RIGHTS AGAINST COSURETIES

Effect of releasing a
Surety (S.138)
Right to contribution (S.
146 147)

1. Effect of Releasing a surety

S.138: Release of one co-surety does
not discharge others- Where there are
co-sureties, a release by the creditor of one
of them does not discharge the others
neither does it free the surety so released
from his responsibility to the other sureties.

Sri Chand vs. Jagdish Parshad

Kishan Chand,
(AIR 1966 SC 1427)

the

creditor may at his will release any of his

co-sureties from his liability. But that will not

operate

as

discharge

of

his

co-sureties.

However, the released co-surety will remain

liable to the others for contribution in the event
of default

2. Right to contribution
S.146: Co- sureties liable to contribute
equally: where two or more persons are cosureties for the same debt or duty, either jointly
or severally ,and whether under the same or
different contracts, and whether with or without
the knowledge of each other, the co-sureties, in
the absence of any contract to the contrary, are
liable, as between themselves, to pay each an
equal share of the whole debt, or of that part of
it which remains unpaid by the principal debtor.

S.147:

Liability

bound

in

of

co-sureties

different

sums-

Co-

sureties who are bound in different

sums are liable to pay equally as far
as

the

limits

of

obligations permit.

their

respective

In State Bank of India v. Prem

Dass
AIR 1998 Del 49
where there are several sureties for the same debt and
the principal debtor has committed a default, each
surety is liable to contribute equally to the extent of the
default

Shirley v. Burdett, (1911)2 Ch

418 if any of the sureties

has been compelled to pay

more than his share, he can
recover contribution from his
co- sureties so as to equalise
the loss as between all of

INDEMNITY

GUARANTEE

ONLY TWO PARTIES

THREE PARTIES

ONLY ONE CONTRACT

THREE CONTRACTS

LIABILITY IS CONTIGENT-

LIABILITY IS SUBSISTING

MAY OR MAY NOT ARISE

THOUGH REMAINS
SUSPENDED TILL DEFAULT

NO THIRD PERSONLIABILITY IS IN ITSELF

PRIMARY

ARISES
PURPOSE IS TO SUPPORT A
THIRD PERSON

BAILMEN
T
S.148

S.148: 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

Delivery of
goods from
one person
to another

For some
purpose
upon a
contract

Contractthe
delivered
goods shall
be returned
when that
purposeis
accomplishe
d

Person
delivering
goods

BAILOR

Person to
whom
delivered

BAILEE

GOODS
BAILOR

BAILEE

(Book)
(For reading)

PURPOSE
CONTRACT

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

ESSENTIALS OF
BAILMENT
1.DELIVERY OF POSSESSION
2.DELIVERY UNDER A
CONTRACT
3. DELIVERY UPON SOME
PURPOSE

DELIVERY OF GOODS/POSSESSION
POSSESSION

In New India Assurance Co Ltd v. Delhi

Development Authority, AIR 1991 Delhi 298,
the first important characteristic of bailment is
the delivery of possession by one person to
another. The essence of bailment is possession.
Delivery of possession has to be distinguished
from mere custody
eg: a servant cannot be considered a bailee.
ie; the goods must be handed over to the bailee for
whatever is the purpose.

ULTZEN vs. NICOLLS, (1894)1

QB 92
Facts:

An old customer went into a restaurant for the

purpose of dining there. When he entered the
room a waiter took his coat, without being asked,
and hung it on a hook behind him. When the
customer rose to leave the coat was gone.
Observation:
The waiter by taking the coat into his possession
had relieved the plaintiff to its care and had thus
assumed the responsibility of a bailee. It was he
who selected the place where the coat should be
put.
Judgement:
The restaurant-keeper was held liable as a bailee.

KALIAPERUMAL PILLAI VS.

VISALAKSHMI, AIR 1938 Mad 32
Facts:
A lady handed over to a goldsmith certain jewels for the purpose of
being melted and utlized for making new jewels. Every morning as
soon as the goldsmiths work for the day was over, the lady used to
receive half-made jewels from the goldsmith and put them into a box
in the goldsmiths room and keep the key in her possession. The
jewels were lost one night.
Observation:
any bailment that could be gathered from the facts must be taken to
have come to an end as soon as the plaintiff was put in possession of
the melted gold. Delivery is necessary to constitute bailment. The
mere leaving of box in a room in the defendants house, when the
plaintiff herself took away the key, cannot certainly amount to
delivery within the meaning of the provision in S. 149.
Judgement:
The goldsmith was not held liable

NOT

BANK LOCKER
BAILMENT
Hiring of a bank
locker and storing

things in it would not constitute a

bailment. Things are put in a hired
portion of premises and not entrusted
to
bank.
In the
order
to constitute bailment within
the meaning of S.148 it is necessary
to show that actual and exclusive
possession of the property was given
by the hirer of the locker to the bank.
Only then the question of reasonable

S.149: DELIVERY TO BAILEE HOW

MADE- The delivery to the bailee
may be made by doing anything
which has an effect of putting the
goods in the possession of the
intended bailee or of any person
authorised to hold them on his
behalf.
Here consider explanation S.148

DELIVERY OF
POSSESSION
ACTUAL
DELIVE
RY

When bailor
hands over to
the bailee
physical
possession

CONSTRUC
TIVE
DELIVERY

No change of
physical
possession.
Good remains
where they are .

Bank of Chittoor vs. Narasimbulu, AIR 1966

AP 163
FACTS:
A person pledged the projector machinery of his cinema
under an agreement which allowed him to retain the
machinery for the use of cinema.
OBSERVATION:
it must be held that there was a constructive delivery, or
delivery by attornment to the bank. Since then there was a
change in the legal character of the possession of goods,
though not in the actual and physical custody. Even though
the bailor continued to remain in possession, it was the
possession of the bailee
HELD:
There is a constructive delivery

FAZAL VS. SALAMAT RAI, (1928) 120

IC 421
FACTS:
The defendant was holding the plaintiffs mare under the
execution of a decree. The plaintiff satisfied the decree and
the court ordered redelivery of the mare to the plaintiff. The
defendant, however refused to do so unless the maintenance
charges were also paid. The mare was stolen from his
custody.
OBSERVATION:
After the delivery order had been passed, the relation of
bailor bailee was established by virtue of the explanation to
s.148
HELD:
Defendant was held liable.

2. DELIVERY SHOULD BE UPON A

CONTRACT

DELIVERY

PURPOSE

CONTRACT

Will be returned
after the
fulfillment of
the purpose

IF NO CONTARCT MADE = NO
BAILMENT

RAM GULAM v. GOVT Of U.P, AIR 1950

All 206
FACTS:
The plaintiffs ornaments, having been
stolen, were recovered by the police and
while in police custody were stolen again.
OBSERVATION:
The ornaments were not handed over to
the government under any contract.
Therefore, government never occupied
the position of bailee and is not liable as
such to indemnify the plaintiffs.
HELD:
Government not held liable

LASALGAON MERCHANTS COOP BANK LTD v.

PRABHUDAS HATHIBHAI, AIR 1966 Bom134
FACTS:

Certain Packages of tobacco lying in the godown of a

partnership firm were pledged to the plaintiff bank. Some
of the partners, having failed to clear their income tax
dues, the income tax officer ordered seizure of the goods.
The officials of the collectorate accordingly locked the
godown and handed over the key to the police. Due to
heavy rain the roof of the godown leakednand the
tobacco was damaged.
OBSERVATION:
It was the duty of the government officers to take such
care as every prudent manager would take of his own
goods. The government stood in the position of bailee and
it was for them to prove that they had taken as much care
as possible for them and that the damage was due to
reasons beyond their control.
HELD:

STATE OF GUJARAT V. MEMON

MAHOMED,
AIR
1967
SC
1885
FACTS:

Certain motor vehicles and other goods

belonging to the plaintiffs were seized by
the state in exercise of its powers under a
sea customs act. The goods while in the
custody of the state remained totally
uncared for.
OBSERVATION: 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.

RAM GULAM v. GOVT Of U.P, AIR 1950

All 206
LASALGAON MERCHANTS COOP BANK
LTD v. PRABHUDAS HATHIBHAI, AIR
1966 Bom134

STATE OF GUJARAT V. MEMON

MAHOMED, AIR 1967 SC 1885

Repetition of RAM GULAM case

Contract can be
EXPRESSED or
IMPLIED
eg: A, with the consent of the station master goods were
stored on a railway companys platform since wagons were
not available. Later by the spark emitted by a passing engine
goods were damaged. The company was held liable.

3. DELIVERY SHOULD BE UPON

SOME PURPOSE
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 bailor and bailee.

3 types of purposes

For the benefit

of bailor and
bailee

Sole
benefit
of
bailor

Sole benefit
of the bailee

SECY OF STATE vs. SHEO SINGH

RAI, (1880)2 All 756
FACTS:

The plaintiff delivered to the treasury officer at

Meerut nine government promissory notes for
cancellation and consolidation into a single note
of Rs. 48,000. The defendants servants
misappropriated the notes. The plaintiff sued the
state to hold them responsible as bailees.
OBSERVATION:
There can be no bailment unless there is a
delivery of goods and a promise to return. The
government was not bound to return the same
notes, nor was it bound to dispose of the
surrendered notes in accordance with the
plaintiffs directions.

BAILMENT WITH OTHER

SIMILAR RELATIONS

DUTY OF BAILOR
S. 150

GRATUITOUS
BAILOR
A BAILOR WHO LENDS
HIS GOODS WITHOUT
ANY CHARGE

BAILOR FOR
REWARD
A BAILOR WHO LENDS
HIS GOODS FOR A
PARTICULAR AMOUNT
OF CONSIDERATION

S.150- BAILORS DUTY TO

DISCLOSE FAULTS IN GOODS
The bailor is BAILED
bound to disclose to the

bailee faults in the goods bailed, of

which 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
directlty 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

a) DUTY OF A GRATUITOUS BAILOR

The conditions of his liability are:
1. He should have the knowledge of the defect and
the bailee should not be aware
2. The defect in the goods must be such as exposes
the bailee to extraordinary risks or materially
interferes in the use of the goods.
Illustration 1:

Lends a vicious horse knowingly

without disclosing it

B is thrown and injured and the horse runs away.

A is responsible to B for damage sustained.

Blakemore v. Bristol and Exeter Rly Co,

(1858) 8 E&B 1035

By the necessarily implied purpose

of the loan a duty is contracted
towards the borrower not to
conceal from him those defects
known to the lender which may
make the loan perilous or
unprofitable to him.

b) DUTY OF A BAILOR FOR REWARD

The duty of a bailor for consideration is much greater
since making profit out of it. Therefore it is his duty to see
that the goods which he delivers are reasonably safe for
the purpose of the bailment.
No defence for him to say that he was unaware of the
defects.
He is bound to examine the goods and remove such
defects.

Illustration 2:

Lends a carriage for hire without

knowing that it is unsafe

B is injured
A was held liable.

HYMAN & WIFE v NYE & SONS, (1881) 6

QBD 685
FACTS:
The plaintiff hired a carriage, a pair of horses and a driver.
During the journey a bolt in the underpart of the carriage
broke, the splinter bar became displaced, the carriage
was upset and the plaintiff injured.
OBSERVATION: a person who lets out carriages is not
responsible for all the defects discoverable or not but is
an insurer against all the defects which and skill can
guard against. His duty is to supply a carriage as fit for
the purpose for which it is hired as care and skill can
render it.

REED v DEAN, (1949) 1 KB

FACTS: the plaintiffs hired a motor
188
lounge from the defendant for a holiday
on the river thames. The launch caught
fire, and the plaintiffs were unable to
extinguish it, the fire fighting equipment
being out of order. They were injured
and suffered loss.
OBSERVATION: there was an implied
undertaking that the launch was as fit
for the purpose for which it was hired as
reasonable care and skill could make it.
HELD: defendant held liable

DUTIES OF
BAILEE
1.DUTY OF REASONABLE CARE (Ss.151-152)
2.DUTY NOT TO MAKE UNAUTHORISED USE (S.154)
3.DUTY NOT TO MIX (Ss.155-157)
4.DUTY TO RETURN (Ss. 160 AND 161)
5.DUTY NOT TO SET UP JUS TERTII
6.DUTY TO RETURN INCREASE (S.163)

BAILEE

GRATUITIOUS
BAILEE

BAILEE FOR
REWARD

DUTY OF REASONABLE CARE (S.151152)

S.151: CARE TO BE TAKEN BY

BAILEE-

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.

ENGLISH LAW:

Earlier in English law, liability in

bailment was absolute.
It was no excuse for the bailee to say
that the damage or failure by return
was due to no fault of his own.
Subsequently through many decisions
the concept of gratuitious bailee and
bailee for reward developed.
A gratuitious bailee is liable for loss
of, or damage to, goods only if he is
guilty of gross negligence.

BLOUNT v. THE WAR

OFFICE, (1953) 1 All ER
1071

FACTS: 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 locked. Of
the troops sanctioned there, some broke into
the room and stole a quantity of silver plates.
OBSERVATION: There was a voluntary
bailment of the goods to the defendant in the
way of deposit and the standard of care
required of them was reasonable care which a
man would take of his own property.

Houghland V. RR. Low (Luxury

Coaches) Ltd, (1962) 1QB 694
CA

Martin v. London County

Council, (1947) KB 628

INDIA- UNIFORM
STANDARD OF CARE
A degree of care which a man
of ordinary prudence of his own
goods of the same type and
under similar circumstances.
If the care given by the bailee
falls below the standard, he will
be liable for damages.

S.152- BAILEE WHEN NOT LIABLE FOR

LOSS OF, etc, OF THING BAILED- 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 S.151
Food grains stored at bailees godown
were damaged by floods. Not liable
A man hired a wooden shop and it was
burnt by mobs during communal riots in
the city. Not liable

LOSS BY THEFT:
WHERE THE BAILORS GOODS ARE
STOLEN FROM THE CUSTODY OF THE
BAILEE, HE WILL BE LIABLE IF THERE
HAS BEEN NEGLIGENCE ON HIS PART.

A stayed at a hotel and his

articles were stolen while he was
away, the hotelier was held liable
as the room was, to his knowledge,
in an insecure condition.

BANK/BANKER AS BAILEE

UNITED COMMERCIAL BANK v HEM

CHANDRA SARKAR, (1990) 3 SCC 389
FACTS: A banker was rendering the service of
receiving goods on behalf of its account holder
and to hold them for the purpose of delivering
them to the customers of the account holder
against payment. Banker did not deliver goods to
the customers from whom payment had been
received.
OBSERVATION: position of the banker was that
of the bailee and he was liable for the account
holders loss inasmuch as the banker did not
deliver goods to the customers from whom
payment had been received.

HALSBURY LAW OF
ENGLAND:

where a bank delivers the

goods to the wrong person,
whereby they are lost to the
owner, the liability of the bank
is absolute, though there is no
element of negligence, as
where the delivery is obtained
by means of an artfully forged

BURDEN OF
PROOF

The burden of proof is on the bailee to

show that he was exercising reasonable
care and if he can prove this he will not be
liable.
If the bailee places before the court
evidence to show that he had taken
reasonable care to avoid damage which
was reasonably foreseeable or had taken
all reasonable precautions to obviate risks
which were reasonably apprehended, he
would be absolved of his liability.

LOSS DUE TO ACT OF BAILEES SERVANT- Where

the loss has been due to the act of the bailees
servant, he would be liable if the servants act is
within the scope of his employment.

SANDERSON v. COLLINS,
(1904)1 KB 628

FACTS: the defendant sent his carriage to the

plaintiff for repairs and for that reason he lent his
own carriage to defendant for his use. The
defendant's coachman, without his knowledge,
took away the carriage for his own purpose and
damaged it.
OBSERVATION: the coachman at the time when
the injury was done to the carriage was not acting
within the course of his employment

PROBLEM:

1.The bailees driver left the vehicle in

which he was carrying the bailors
goods unattended and half the
goods were stolen . Whether bailee
liable?

if the bailee raise an argument

that he contracted with an agent and
not directly with bailor?

WHEN THE GOODS HAVE BEEN STOLEN

FROM THE BAILEES CUSTODY, HE
SHOULD TAKE REASONABLE STEPS TO
RECOVER THEM.

Eg: A farmer accepted certain

cattle for adjustment. Some of
them were stolen without his
default but he made no efforts in
informing the owner or the police
to recover them.

BAILEES OWN GOODS LOST WITH

THOSE OF BAILOR

The fact that the bailee is

generally negligent with his own
goods is no justification for his
negligence towards the bailors
goods.
He can only have the defence of
having good faith of taking equal
care of both his and bailors article

INVOLUNTARY BAILEE

A person who has come into

possession of a chattel through no
act of his own and without his
consent
HAWARD v. HARRIS, (1884) C&E
253
FACTS: The author of play, without being
asked, sent his manuscript to a theatre
operator, who lost it
OBSERVATION: that no duty of any kind
was cast on the defendant by receipt of
something he had not asked for.

 Later in many cases this

rule was not followed
The rule later was based on
the ratio that the degree of
negligence must be
measured by the apparent
value of the article. (Newman
v Bourne &Hollingsworth,
(1951)31 TLR 209)

2. DUTY NOT TO MAKE

UNAUTHORISED USE-S.154
Liability of bailee making unauthorised use 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
A lends a horse to B for his own riding only. C, a member
of his family, to ride the horse. C rides with care, but the
horse accidently falls and is injured. B is liable to make
compensation to A for the injury done to the horse.
A hires a horse in Calcutta from B expressely to march
to Benares. A rides with due care, but marches to Cuttack
instead. The horse accidentally fals and is injured. A is
liable to make compensation to B for the injury to the
horse.

S.153- TERMINATION OF BAILMENT BY

BAILEES ACT INCONSISTENT WITH
CONDITIONS.
A contract of bailment is avoidable at
the option of the bailor, if the bailee
does any act with regard to the
goods bailed, inconsistent with the
conditions of the bailment.
A lets to B, for hire, a horse for his own
riding, B drives the horse in his carriage.
This is, at the option of A, a termination of
the bailment.

3.DUTY NOT TO MIX (Ss.

155-157)

The bailee should maintain the

separate identity of the bailors
Bailor and bailee
goods.
S.155- Effect of
mixture, with
bailors consent, of
his goods with
bailees
S.156- Effect of
mixture, without
bailors consent,
when the goods
can be seperated.

shall have an
interest, in
proportion to their
respective shares,
in
the
mixture
thus
Bailee is bound to
bearproduced
the expense
of seperation or
division, and any
damage arising

A bails 100 bales of cotton marked with a particular mark

to B. B without As 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 damage

S.157- Effect of
mixture, without
bailors consent,
when the goods
cannot be
separated

Bailee has to
compensate
bailor for the
loss of the
goods.

A bails a barrel of Cape flour worth Rs. 45 to B. B, without

As consent, mixes the flour with country flour of his own,
worth only Rs.25 a barrel. B must compensate A for the
loss of his flour.

4. DUTY TO RETURN (Ss. 160

and 161)

S.160- RETURN OF GOODS

BAILED, ON EXPIRATION OF
TIME OR ACCOMPLISHMENT
S.161BAILEES
OF PURPOSE.
RESPONSIBILITY (for any
loss, destruction or
deterioration of the goods)
WHEN GOODS ARE NOT

SHAW & Co v. SYMMONS &

SONS, (1917) 1 KB 799

FACTS: The plaintiff entrusted books to the

defendant, a bookbinder, to be bound, the latter
promising to return them within a reasonable
time. The plaintiff having required the defendant
to deliver the whole of the books then bound, the
defendant failed to deliver them within a
reasonable time and they were subsequently
burnt in an accidental fire on his premises.
OBSERVATION: the loss took place when the
bailees wrongful act was in operation and hence
there is no question of any defence like act of
god or inevitable accident.
HELD: defendant was held liable.

S.159- TERMINATION OF
GRATUITIOUS BAILMENT
S.159-RESTORATION OF
GOODS LENT GRATUITOUSLY
The bailor may at any time
require its return
If return of goods before the time
agreed upon results in any loss for
the bailee then, bailor has to
indemnify the bailee.

S.162- TERMINATION OF
GRATUITIOUS BAILMENT BY
DEATH

Terminated either by
the death of bailor
or bailee.

S.165- BAILMENT BY
JOINT OWNERS
If several joint owners of goods
bail them the bailee may deliver
them back to, or according to the
directions of, one joint owner
without the consent of all, in the
absence of any agreement to the
contrary.

5.DUTY NOT TO SET UP JUS

TERTII
The bailee is estopped from denying the right of
the bailor to bail the goods and to recerive them
back.
Even if there is a person who has a better title to
the goods than that of the bailor or who claims
ownership of the goods, the bailee may safely
return the goods to the bailor and he will not be
liable to the owner for conversion.
S.166: BAILEE NOT RESPONSIBLE ON REDELIVERY TO BAILOR WITHOUT TITLE

S.167: RIGHT OF THIRD PERSON CLAIMING

GOODS BAILED
JUGGILAL KAMPLAPAT OIL MILLS v UOI,
(1976)1SCC 893
FACTS:
Oil was consigned with the railways from kanpur to
culcutta. It reached culcutta intact. The sender,
however, instructed the railwaysb to bring it back to
kanpur. Before the formalities for the same could be
complied with, the oil was seized by a food inspector,
who found it adulterated and had it destroyed under
the order of the high court.
OBSERVATION: Bailee is excused from returning the
subject-matter of the bailment to the bailor where it
was taken away from him by an authority of law.
JUDGEMENT: Railway not liable.

6.DUTY TO RETURN
INCREASE (S.163)

S.163: BAILOR ENTITLED TO

INCREASE OR PROFIT FROM
GOODS BAILED.