2 persons under the original contract(first).
30.
T. Raju Setty v. Bank of Baroda- To avail a certain benefit(in a commercial
transaction), it is available to the parties to waive off their rights given to them by
S.132,133,135,139,141 of the act. Although the phrase unless otherwise provided by the
contract is absent in these sections, it is present in S.128 and since they all come under
Chap.VIII and relate to the same thing they have to be read together. Moreover, if a final
decree is passed relieving the P.D. of his liability then the Creditor cannot claim the money
from the surety because they were all liable for one claim and sued jointly and severally. Now
there cannot be two conflicting decrees regarding the same matter. Ergo, relief is one and
common to all.
31.
Rees v. Berrington- S.135- (Obligee in a bond with a surety without
communication with the surety takes notes from the principal, and gives farther time:
the surety is discharged.)( there shall be no transaction with the principal debtor,
without acquainting the person, who has a great interest in it. The surety only
engages to make good the deficiency. It is the clearest and most evident equity not to
carry on any transaction without the privity of him, who must necessarily have a
concern in every transaction with the principal debtor. You cannot keep him bound,
and transact his affairs (for they are as much his as your own) without consulting
him. You must let him judge, whether he will give that indulgence contrary to the
nature of his engagement.)
32.
creditor's act is inconsistent with the rights of the surety or it the creditor fails to do
any act which is his duty towards the surety to do, then that also gives rise to
discharge of the surety. In our view, this is the effect of reading Sections 128, 133 and
139 in combination.
Raja Bahadur v. Raja P. Parasarthy- S.135- Although S.135 does not apply to a surety bond executed in
favour of the court, there can be no doubt that equitable rule underlying that section applies to it.
Reason is that surety must be able at any time either to require the creditor to call upon the principal
debtor to pay off his debt or himself to pay the debt and seek his remedy against principal debtor. The
question as to whether the liability of the surety is discharged by a compromise in the judicial
proceeding in which the surety bond is executed must depend on the terms of the bond itself. If the
terms indicate that the surety undertook the liability on the basis that the dispute should be decided
on the merits by the court and not amicably settled, the compromise will effect a discharge of the
surety.
33.
S. 141 - Amrit Lal Goverdhan Lalan v State Bank of Travancore
& Others
34. S. 141 - State Bank of Saurashtra v Chitranjan Rangnath Raja and
Another- In order to attract section 141 of the Contract Act, it must be shown that
the creditor had taken more than one security from the principal debtor at the time
when the contract of guarantee was entered into and irrespective of the fact whether
the surety knew of such other security offered by the principal debtor, if the creditor
loses or without the consent of the surety parts with the other security the surety
would be discharged to the extent of the value of the security
35.
Barclays Bank v Obrien-(read Brief) Court of appeal
enunciated two lines of authority. Preferred the Special Equity theory
which says if there is a special relationship between the PD & surety
then special protection will be given to the surety. Further, it ruled
that if the consent was obtained through Ui then the surety will be
discharged. (read brief quickly-specially principle)
36.
Sripatrao v Shankarrao-S.145- the measure of the liability of the
indemnifier is not the capacity of the idemnified to pay, but his liability to pay. it is
not necessary that, before a suit on an indemnity bond can be filed, the plaintiff
should have already been compelled to make the payment in respect of which he is
seeking to be indemnified. It is sufficient that a decree has been passed against him
for such payment. Section 145 of the Indian Contract Act does not in my judge merit
debar a surety from making a claim against the principal debtor in cases where he has
not made the payment under the guarantee but has become liable only in pcresenti to
do so. In the absence of such provision in the act, the court would be at liberty to
apply the principles of English cases.
37.
S. 148 - Trustees of the Port of Bombay v Premier Automobiles
Limited (Bailment) High Court- Facts Appl servansts and employees
dropped a machinery which was to be delivered to the respondents and
thus respondents had claim damages owing to the negligent conduct of
the employees of the Appelant which were granted pursuant to s61B of
the Bonbay Docks Act.-High court said that there can be two claims
torioaus and statutory- they can take statutory claim and thus the state
will be liable under 61B- HC said 87 (2) exoneratwes the state from any
liability and the defendants are thus liable to pay . also held that 87 is
not relevant to s.61(b).
38.
S. 148 - Trustees of the Port of Bombay v Premier Automobiles
Limited (Bailment) Supreme Court- The appelants and appealed in
front of the SC- SC REVERSING the decision said that said there has to
be an harmonious reading of both these sections and one cannot just
pick and choose which section to apply- they addressed the argument
of the defendants that this way can never make the employer liableSC countered by saying that only those cannot be held liable whose
acts are covered under a statute and the statute expressly exonerates
them as in this case was done. - It was a specific case where statute
interfered.
39.
S. 148 - State of Maharashtra, Bombay and Others v Britannia
Biscuits Company Limited and Others (Bailment)- Respondent sold
biscuits in tin cans. The price was only for the biscuit. For the cans
they took a refundable deposit with the condiiton that if the tins were
returned in good condition within 3 months, the deposit would be
refunded. For tax purposes, the resp wrote off 50% of the non returned
and rest 20% as profit. The Govt. claimed that the tins not returned
amounts to sale.Question was whether the trasacation was a sale or a
bailment. HELD- hat there was no obligation on the part of the
customers to return the tin cans. To construe whether it was a sale or a
bailment, the precise terms of the contract bw seller and buyer is to be
looked at,. There was no obligation to return and hence the basic
feature of bailment not fulfilled. Held, it was sale.
40.
S. 148 - Messrs Kalyani Breweries Limited v State of West
Bengal and Others (Bailment)- Case where facts are similar to the UB
in terms of selling the bottles and crates of beer- However in their case
the judgement was found AGAINST Kalyani and they were held liable to
pay sales tax for the value of the bottles as in their scheme the
securities taken for the bottle was equivalent to the value of the bottle.
HELD- thus it was held that considering the facts and circumstances of
the case the intention of parties appears as that Kalyani was in a away
selling the bottles and whether they came back or not wasnt of much
concern to them. There was further no provision as to how the
customers were informed about the policy ansd scheme of refund. And
further out of 30 lacs only 11 lacs were returned. No time was
mentioned for the return and thus for the court it was difficult to assess
a claim of bailment where the terms of the bailment were not conveyed
to the bailees.
41.
S. 148 - State of Bombay v Memon Mahomed Haji Hasam
(Bailment)- Respondents goods (trucks) were seized by the Appelants
on charge of smuggling- later through judicial determination the
respondent was cleared of charge but the government had already sold
the goods- and had given the proceeds to the creditor of the
respondent- Respondent sued for wrongful conversion. Held-That
bailment as a concept is not only about contractual claims- there may
be a liability in a tortuous way, Further as in a case a finder is also
treated as a bailee- in the present case there was an expectation of the
government to return the goods in case the charge being disposed.
Hence the government held liable.
42.
S. 148 - K. L. Johar and Company v Deputy Commercial Tax
Officer (Bailment)- This is a case to decided if hire purchase
agreement would come under sale. The Appellants were financing
company. Bought cars from dealers and then sold it to buyers as hire
purchase agreement. income tax dept wanted to levy tax on the
sale.App contended that hire purchase is only bailment thereofore no
tax ought to be levied. WRITTEN BAILMENT CONTRACT HERE. HELDthere are two sales taking place. one by dealer to app and another by
app to the customers. Held both the transactions can be taxed.
Regarding where payments made in installments court said hire
purchase has bailment as well as sale. In hire purchase agreement the
tax would apply when all the conditions are met with and the buyer
wants to buy the car. Tax should be charged on price lesser thanthe
actual price of goods.[depreciation included].
43.
S. 148 - United Breweries Limited v State of Andhra Pradesh
(Bailment)- UB started a scheme under which it collected the
deposit for the bottles and crates other than collecting the price of
beer. The customers will sell the bottles to the consumers and apart
from beer price they will collect a deposit of 40paisa per bottle to
ensure return of bottles. After returning the bottles, the deposit will
be refunded. He tax officers wanted to tax the companys scheme
and hence suit. SC held- intention of the parties is crucial in
determining this- UB was very anxious to get the bottles back and
clearly had communicated the scheme to the customers- Supreme
Court though this was a genuine scheme- clearly communicated- value
of bottles was not than the security- UB won as there was a clear
intention to pay- They sent trucks around to collect- Clear intention to
sell. 40p collected for bottles from consumers is very low compared to
the vales of the bottle.
44.
S. 148 - Hyman v Nye & Sons (Bailment)
45.
S. 148 Coggs v Bernard (Bailment)- (Bernard undertook to
carry several barrels of brandy belonging to Coggs. Undertaking was
gratuitous(ie no consideration or compensation). While unloading
the brandy, a barrel was staved and 150 gallons were lost. Hence
Coggs sued) (if a person undertakes specially to protect the goods
against all perils then he is obliged to take care of them. Regarding
consideration it was said that bailors trust in bailee to take care of
goods is good consideration. And a negligence will amount to fraud
as that will go against the undertaking. Court also defined 6 types of
bailment.)(refer brief)
46.
S. 148 - The Pioneer Container, KH Enterprise v Pioneer
Container (Sub Bailment) Privy Council47.
S. 148 - Morris v C. W. Martin and Sons Ltd. (Sub Bailment) Court of Appeal- Plaintiff gave a mink stole to the furier for dry
cleaning or cleaning purpose- the furrier without cleaning it himself
passed it on to famous cleaners who are the defendants and this was
consented to by the plaintiff. While in custody of the defendants the fur
got stolen by one of their employee. Plaintiff thus sued the for
damages and depriving them of the cases. HELD- by Denning that the
defendants are indeed liable for the acts of their servants vicariously
and where the sub bailment is for reward the owner has a right to sue
the sub bailee directly since both the owner and the baliee act in the
capacity of the bailor even in absence of privity of contract. baiment as
discussed is sui generis and independent of principles of contract.- That
there was a duty of care owed and they were negligent in employing
the person. Also the exemption clause was between the bailee and the
sub-bailee.
48.
Bombay Steam Navigation Co. ... Vs Vasudev Baburao KamatBailees Duty- Case where Vasudev sent iron nail casks to the shipping
company to be transported- Subsequently it wa found that the Iron
Cask were lost. Plaintiff alleged negligence of the company and sued
for loss. Company defends the suit by saying that they are not liable
under terms of contract which excluded liability by negligence. HELDThere is a further point as to whether in any event conditions of the nature relied on
in this bill of lading are legal having regard to Section 151 of the Indian Contract Act.
The plaintiff's argument is that the shipowner is a bailee under the bailment sections
of the Indian Contract Act, viz., 148 et seq,: and that under Section 151 he is bound to
take as much care of the goods bailed as a man of ordinary prudence would of his
own goods; and that there is no clause which permits him to contract himself out of
that minimum liability In this respect there is a marked contrast under Section 152.
But there it is expressly provided that in the absence of any special contract the bailee
is not liable for the loss if he has taken the amount of care described in Section 151. As
far as the Indian Carriers Act is conerned, that does not, I think, apply to carriage by
sea. I exclude of course inland navigatio ."In England it is competent to a shipowner
to protect himself, by express contract from liability for the negligence of himself or
his servants. This is also the law applicable in India". The company is protected.
49.
S. 151 - Lakshmi Narain Baijnath v Secretary of State for India
(Duty of Care of Bailee)- Bailees Duty Of Care- Boat in which the
goods were transferred was leaking(there were 20 leaks in the boat)the boat had to wait in transit due to a storm(bad weather) for 30
hours. The jute was kept in such a way that it got wet due to holes in
the boat - the jute mill refused to accept the jute and the bailor
suffered a loss- Bailor sued the bailee. the defendant did not take proper care
of the goods during transit, and that the consequences of the act of God would have
been avoided had proper care been taken. The defendant pleaded that there was no
other boat available.
50.
S. 160 Coastal Oil Mills, Ongole v Andhra Pradesh Industrial
Development Corporation, Vice-Chairman, Hyderabad and Others
(Rights of Third Party in Bailment)
51.
S. 170 - Messrs Kalloomal Tapeshwari Prasad and Company v
Messrs Rastriya Chemicals and Fertilizers Limited and Another (Lien)
52.
S. 170 - E. H. Parakh and Others v G. Mackenzie and Company
Limited (Lien)- Case where Parakh bought Car and accessories for the
firm. Firm was asked to pay for the accessories. They said you take
back the car , deduct the price of accessories and adjust the excess in
Mr. Parakhs name. Car sellers instituted a suit for recovery of price of
accessories against Parakh in Calcutta and Parakh instituted a suit for
recovery of excess price for car in Lucknow. The Court held that the
title of the car had passed to the defendants(the sellers) and Mr. Parakh
must hand over possession to them. He didnt, his contention was that
he was a bailee of the car and he had a right to lien until garage
charges since the car was transferred to the defs. was paid to him.
HELD- Bailment requires delivery of goods by bailor to bailee for a
specified purpose and the accomplishment of that purpose. There is
nothing like that here. No contract to that effect. Furtehr, he did not do
anything to improve the goodsby exercise of labor or skill but only
stored it. Hence no lien under S.170
53.
S. 171 - R. D. Saxena v Balram Prasad Sharma (General Lien)A was solicitor for B(bank). after B ended its contract with A, A
retained some files of B and claimed that his fees is due and he will
return the documents as soon as he is paid. B went to court. HELDS.171 does not apply here. Files containing copies of records cant
be equated with goods. In case of litigation papers with the
advocate there is neither delivery of goods nor any contract that
they shall be returned or otherwise disposed of. Therefore,
conditions of bailment are not satisfied. Here, goods are same as
defined under S.2(7) of SOGA. They must have marketability and
should be saleable. Files cant be converted into money. Hence
verdict entered for B. however, when there is an express contract
regarding retaining of files with the other party then he can retain it.
(check the last sentences credibility).
54. S. 171 - Board of Trustees of The Port of Bombay v Sriyanesh
Knitters (General Lien)- CUSTOMS OFFICE AND IMPORTERS HAD FIGHT RELATING
TO GOODS- MEANWHILE, GOODS LAY AT THE DOCK OF THE PORT- PORT LATER
CLAIMED RIGHT OF GENERAL LIEN AND ASKED IMPORTER TO PAY STORAGE CHARGES
Under 171, 5 categries of ppl mentioned don't need express contract to establish that
they are bailees, in order to enforce lien. As long as it is proven that they are those
categories (by fact), they have an automatic right of lien.
55.
S. 172 - 176 - Central Bank of India v Siriguppa Sugars and
Chemicals Limited and Others (Pledge)
56. Binstead v Buck (1776) 2 W B1 1117, where a finder of a dog could not claim from
the owner monies he has spent looking after it because the owner had never
agreed to bailment. It was held that no agency cannot arise if someone takes it
upon themselves to look after someone elses property; A contrasting decision to
the ruling in China Pacific SA v Food Corp. of India [1982] AC 939 where it was
held reasonable for someone to recover in such circumstances.
57.
S. 172 - 176 - Karnataka Pawnbrokers' Association and Others
v State of Karnataka and Others (Pledge)
58.
S. 172 - 176 - Lallan Prasad v Rahmat Ali and Another
(Pledge)- Appellants advanced 20,000 to the Resp and the respondant
agreed to pledge certain amount of aeorscaps as goods and agreed to
deliver them to appellant, under two separate agreements. There was
no repayment and appellants sued respondents on the promisory note,
stating that they had no special property over the pawn, as it had
never been delivered to them. HELD- The pledge was delivered to
them-discovered from facts. Reiteration of principle laid down in S. 176If the pawnor makes default in payment, pawnee may either sue him
and retain the pawn as collateral security or may sell the collateral
security and pay any excess to the pawnor.
59.
S. 178 - 178A - The Official Assignee of Madras v The
Mercantile Bank of India (Mercantile Agent)
60.
S. 178 - 178A - Morvi Mercantile Bank Limited and Another v
Union of India, Through The General Manager, Central Railway,
Bombay (Mercantile Agent)- A firm sent some goods by train. Later
the firm took loan from a Bank and endorsed Railway receipt as
pledge. Goods got lost and pledge sued the UOI.Q. Is transfer of
docs=transfer of goods. Majority=if mercantile agents are allowed
to transfer receipts amounting to goods underS.178, it will be
anomalous if owners of goods cant do the same-hence transfer of
docs=transfer of goods-under S.180 bailee and bailor are entitled to
same remedies, ergo full amount of goods can be recovered.
Dissent-Railway authority cant be held liable unless they agreed to
hold goods for owner-attornment(bailee must agree to hold goods
for bailor)must happen-S.178 is an exception, must be read
narrowly-cannot include owners.
61.
S. 182 - Loon Karan Sohan Lal v Firm John and Co. and Others
(Agency)-App purchased 120 bales yarn from John &co. S&c were
agents of John- app sues for non delivery-when money didnt come
he asked assam govt to reimburse him(under S.222 &223) as he
was their agent. HELD- cant recover from S&c as the app didnt
have any contract with them-contract was with John-there was no
privity-Agency cant be assumed simply on the basis of contractnased on conduct of parties and nature of relationship. Parties didnt
contemplate agency-app did everything in his own name. Dif betwn
licensee and agent is that in former work is done FOR plaintiff & in
latter work is of agent. This was license not agency.
62.
S. 182 - Lakshminarayan Ram Gopaland Son v The
Government Of Hyderabad (Agency)-Q was whether the appellant was an
agent or a servant as authorities wanted to tax him-Agent can be taxed if hes doing
his own business, but servant cant be taxed. Held-Diff between servant & agent(a)
servant is told what work and how to do, agent receives instructions but not
directions(b) servant doesnt have authority to enter into contracts on behalf of princi;
(c)servant gets wages; agents receives commission.
63.
S. 182 - Kuchwar Lime And Stone Co v MS. Dehri Rohtas Light
Railway (Agency)
64.
S. 185 - Mohd. Moinuddin v Mir Ahmed Ali (Agency)
65.
S. 186 - Harshad J. Shah and Another v L.I.C. of India and
Others
66.
S. 189 - Shanti Lal and Another v Tara Chand Madan Gopal
(Sub Agency)
67.
S. 190 - De Bussche v Alt (Sub Agency)
68.
S. 190 - 194 - Nensukhdas Shivnaraen v Birdichand Anraj (Sub
Agency)
69.
S. 196 - Bolton Partners v Lambert (Ratification of Agency)
70.
S. 196 - Keighley Maxsted & Co v Durant (t/a Bryan Durant &
Co) (Ratification of Agency)
71.
S. 201 - Monindra Lal Chatterjee v Hari Pada (Revocation of
Agency)
72.
S. 202 - Ishwarappa v Arunkumar (Irrevocable Agency)
73.
S. 205 - Boulton Brothers and Company Limited, (India) v New
Victoria Mills Company Limited, Cawnpore (Revocation of Agency)
74.
S. 205 - Drew v Nunn (Revocation of Agency)
75.
S. 212 - Pannalal Jankidas v Mohanlal and Another
76.
S. 213 - Narandas Morardas Gaziwala and Others v S. P. Am.
Papammal and Another
77.
S. 215 - Gopaldas v Thakurdas (Agent Lien)
78.
S. 230 - Patiram Banerjee v Kankinarra Company Limited and
Another (Undisclosed Principal)