CONTRACT OF BAILMENT AND STATUTORY

BAILMENT

FINAL DRAFT SUBMITTED IN PARTIAL FULFILMENT OF THE

COURSE CONTRACT LAW – II FOR THE REQUIRMENT OF THE
DEGREE B.B.A., LL. B. (HONS) DURING THE ACADEMIC SESSION
2019-20.

SUBMITTED BY: -
GAURAV DEEP RAJAN
ROLL NO: 2018
SEMESTER: 3rd

SUBMITTED TO: -
DR. VIJAY KR. VIMAL
(FACULTY OF LAW OF CONTRACT)

SEPTEMBER, 2019

CHANAKYA NATIONAL LAW UNIVERSITY

NAYAYA NAGAR, MITHAPUR, PATNA – 800001
 DECLARETION
I Hereby Declare That the Project Entitled “CONTARCT OF BAILMENT AND
STATUTORY BAILMENT Submitted by Me At “Chanakya National Law
University” Is A Record Of Bona Fide Project Work Carried Out by Me Under
the Guidance of Our Mentor DR. VIJAY KR. VIMAL. I Further Declare That
the Work Reported in This Project Has Not Been Submitted and Will Not Be
Submitted, Either in Part or In Full, For the Award of Any Other Degree or
Diploma in This University or In Any Other University.

GAURAV DEEP RAJAN

ROLL NO: 2018

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CONTRACT OF BAILMNET
 ACKNOWLEDGEMENT
It is a fact that any research work prepared, compiled or formulated in isolation
is inexplicable to an extent. This research work although prepared by me is a
culmination of effort of a lot of people who remained in veil, who gave their
intense support and helped me in the completion of the project.

Firstly I, am very grateful to my subject teacher “DR. VIJAY KR. VIMAL”

without the kind support and help to whom the completion of this project was a
herculean task for me. she donated her valuable time from his busy schedule to
help me to complete this project. I would like to thank her for her valuable
suggestion towards the making of this project.

I am highly indebted to my parents and friends for their kind co-operation and
encouragement which helped me in completion of this project. I am also thankful
to the library staff of my college which assisted me in acquiring the sources
necessary for the compilation of my project.

Finally, I would like to thank the almighty who kept me mentally strong and in
good health to concentrate on my project and to complete it in time.

I thank all of them!

(GAURAV DEEP RAJAN)

ROLL NO:2018

B.B.A., LLB (HONS)

SESSION :2018-2023

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 TABLE OF CONTENTS

DECLARETION ................................................................................................................... i

ACKNOWLEDGEMENT ...................................................................................................ii

TABLE OF CONTENTS ................................................................................................... iii

CHAPTER 1. INTRODUCTION ........................................................................................ 4

OBJECTIVES OF THE STUDY ........................................................................................ 5

RESEARCH QUESTIONS ................................................................................................. 5

RESEARCH METHODOLOGY ....................................................................................... 5

LIMITATIONS OF THE STUDY ...................................................................................... 5

CHAPTER 2. MEANING OF BAILMENT ...................................................................... 6

CHAPTER 3. DUTIES OF BAILOR ................................................................................. 9

CHAPTER 4. DUTIES OF BAILEE ............................................................................... 10

CHAPTER 5. RIGHTS OF BAILEE .............................................................................. 16

CHAPTER 6. STATUTORY BAILMENT ................................................................... 20

CHAPTER 7. CONCLUSION ......................................................................................... 22

BIBLIOGRAPHY .................................................................................................................. 23

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 1. INTRODUCTION

A bailment is a special contract defined under section 148 of the Indian Contract Act, 1872. It
is derived from a French word i.e. “bailer” which means “to deliver”. The etymological
meaning of bailment is “handing over “or “change of possession of goods”. By bailment, we
mean delivery of goods from one person to another for a special purpose on the contract that
they shall reimburse the goods on the fulfilment of the purpose or dispose of them as per the
direction of the bailor. The person who delivers the goods is known as bailor. And the person
to whom the goods are given is known as Bailee. And the property bailed is known as Bailed
Property.

Essentials of Bailment

• There shall be a contract between the parties for the delivery of goods,
• The goods shall be delivered for a special purpose only,
• Bailment can only be done for movable goods and not for immovable goods or
money,
• There shall be a transfer of possession of goods,
• Ownership is not transferred to Bailee; therefore, Bailor remains the owner,
• Bailee is duty bound to deliver the same goods back and not any other goods.

Exception: The money deposited in the bank shall not account to bailment as the money
returned by the bank would not be the same identical notes. And it is one of the essentials of
the bailment that same goods are to be delivered back.

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 OBJECTIVES OF THE STUDY
The researcher intends to find out the following during the course of research:

A. The Objective of this research is to study of the contract of bailment.

B. The Objective of this research is to find out the Essentials of Bailment.
C. The Objective of this research is to examine the basic rule of Bailment.

RESEARCH QUESTIONS
1. When is he not responsible for loss, destruction, or deterioration of the things bailed?
2. What are the various kinds of lien held by the bailee?
3. What are the rights of finder of goods?

RESEARCH METHODOLOGY
The researcher proposed to undertake the doctrinal methods which include documents, legal
propositions, doctrines, articles, books and online research etc. The doctrinal method will help
in doing a comparative study of the topic.

LIMITATIONS OF THE STUDY

Since the researcher is a student in a university, she has limited time frame in which she has to
conclude the project work. Also, there is a limited access of area. Although the researcher
would study various books and judgements, but her knowledge would still be limited. The
researcher also has restricted access to the cases, law reports.

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 2. MEANING OF BAILMENT

Definition- Section 148 of Indian Contract Act 1872, defines bailment as follows –

“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 and the person to whom they are delivered is called the bailee.”1

Explanation - If a person is already in possession of the goods of another and make a contract
to hold it as a bailee, he thereby becomes the bailee and the bailor although they may not have
been delivered by way of bailment.

essential elements of bailment -According to this definition the following are the essential
elements of bailment –

• There should be a Delivery of goods by one person to another

• Such delivery should be upon some purpose under the contract
• Such delivery should be Conditional that when the purpose is accomplished, goods will
be returned or disposed of as per bailor

1. Delivery of goods

The possession of goods must transfer from one person to another. Delivery is not same as
custody. For example, a servant holding his master's umbrella is not a bailee but only a
custodian. The goods must be handed over to the bailee for whatever is the purpose of the
bailment.
In Ultzen vs Nicols 1894,2 the plaintiff went to a restaurant for dining. When he entered the
room, the waiter took his coat and hung it on a hook behind him. When the plaintiff arose to
leave, the coat was gone. It was held that the waiter voluntarily took the responsibility of
keeping the coat while the customer was dining and was thus a bailee. Therefore, he was liable
to return it.
Contrasting this case with Kaliaperumal Pillai vs Visalakshmi3, we can see the meaning of

1
SECTION 148, INDIAN CONTRACT ACT, 1872
2
Ultzen vs. Nicolls [1894 1 QB 92]
3
AIR 1938
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delivery. In this case, a woman gave some gold to a jeweler to make jewelery. Every evening
she used to take the unfinished jewels, put it in a box, lock the box and take the keys of the box
with her while leaving the box at the goldsmith. One morning, when the opened the box the
gold was gone. It was held that, in the night, the possession of the gold was not with the jeweler
but with the plaintiff because she locked the box and kept the keys with her.

As the explanation to section 148 says, even if a person already has the possession of goods
that he does not own, he can become a bailee by entering into a contract with the bailor. In such
a case, the actual act of delivery is not done but is considered to be valid for bailment.

Types of Delivery - As per 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. This means that the delivery can be made
to either the bailee or to any other person whom the baliee authorizes. This person can be the
bailor himself. This gives us two types of delivery - Actual and Constructive. In actual
delivery, the physical possession of the goods is handed over to the bailee while in constructive
delivery the possession of the goods remains with the bailor upon authorization of the bailee.
In other words, the bailee authorizes the person to keep possession of the goods.

In Bank of Chittor vs Narsimbulu4, a person pledged cinema projector with the bank but the
bank allowed him to keep the projector so as to keep the cinema hall running. AP HC held that
this was constructive delivery because something was done that changed the legal possession
of the projector. Even though the physical possession was with the person, the legal possession
was with the bank.

2. Such delivery should be upon some purpose under the contract

For a valid bailment, the delivery must be done upon a contract that the goods will be returned
when the purpose is accomplished. If the goods are given without any contract, there is no
bailment. In Ram Gulam vs Govt. of UP5 plaintiffs ornaments were seized by police on the
suspicion that they were stolen. The ornaments were later on stolen from the custody or police

4
AIR 1966
5
AIR 1950,
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CONTRACT OF BAILMNET
and the plaintiff sued the govt. for returning the ornaments. It was held that the goods were not
given to the police under any contract and thus there was no bailment.

However, this decision was criticized and finally, in State of Gujarat vs Menon Mohammad6,
SC held that bailment can happen even without an explicit contract. In this case, certain motor
vehicles were seized by the State under Sea Customs Act, which were then damaged. SC held
that the govt. was indeed the bailee and the State was responsible for proper care of the goods.
3. Conditional Delivery

The delivery of goods is not permanent. The possession is given to the bailee only on the
condition that he will either return the goods or dispose them according to the wishes of the
bailer after the purpose for which the goods were given. For example, when the stitching is
complete, the tailor is supposed to return the garment to the bailor. If the bailee is not bound to
return the goods to the bailor, then the relationship between them is not of bailment. This is a
key feature of bailment that distinguishes it from other type of relations such as agency.

J Shetty of SC in U Co. Bank vs Hem Chandra Sarkar observed that the distinguishing feature
between a bailment and an agency is that the bailee does not represent the bailor. He merely
exercises some rights of the bailor over the bailed property. The bailee cannot bind the bailor
by his acts. Thus, a banker who was holding the goods on behalf of its account holder for the
purpose of delivering them to his customers against payment, was only a bailee and not an
agent.7

6
AIR 1967
7
https://lawtimesjournal.in/contract-of-bailment-and-pledge/
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CONTRACT OF BAILMNET
 3. DUTIES OF BAILOR

The duties of bailor are as follows:

1. Duty of gratuitous bailor

2. Duty of bailor for reward

A bailor may give his property to the bailee either without any consideration or reward or for
a consideration or reward. In the former case, he is called a gratuitous bailor, while in the latter,
a bailor for reward. The duties in both the cases are slightly different.

Duties For Both Kinds Of Bailor:

Bailor’s duty to disclose fault in goods bailed:-Section 150 specifies the duties for both kinds
of bailor. It says that the bailor is bound to disclose any faults in the goods bailed that the bailor
is aware of, and which materially interfere with the use of them or which expose the bailee to
extraordinary risk.

This means that if there is a fault with the goods which may cause harm to the bailee, the bailor
must tell it to the bailee. For example, if a person bails his scooter to his friend and if the person
knows that the brakes are loose, then he must tell this to the friend. Otherwise, the bailor will
be responsible for damages arising directly out of the faults to the bailee. But the bailor is not
bound to tell the bailee about the fault if the bailor himself does not know about it.

Duty of bailor for reward

The second paragraph of Section150 imposes a bigger responsibility to the non-gratuitous

bailor since he is making a profit out of the bailment. As per this provision, If the goods are
bailed for hire, the bailor is responsible for such damages, whether he was or he was not aware
of existence of such faults in the goods bailed. In Hyman and Wife vs Nye & Sons8, the plaintiff
hired a carriage from the defendant. During the journey, a bolt in the under part of carriage
broke, causing an accident in which the plaintiff was injured. The defendants were held liable
even though they did not know about the condition of the bolt.

8
AIR 1881
9|Page
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 4. DUTIES OF BAILEE

The duties of bailee are as follows:

1. Duty of reasonable care 151-152

a. Uniform standard of care
b. Loss by theft
c. Burden of proof
d. Loss due to act of bailee’s servant
e. Bailee’s own goods lost with those of bailor
f. Involuntary bailee
g. Contract to the contrary
2. Duty not to make unauthorized use 154
3. Do not to mix 155-157
4. Duty to return 160-161

a. More than one bailee 165

5. Duty not to set up jus tertii

6. Duty to return increase 163

1. Duty to take reasonable care

In English law the duties of a gratuitous and non-gratuitous bailee are different. However, in
Indian law, Section 151 treats all kinds of bailees the same with respect to the duty. It says that
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.

It means the bailee must treat the goods as his own in terms of care. However, this does not
mean that if the bailor is generally careless about his own goods, he can be careless about the
bailed goods as well. He must take care of the goods as any person of ordinary prudence would
of his things.

In Blount vs War Office, a house belonging to the plaintiff was requisitioned by the War

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Office. He was allowed to keep his certain articles in a room of the house, which he locked.
The troops who occupied the house were not well controlled and broke into the room causing
damage and theft of the articles. It was held that War office did not take care of the house as
an owner would and held the War Office liable for the loss. 9

Bailee, when not liable for loss etc. for thing bailed –

As per section 152, in absence of a special contract, the bailee is not responsible for loss,
destruction, or deterioration of the thing bailed, if he has taken the amount of care as described
in section 151.

This means that if the bailee has taken as much care of the goods as any owner of ordinary
prudence would take of his goods, then the bailee will not be liable for the loss, destruction, or
deterioration of the goods. No fixed rule regarding how much care is sufficient can be laid
down and the nature, quality, and bulk of goods will be taken into consideration to find out if
proper care was taken or not. In Gopal Singh vs Punjab National Bank,10 Delhi HC held that
on the account of partition of the country, when a bank had to flee along with mass exodus
from Pakistan to India, the bank was not liable for the goods bailed to it in Pakistan.

If the bailee has taken sufficient care in the security of the goods, then he will not be liable if
they are stolen. However, negligence in security, for example leaving a bicycle unlocked on
the street, would cause the bailee to be liable. In Join & Son vs Comeron11, the plaintiff stayed
in a hotel and kept his belonging in his room, which were stolen. The hotel was held liable
because they did not take care of its security as an owner would. If loss is caused due to the
servant of the bailee, the bailee would be liable if the servant's act is within the scope of his
employment.

Contract to contrary (Special Contract):-

The extent of this responsibility can be changed by a contract between the bailor and the bailee.
However, it is still debatable whether the responsibility can be reduce or it can be increased by

9
http://egyankosh.ac.in/bitstream/123456789/13397/1/Unit-10.pdf
10
AIR 1976
11
AIR 1922
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a contract. Section 152 opens with, "In absence of special contract", which is interpreted by
Punjab and Haryana HC, as the bailee can escape his responsibility by way of a contract with
the bailor. However, in another case Gujarat HC held that the bank was liable for loss of bales
of cotton kept in its custody irrespective of the clause that absolved the bank of all liability.
This seems to be fair because no one can get a license to be negligent and a minimum standard
of care is expected from everybody. 12

2. Duty not to make unauthorized use (Section 154)

Section 154 says that 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.

Illustration 1- A lends 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 is injured. B is liable to compensate A for the
injury to the horse.

Illustration 2-A hires a horse in Calcutta from B expressly to march to Benares. A rides with
care but marches to Cuttack instead. The horse accidentally falls and is injured. A is liable to
make compensation to B.

Thus, we can see that bailee is supposed to use the goods only as per the purpose of the
bailment. If the bailee makes any unauthorized use of the goods, he will be held absolutely
liable for any damages.

3. Duty not to mix (Section 155-157)

a. mixture with bailor's consent

b. mixture, without bailor's consent

The bailee should maintain the separate identity of the bailor's goods. He should not mix his
goods with bailor's good without bailor's consent. If he does so, and if the goods are separable,

12
https://www.lawctopus.com/academike/pledge/
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he is responsible for separating them and if they are not separable, he will be liable to
compensate the bailor for his loss.

For example, A bails 100 bales of cotton with a particular mark to B. B, without A's consent,
mixes them with his own. A is entitled to have his 100 bales returned and B is bound to bear
all expenses for separation. But if A bails a barrel of Cape flour worth Rs 45 to B and B mixes
it with country flour worth Rs 25, B is liable to A for the loss of his flour.

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.

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 be bear the expense of separation or division, and any
damage arising from the mixture.

Illustration: A bails 100 bales of cotton marked with a particular mark to B. B, without A's
consent, mixes the 100 bales with other bales of his own, bearing a different mark; A is entitled
to have his 100 bales returned, and B is bound to bear all the expenses incurred in the separation
of the bales, and any other incidental damages.13

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 foods 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.

13
https://www.toppr.com/guides/business-laws-cs/indian-contract-act-1872/rights-of-pawnee-and-pawnor/
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Illustration: A bails a barrel of Cape flour worth Rs. 45 to B. B, without A's consent, mixes the
flour with country flour of his own, worth Rs. 25 a barrel. B must compensate A for the loss of
his flour.14

4. Duty to return (Section 160)

Section 160 - 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. If the bailee keeps the goods
after the expiry of the time for which they were bailed or after the purpose for which they were
bailed has been accomplished, it will be at bailee's risk and he will be responsible for any loss
or damage to the goods arising howsoever. In Shaw & Co vs Symmons& Sons15, the plaintiff
gave certain books to the defendant to be bound. The defendant bound them but did not return
them within reasonable time. Subsequently, the books were burnt in an accidental file. The
defendants were held liable for the loss of books.

5. Duty to return increase (Section 163)

As per Section 163, in absence of any contract to the contrary, the bailee is bound to deliver to
the bailor, or according to his directions, any increase of profit which may have accrued from
the goods bailed.

Illustration - A leaves a cow in the custody of B to be taken care of. The cow has a calf. B is
bound to deliver the calf as well as the cow to B.

6. Duty not to set up jus tertii (Section 166) (Latin, “third party rights”)

As per Section 166 if the bailor has no title and the bailee, in good faith returns the goods back
to the bailor or as per the directions of the bailor, he is not responsible to the owner in respect
of such delivery. Thus, once the bailee takes the goods from the bailor, he agrees that the goods
belong to the bailor and he must return them only to the bailor. He cannot deny redelivery to
the bailor on the ground that the bailor is not the owner.

14
ibid
15
AIR 1971
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166. Bailee not responsible on redelivery 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. If there is true owner of the goods, he can apply to the court to stop the delivery
of the goods from the bailee to the bailor. This right is given to the true owner in section 167.

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 delivery
of the goods to the bailor, and to decide the title to the goods.

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 5. RIGHTS OF BAILEE

The rights of Bailee are as follows:

1. Right to necessary expenses (Section 158)

The bailee is entitled to lawful charges for providing his service. As per Section
158 says that where by conditions of the bailment-
i. the goods are to be kept or
ii. to be carried or
iii. to have work done upon them by the bailee for the bailor and
iv. the bailee is to receive no remuneration,
the bailor shall repay to the bailee the necessary expenses incurred by him for the purpose of
bailment.
Thus, a bailee is entitled to recover the charges as agreed upon, or if there is no such agreement,
the bailee is entitled to all lawful expenses according to this section.

2. Right to compensation (Section 164)

As per section 164, 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.
This means that if the bailor had no right to bail the goods and if still bails them, he will be
responsible for any loss that the bailee may incur because of this.

3. Right of Lien (Section 170-171)

Meaning of Lien-In general, Lien means the right to keep the possession of the property of a
person until that person clear the debts. 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.

Lien is of two kinds - Particular and General.

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a. Particular Lien (S.170)
This means that the lien holder has a right to keep possession of only that particular property
for which the charges are owed.
For example, A gives a horse and a bicycle to B. A agrees to pay B charges for training the
horse and no charges for keeping the bicycle. Now, if A fails to pay charges for the horse, B is
entitled to keep possession only of the horse and not of the bicycle. He must return the bicycle.
Section 170 gives this right to the bailee. It says that where the bailee has, in accordance with
the purpose of the bailment, rendered any service involving the exercise of labor or skill in
respect of the goods bailed, he has, in 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.
Illustrations - A delivers a rough diamond to B to be cut and polished, which is accordingly
done. B is entitled to keep the diamond until charges for his services are paid.
• in absence of a contract to the contrary-A gives cloth to B, a tailor, to make into a
cloth. B promises to deliver the coat as soon as it is done and also to give 3 months
credit for the price. B is not entitled to keep the coat until he is paid.

Conditions for Particular Lien –

1. Exercise of labor or skill - This right is subject to the condition that the bailee has
exercised labor or skill in respect of the goods. Further, it has been frequently pointed
out that the labor or skill must be such as improves the goods. This, in Hutton vs Car
Maintenance Co 1915, it was held that a job master has no lien for feeding and keeping
the horse in his stable but a horse trainer does get a lien upon the horse.
2. Labour or skill exercised must be for the purpose of the bailment - Any services
rendered that are beyond the purpose of the bailment do not give a right of lien. For
example, A bails his car to B to repair Engine. But B repairs tires instead. B will not
get the right of lien.
3. Labour or skill exercised must be in respect of the goods - As mentioned before, the
bailee gets a right of lien only upon the goods upon which the service was performed.

b. General Lien –
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CONTRACT OF BAILMNET
As opposed to Particular Lien, General Lien gives a right to the bailee to keep the possession
of any goods for any amount due in respect of any goods.
Section 171 says that, bankers, factors, wharfingers, attorneys of a High Court, and policy
brokers may, in the absence of a contract to the contrary, retain as a security for a general
balance of account, any goods bailed to them; but no other 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.
Thus, this right is only available to bankers, factors, wharfingers, attorneys of high court, and
policy brokers. However, this right can be given to the bailee by making an express contract
between the bailor and the bailee.

4. Right to Sue (Section 180-181)

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 injury. The bailee's rights and remedies
against the wrong doer are same as those of the owner. An action may be brought either by the
bailor or the bailee. Thus, in Umarani Sen vs Sudhir Kumar,16 a firm which had consigned the
goods, of which it was a bailee, with a carrier, was allowed to sue the carrier for loss of the
goods.

Rights of finder of goods (R/W S. 71-Responsibility of finder of goods)

If a person finds something, he does not automatically become the owner of that thing. He, in
fact, becomes a special kind of a baliee in the sense that he has to keep the thing until the owner
is found. He should take care of the thing just like a bailee. Section 168 and 169 describe the
rights of such finder of goods.
Section 168 - 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.
Thus, if the finder has incurred expenses in finding the owner and/or in maintaining the goods
voluntarily, he can retain the possession of the goods until the owner pays the expense to him,

16
AIR 1984,
18 | P a g e
CONTRACT OF BAILMNET
though the finder cannot sue the owner for the expense. His only remedy is to keep the goods.
Further, if the owner has promised a reward for the return of the goods, the finder is entitled to
the rewards, and he can even sue the owner for the reward. He can retain the goods as well
until the reward is received.
As per Section 169, the finder of the goods can even sell the goods if they are of common
objects of sale, in the following conditions –

1. the finder of goods was not able to find the owner after good faith efforts.
2. the owner is found but the owner refuses to pay lawful expenses and
1. either the goods are in danger of perishing or of losing greater part of the value
2. or the lawful charges of the finder amount to two third of the value of the
goods.17

17
http://notesforfree.com/2017/12/16/pledge-law-contracts-ii-notes/
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 6. STATUTORY BAILMENT

Statutory bailment generally refers to bailment entered by statutory or legislative

ascendancy. The Indian Contract Act of 1872 remains silent on the following concept and does
not exclusively deal with it. Hence, it leads to an embroilment whether bailment can subsist
only with a contract or it can arise independently of the contract. The present mystification
regarding statutory bailment has been settled by the Supreme Court in following case laws but
still, there has been no enactment in the Contract Act of 1872 for the same. Even there has been
a Law Commission Report which provided for the need to take legislative action for the same
yet our legislature did not pay heed to it.

Initially, the position regarding statutory bailment was that when a person’s goods go into the
position of another without any contract there is no bailment under sec 148. A well-known
illustration for the same is the decision of Allahabad High Court in Ram Gulam v. Govt. of
U.P. In it, Allahabad High Court had articulated the view that bailment can be there only when
there is a contract. In the following case, the plaintiff’s property which previously had been
stolen was recovered by the police. It may be mentioned that great adversity is shaped for the
owner of the goods when he is not able to have any remedy against another person, who
negligently loses it. The Property was glommed again and it despite all efforts could not be
recovered. The State was sued to recuperate the value of the property with the police, plaintiff
contended that the state was in the capacity of a Bailee. It was held that when there was no
contract there can be no bailment. Therefore the question of State’s liability does not arise.

“But where the police have acted on mere suspicion and have seized the goods according to
the procedure established under criminal procedure code. Then until the final decision of the
court is declared the police have to act as a Bailee of goods and the burden of proof is upon
Bailee to show that he has exercised reasonable care.”

English law recognizes bailment without the contract. In the words of Cheshire and Fifoot “We
put at the present day no doubt at most instances where goods are lent or hired or deposited for
safe custody or security for a debt, the delivery will be the result of a contract.”

With the passage of time Supreme Court and other High Courts realized the importance of
bailment which existed independent of the contract between the parties. In the case of L.M.

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Co-Operative Bank v. Prabhudas Hathibhai, the Bombay High Court has taken the contrary
view. In the following case, some packages of tobacco belonging to A had been pledged to the
plaintiff bank but they were still lying in A’s godown. Owing to the non-payment of some
income-tax dues by A, the said goods were affixed by the Collector. Hefty rains led to leak and
the goods kept inside were damaged. Although goods were not in the possession of the
Government under a contract yet the state was still held liable as a Bailee.

Similarly, Honourable Supreme Court in the landmark case of State of Gujarat v. Memon
Mahomed held that the position of the State in respect of the goods seized by the customs
authorities is that of a Bailee. If such goods are disposed of before the matter is finally decided
and the authorities are not able to return the same when the final order is made, the state was
held liable for the same18.

18
https://blog.ipleaders.in/statutory-bailment-jurisprudence/
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 7. CONCLUSION
Bailment is delivery of goods by one person to another for some purpose upon the condition
that the goods shall, when the purpose is accomplished be returned to the bailor or to any other
person, according to the directions of bailor. Bailment is classified into three categories i.e., for
the exclusive benefit of bailor, for the exclusive benefit of bailee and for mutual benefit of
bailor and bailee. On the basis of reward a bailment may be classified as gratuitous 01. non-
gratuitous bailment.

Lien means bailee's right to keep the goods in his possession till he is not paid his dues. A lien
may be either a Particular lien or a General lien. A particular lien is available only against the
goods in respect of which the bailee has rendered any service, labour or skill. While general
lien signifies the bailee's right to retain, the goods bailed as well as any other property of the
bailor, until the claims of bailee are satisfied.

Bailment comes to an end on the expiry of fixed period on the fulfillment of the object of
bailment, by doing some act which is inconsistent with the terms of bailment, with respect to
the goods bailed and on the destruction of subject matter. A gratuitous bailment can be
terminated even before the expiry of the term of bailment but then bailor is liable to compensate
the bailee for the losses suffered by him.

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 BIBLIOGRAPHY

BOOKS: -

THE INDIAN CONTRACT ACT,1872 (BARE ACT)

CONTRACT -II BY DR. R. K. BANGIA

LAW OF CONTRACT BY AVTAR SINGH

WEBSITES: -

1. https://lawtimesjournal.in/contract-of-bailment-and-pledge/
2. https://legal-dictionary.thefreedictionary.com/pledge
3. https://www.slideshare.net/surtomtomar/bailmentpledge
4. https://www.legalbites.in/bailment-concept-meaning/
5. https://blog.ipleaders.in/statutory-bailment-jurisprudence/

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