CHANAKYA NATIONAL LAW

UNIVERSITY

PROJECT WORK ON

FINDER OF LOST GOODS

SUBMITTED TO SUBMITTED BY:

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 DECLARATION BY THE CANDIDATE

I hereby declare that the work reported in the B.A. LL.B (Hons.) Project Report entitled
“FINDER OF LOST GOODS” submitted at Chanakya National Law University,
Patna is an authentic record of my work carried out under the supervision of MISS SUSHMITA
I have not submitted this work elsewhere for any other degree or diploma. I am fully responsible
for the contents of my Project Report.

(Signature of the Candidate)

Chanakya National Law University, Patna

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 ACKNOWLEDGEMENT

“IF YOU WANT TO WALK FAST GO ALONE

IF YOU WANT TO WALK FAR GO TOGETHER ”

A project is a joint endeavor which is to be accomplished with utmost compassion, diligence and
with support of all. Gratitude is a noble response of one’s soul to kindness or help generously
rendered by another and its acknowledgement is the duty and joyance. I am overwhelmed in all
humbleness and gratefulness to acknowledge from the bottom of my heart to all those who have
helped me to put these ideas, well above the level of simplicity and into something concrete
effectively and moreover on time.

This project would not have been completed without combined effort of my revered teachers
MISS SUSMITA whose support and guidance was the driving force to successfully complete this
project. I express my heartfelt gratitude to him .Thanks are also due to my parents, family ,
siblings , my dear friends and all those who helped me in this project in any way . Last but not
the least, I would like to express my sincere gratitude to our teachers for providing us with such
a golden opportunity to showcase our talents .. It gave me a special insight. It was truly an
endeavour which enabled me to embark on a journey which redefined my intelligentsia induced
my mind to discover the intricacies involved in justice delivery mechanism.

Moreover, thanks to all those who helped me in any way be it words , presence
Or blessings .

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 CONTENT PAGE

SERIAL NO. NAME OF CHAPTER PAGE NO.

REVIEW OF LITERATURE 5
2.

3. RESEARCH 6
METHODOLOGY
4. CHAPTERISATION: 7to 15
1. INTRODUCTION
2. Position of finder of goods
3. Rights of finder of goods
4. Responsibilities of finder
of goods

5. Liability of finder goods

6. Conclusion
BIBLIOGRAPHY 16

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a) AIMS AND OBJECTIVES :
The researcher intends to find out the following
 To understand position of finder of goods.
 To understand the responsibility of finder of goods.
 To know the wha are different duties of finder of goods..

b) HYPOTHESIS :

The researcher has formulated following hypothesis, the validity of which has been

Checked in the course of project :

i. Is section 168 and 169 allow the finder to retain the goods.
ii. There is no such liability on the finder of goods.

c) LIMITATIONS :
The presented research is confined to a time limit of one month and this research
contains only doctrinal works which are limited to library sources.

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 REVIEW OF LITERATURE

Researcher while doing research project deal with following issues , they are as follows :

Under Indian Contract Act, the position of the finder of the lost goods arises out of the quasi-
contractual situation but not under any contractual situation. The expression quasi-contract has
no relation or affinity with contract, rather implied by law. A finder of the lost goods is under
obligation to take care of the goods as a man of ordinary prudence .

Supreme court cited following passage from “HALSBURY LAW ENGLAND” as to the nature
of this right “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”.

Blount Vs. War office – A house Belonging to the plaintiff was requisitioned by the war office.
The plaintiff was allowed to store certain articles in a strong room in the house which he looked.
Of the troops stationed there, who kept under proper control, some broke into the room and stole
a quantity of silver plates. The war office was held Liable because there was voluntary bailment
of the goods to the defendant.

Cheshire v Bailey Collins MR said – The finder of goods is bound to bring reasonable care to the
execution of every part of duty accepted. He may perform that duty personally or by servant. He
is much responsible for the for all acts done by them within the scope.

Originally in English law “ liability in bailment was absolute. It was no excuse for the bailee to
say the damage or failure return was due no fault of his own; he was liable in any case”.

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 RESEARCH METHODOLOGY

The researcher will be using only doctrinal methods of research. The researcher will be using
library for doctrinal research. The sources are mentioned in the review of literature.

I. SOURCES OF DATA:

a) SECONDARY SOURCES :

 Books:

1. Law of torts, Dr. R.K. Bangia, Allahabad Law Agency , Faridabad.

2. Law of contract, Avtar Singh , Eastern book company

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Introduction:

The finder of the lost goods is a person who finds the goods of another person presumably not
knowing the true owner at that time. Now the question is what is lost and how it is lost? The
answer is the goods are lost when the owner has involuntarily parted with the possession of the
goods and that he is ignorant of its location. However owner intentionally places the goods
somewhere so that it can be found again in due course, but the owner subsequently forgets where
it was placed, it can be said the goods are lost. A person who finds the lost goods does not
acquire absolute ownership of the goods. Similarly, the goods when is in someone’s possession,
he cannot be considered as finder of the goods. The individual who acquires possession of lost
goods is the best owner and has superior rights on the goods over anyone except the true owner.
In this circumstance, the finder is only the apparent owner. The finder’s title on the goods may
be forfeited upon discovery of the true owner, whose title in it is unaffected by the fact that the
goods has been lost. A finder’s title is contingent upon the possible discovery of the true owner.
Therefore, the finder cannot transfer title to another person.

Quasi-contractual situation: Under Indian Contract Act, the position of the finder of the lost
goods arises out of the quasi-contractual situation but not under any contractual situation. The
expression quasi-contract has no relation or affinity with contract, rather implied by law. A
finder of the lost goods is under obligation to take care of the goods as a man of ordinary
prudence. Even this case, in fact, is not contract in true sense of the term, but they present certain
relations which resemble those created by contract. The rights and liabilities of the finder do not
arise out of contract, but the conditions create certain relations by which parties become bound.
A quasi- contract is not a consensual contract arising out of consensual relations to a transaction;
but something which the law brings into existence by a fiction irrespective of the agreement of
the parties. Since this is a quasi contract, the liability exists independent of the agreement and
rest upon the equity, justice and good conscience. It is because of this Lord Mansfield preferred

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to apply the principle that law must prevent “unjust enrichment” . In India the quasi-contract or
restitution has been held as third category of law not founded upon contract or tort1.

1. POSITION OF FINDER OF GOODS

A person, who find goods belonging to another and takes them into his custody, is subject to the
responsibility of taking due care of them and trying to find out the real owner of the goods. It is

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also to be remembered that the finder has a good title over the things found and that his right is
enforceable against all except the real owner.

According to section 71, a person who find goods belonging to another and takes them into his
custody, is subject to the same responsibility as a bailee. Since the position of the finder of the
goods is that of a bailee he is supposed to take the same amount of care with regard to the goods
as is expected of a bailee under section 151. He is also subject to all the duties of a bailee,
including a duty to return the goods after the true owner is found. If he refuses to return, he could
be made liable for conversion2.

2 .RIGHTS OF THE FINDER OF THE GOODS

The following are his right as envisaged by the sections 168 and 169 of the Indian Contract Act.
(i) He has right to retain possession of the goods so long as not claimed by the true owner, since
finder of lost goods is the best owner as against rest of the world except the true owner. (ii) He is

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http://www.legalservicesindia.com

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entitled to be compensated for the trouble and expenses voluntarily incurred by him in preserving
the goods and finding out the owner, but for such expenses he has no right to sue the owner for
compensation (Sec. 168). He has a particular lien upon those goods for payment of these
expenses, i. e.; he can refuse to return the goods until he is paid for the expenses and trouble. (iii)
He can sue for any rewards if offered by the owner for the return of the lost goods. The finder of
goods may retain the goods against the owner where the owner has offered a specific reward for
the return of goods lost, but it Law & Society Review 37 (June): 369–423. | State of West Bengal
v. B.K. Mondal, A.I.R. 1962, SC. | Moses v. Macferlan, (1760) 2 Burr. 1005. | Mulchand v. State
of Madhya Pradesh, A.I.R. 1968, SC, 1218. | Hollins v. Fowler, L. R. 7 H. L. 757. | Explanation
(2), Section 403, Indian Penal Code. | must within his contemplation of offering the reward by
the owner. The finder may sue for such reward, and may retain the goods until he receives it. (iv)
If the goods found are commonly a subject-matter of sale, and if the owner cannot with
reasonable diligence be found, or if he refuses, on demand, pay the lawful charges of the finder,
he may sell them when; (a) they are in danger of perishing or of losing the greater part of their
value, or (b) when the lawful charges of the finder amount to two-thirds of their value (Sec. 169).

AS we know the rights of finder of goods is subject to the same responsibility as a bailee.

A finder of goods is a bailee thereof and as such bound by the duty of reasonable care 3. He does
not have the 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. Early English cases disallowed not only
any compensation, but also right to lien for expenses.

Section 168 and 169 however, protect the interest of a finder in two ways. Section 168 allows the
finder to retain the goods against the owner until he receives compensation for trouble and
expense. Further, where the owner has offered a specific reward for the return of the goods lost,
the finder may sue for such reward, and may retain the goods until he receives it.

Section 169 allows the finder to sell the goods in certain circumstances. +here the thing found
iscommonly the subject of sale and if the owner cannot be found with reasonable diligence, or if
he refuses to pay the lawful charges of the finder the finder may sell the goods in the following
cases:

3
snack v.clark(1615)2buster306.

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•When the thing is in the danger of perishing or of losing greater part of its value, or

•When the lawful charges of the finder in respect of the thing found, amount to two-third of its
value.

Rights of the finder of goods are discussed below-

1. Right to compensation - 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. If the bailor has no right to bail the goods or to
receive them back or to give directions respecting them and consequently the bailee is exposed to
some loss, the bailor is responsible for the same. Taken from the section 164 of the Indian
contract act.

2. Right to expenses or remuneration- 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 bailor4 , and the
bailee is to receive no remuneration, the bailor shall repay to the bailee the necessary expenses
incurred by him for the purpose of the bailment. " bailee is entitled to recover his agreed
charges. But where there is no such agreement at all, section 158 comes into play. The section
says that where the bailee is required by the terms of bailment to reep or carry the goods or to do
some work upon them for the benefit of the bailor and the contract provides for noreward, the
bailee has a right to ask the bailor for payment of necessary expense incurred by him for the
purpose of the bailment. The American law is also the same. where the bailment is gratuitous and
the bailee is in no way benefited, the bailor has to bear the expenses, if any, of the bailee for the
keeping the chattel. It is akin to the lien of a warehouseman for claiming charges for the
preservation of the goods5. where the bailment is for the benefit of the bailee, there, in reference
to expenses, the following two propositions apply:

If in using the thing, the borrower is put to any expense, this must be borne by himself. Thus for
example, if a horse is lent to a friend for a journey, he must bear expenses of his food during that
journey, and to getting him shod, if he should chance to require it , for it is a burden which is
naturally attendant upon the use of horse.

4
The person who delivers the goods is called bailor and the person to whom delivered is called bailee.
5
Willing to the contract, the law of contact in india, 2266(vol. 3)

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“the borrower is compellable to bear the ordinary expenses; for the loan being for his benefit he
must be presumed to engage to bear the burden as an incident to the use6.

3. Right of lien - If the bailee’s lawful charges are not paid he may retain the goods. The right
to retain any property until the charges due in respect of the property are paid is called the right
of lien. The Supreme court7 cited the following example fro HALSBBURY’S LAW OF
ENGLAND as to the nature of this right. “Lien is in its primary sense a right in one man to retain
that which is in his possession are satisfied. In this primary sense it is given by law and not by

contract”. Liens are of two Kinds namely:

1.Paticular Lien and

2. Genral Lien

4. Rights to sue - If a third person wrongfully deprives the bailee of the use or possession of the
goods bailed, or does them any injury, the bailee is entitled to use such remedies as the owner
might have used in the li#e case if no bailment had been made; and either the bailor or the bailee
may bring a suit against a third person for such depravation or injury. Section 180 enables a
bailee to sue any person who has wrongfully deprived him of the use or possession of the goods
bailed or has done them any injury8.

3. RESPONBILITIES OF FINDER OF GOODS

Responsibility of a finder of lost goods has been laid down by section 71 of the Contract Act,
1872 which states that “a person who finds goods belonging to another and takes them into his
custody, is subject to the same responsibility as bailee.” A finder of the goods is subject to the
same responsibilities and liabilities as those of the bailee’s of goods. He has to take the same
degree of care and caution in respect of the goods found as the bailee has in respect of the goods

6
Story on bailment Ss 256 and 273
7
Syndicate bank v. vijay kumar, (1992) 2 SSC 330 : AIR 1992 SC 1006,1068
8
Karnatka electricity board V. Halappa, (1987)

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bailed to him. The person who finds goods belonging to another is entitled to retain the goods
against the owner until he gets compensation from him. He has the right of lien against the goods
for the expenses which he incurred in preserving the goods in the safe custody, but this does not
give him the right to sue the finder for the trouble and expenses incurred by him. He can sue the
owner for the reward where a specific reward has been offered. The finder of the goods is
entitled to its possession as against everyone except the real owner.5 Thus, for instance, X picked
up a diamond on the floor of Y’s shop and handed it to Y to keep it tm the owner, appeared. In
Spite of wide advertisements in the newspapers, no one appeared to claim it. After sometime X
tendered to Y the expenses of advertisement and indemnity bond and requested him to return the
diamond; but Y refused to do so. Y was held liable for damages; and X was held entitled to get
the possession and to retain the good as against everyone except the true owner. If a finder
dishonestly appropriates to his own use when he knows the owner or has the means of
discovering the true owner, he is guilty of criminal misappropriation of property.6 But when he
takes the property for the purpose of protecting it, or restoring it to the owner, he is not guilty of
any offence. Furthermore, a person who, on finding lost goods, takes charge of the good is called
the finder of the lost goods, and his position is that of bailee of goods (Sec. 171 of the Contract
Act, 1872). The finder is under an obligation, to take care of the goods as a man of ordinary
prudence would take, under similar circumstances, of his own goods. Secondly, he is bound to
return the goods to the true owner. These are the quasi contractual obligations of a finder of
goods9.

1. To take care of goods entrusted: The first and most important duty of a bailee is to take care
of the goods entrusted to him. The question as to the standard of care expected of a bailee or the
degree of negligence , which should made him responsible, has been much debated. Roman law
recognized three degrees of diligence (or of negligence) viz., high degree of diligence, ordinary
and slight diligence. Common or ordinary diligence is that degree of diligence, which men in
general, exert in respect of their own concerns. In the words of Sir William jones, it is the care
which a person of common prudence and capable of governing of family, takes of his own
concerns. high or great diligence, of course, extraordinary diligence or that which very prudent
persons take of their own concerns and slight diligence is that which persons of less than

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common prudence take in their own concerns. In civil law, ordinary . Wslight diligence
levissima diligentia. Donversely there are three degrees of negligence, lata culpa, gross fault or
negligence, levis culpa,ordinary fault or negliugence and levissima culpa, slight fault or
negligence.

2. Duty not to mix with own goods- another obligation of the bailee is to keep the goods of the
bailor separate from his own. but where the goods of the bailor and bailee become mixed such
mixing may be with the consent of the bailor, or it may be the result of accident, mistake or
inadvertence, or lastly, it may be willful or intentional. The law then seems to be that in cases of
intermixture, if the goods are easily distinguishable and can be separated, each party may claim
proportionate share. but, if the mixture is indistinguishable, he who occasions the wrongful
mixture, must bear the whole loss10.

where however, a bailee, by accident or inadvertence, mixes the chattels confined to him by the
bailor with his own, or where the accidental intermixture results from an act of God or of an
unauthorized third party, the mixture if it is composed of substances similar in kind and quality,
belongs to the bailor and bailee as tenants in common in proportion as each contributed to the
combination, any cost incidental to its separation into shares being borne by the bailee11.

3. Do not make any unauthorized use: The bailee is under a duty not to use the goods in any
unauthorized way.The bailee therefore, precluded from using the chattel bailed, for his own
personal advantage in any manner whatsoever, without, the consent of the bailor, express or
implied, unless such use in needful for its preservation. "part from such necessary use, if the
bailee applied the chattel to any purpose other than that of bare custody he becomes responsible
for any loss or damage resulting from his breach of good faith,12except where the cause of the
loss or damage is independent of his acts andis inherent in the chattel itself. Further, where the
bailee acts in a manner inconsistent with the conditions of the bailment, the bailor gets a right to
terminate the bailment as the possessory title reverts to the bailor and entitles him to maintain an
action of trove13.

10
Spence v unioin marine insurance co.ltd, (1869) 3 cpc 427
11
Lupton v White ( 1808) ER817:10 RR: 101
12
(CF.)RE. Tidd v Ovrell (1893) 3.ch 154
13
Morrison v. Shaw (1916) 2 KB 783.

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4. Duty not to set up Adverse Title - As a rule, the bailee is estopped from denying the bailors
title or setting up against the bailor his own title or the right of a third party. 7ut the estoppel
ceases on actual eviction by title paramount14.mere knowledge of the third party’s title or an
adverse claim on the jus tertii. $e must however inform the bailor of the third party’s claim15.

5. Duty to return the goods - a furher duty arises on the part of the bailee that he must return the
goods, on the expiry of the time fixed or when the purpose is accomplished. If he does not, he
becomes liable for damages occasioned by loss of use during the period for which it is detained.
$e is also responsible as an insurer, that is becomes absolutely liable even without any
negligence on his part if the chattel is lost or destroyed, while it is so detained. "part from an
action for damages against the bailee for non-return of the goods, in case the bailee sells the
goods bailed the bailor can follow the proceeds wherever they can be distinguished either by
being actually kept separate or being mingled with bailees other funds16.in keeping with the
provisions of Section. 151 and 152, a bailee is excused from returning the subject matter of the
bailment to the bailor where it has been taken away from him by authority of law e%ercised
through regular and valid proceedings. where the goods are lost without negligence the bailee
need not return them or be responsible for the loss.

Blount Vs. War office – A house Belonging to the plaintiff was requisitioned by the war office.
The plaintiff was allowed to store certain articles in a strong room in the house which he looked.
Of the troops stationed there, who kept under proper control, some broke into the room and stole
a quantity of silver plates. The war office was held Liable because there was voluntary bailment
of the goods to the defendant17

4. LIABILITY OF FINDER OF GOODS

A little is known about the liabilities of the finder of goods which are as follow.

1.To try and find out the true owner - It is the duty of the finder of the goods to make possible
effort in order to find out the real owner of the goods. He may retain such goods until he finds
true owner by advertisement in case of costly thing.
14
Biddle v. Bond (1865) 122 ER. 1470(CF.)
15
Ramson v. Plat (1911) 2KB 291
16
Re hallet”s estate (1879)
17
Blount V war office (1907 )23 TLR

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2. To take due care of the goods. Such a finder is entitled to the possession of such goods against
all the world except the true owner18 - The finder is bound to take as much care of the goods lost
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 lost.

3.Such a finder is entitled to a lien, retain the goods even against the true owner until he is paid
by the owner, compensation. For the custody, care and preservation, although he is not entitled
to sue for such compensation.

4. Returning of goods:- It is the duty of finder to return the lost goods to real owner when he
receives reasonable compensation for his services he has rendered in respect of them.
In English law once a finder accepts responsibility for the goods his liability is that of a
gratitutious bailee19.

5. CONCLUSION

Finder of goods is a part of quasi contract or certain relation resembling to those created by a
contract. Here it would be worth nothing that finder of goods has the same criteria of
responsibilities and duties towards the innocent parties as given to the bailee. This is something
which is mentioned in the Indian Contract Act, 1872 under section 71.

18
Hollins v Folwer. LR 7 HL 757.
19
Neman v. Bourne (1951) 31 TLR 209

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From the above analysis, it implies that the legal position of the finder of the lost goods under the
Contract Act is as like as the position of bailee even though the contract of bailment arises upon
a contract for some purpose but not the finder of the lost goods. In literal sense, his position is
mere a custodian of the goods. Neither he can dishonestly appropriate to his own use, nor can he
transfer it to any one for his personal gain. He is bound by the law to take appropriate care of the
goods until the true owner is found.

BIBLIOGRAPHY

 BOOKS
Singh Avtar , Law of contract , eleventh edition , Eastern book publication

Bangia R.k , Law of contract , sixth edition , Allahabad Law Agency

 Websites

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