Bailment

Sec.148: "Bailment", "bailor" and "bailee"

defined -

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 direction of the person

delivering them. The person delivering the goods is called the "bailor". The

person to whom they are delivered is called the "bailee".

Explanation: If a person already in possession of the goods of other 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 goods
2. For some purpose
3. Return of goods/disposal of goods (after
the achievement of the purpose)
1. Delivery of Goods
Delivery means transfer of possession of
the goods from one person to another
Kinds of Delivery:

Delivery

Constructive/
Actual
symbolic
Delivery to bailee how made
Sec. 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 authorised to hold them on his
behalf.
Example:
A sellshis watch to B
He kept the possession for one month
Though the watch is already in the
possession of A, but his capacity changed
from owner to bailee.
Jagdish Chandra Trikha v. Punjab
National Bank AIR 1998 Delhi 266.
 Plaintiff’s father has entrusted a box at Peshawar with
respondent bank.
 Containing 480 tolas of gold.
 At the time of delivery, box was wrapped and locked.
 A receipt was given by the bank.
 From Peshawar box came to Lahore Branch and then to
Delhi Branch.
 It was found that box was not in the same condition.
 Plaintiff demanded value amounting to Rs. 3,72,400.
 Whether Bank be considered as Bailee or not?
Yes, court directed the bank to pay the
demanded amount with interest @ 12%
per annum. Bank has the obligation as
Bailee.
Ultzen v. Nicols (1894) 1 Q.B. 92.
Plaintiff went to defendant‘s restaurant.
At the entry door, a waiter took the coat
of plaintiff, and hung it on a hook behind
the plaintiff.
When plaintiff wanted to leave he found
that his coat had been lost.
Whether restaurant is liable as bailee
or not?
Court held them liable for the loss. It was
held that defendant was the bailee of the
coat.
Control over the goods bailed.
If the bailor maintains his control over the
thing bailed, there is no bailment.
Maintaining control over the goods is
considered as no delivery.
Kaliaporumal Pillai v. Visalakshmi AIR
1938 Mad. 32.
A lady took her old jewels to a Goldsmith for
being melted and being converted into new
jewels.
Every evening she used to receive the half made
jewels, put them into a box and lock the same.
She allowed the locked box to remain in the
premises of the goldsmith but kept the key in her
possession.
One night the jewels were stolen.
Whether goldsmith is liable for the loss as
bailee??
It was held that there is no bailment, as
she had not handed over the possession of
the jewels to the gold smith.
Therefore, goldsmith could not be made
liable for the loss.
Similar would be the position if a locker is
given by a bank to the customer and
customer is also given one such key of the
locker , without which the locker cannot be
opened.
In such a case although the locker may be
in the premises of the bank, but as the
locker is under the control of the customer,
there is no bailment of such goods to the
bank.
 National Bank of Lahore v. Sohan Lal
AIR 1962 Punjab 534.
 Bank used to maintain a safe deposit vault in its
Jalandhar city’s branch.
 Where the lockers were given on rent.
 One key pertaining to the locker was given to the
customer, without which the locker could not be
opened.
 Bank manager fraudulently filled the levers of the
vault in such a way that locker can be opened even
without the key of the customer.
 The valuables in the locker was found missing
afterwards.
 Whether Bank is liable as bailee or not?
Court held that after the filling of the
levers of the locker, the possession comes
in the hand of bank and held liable as
bailee.
Whether there can be Bailment without
a contract.
Ram Gulam v. Govt. Of U.P. AIR 1950 ALL.
106.
Plaintiff’s property has been stolen and the
same has been recovered by the police.
Police submitted the property in Malkhana,
form where the property has been stolen again
and could not be traced.
 Plaintiff sued the govt. to recover the value of
the property.
(CONT.)
Court held that there is no bailment,
As there is not contract of bailment
between the plaintiff and the govt. agency.
 State of Gujarat v. Memon Mahomed AIR 1967 SC 1885.

The Customs Authority has seized some

vehicles on the ground that the same has been
used to smuggle the goods.
Though the competent authority (Revenue
Tribunal) directed the return of the vehicles.
But the same has been disposed off by the
order of a Magistrate (consent has been taken
by misrepresenting the fact that the vehicles
are unclaimed).
(CONT.)
Court held that the govt. is bound to
return the said vehicles, otherwise
compensation must be paid to the
plaintiff.
2. Return of the goods after the purpose
is achieved.
 The delivery of the goods in bailment is for a purpose,
so after the achievement of the purpose the things must
be restored back. (or disposed off as per the directions.)
 Kalyani Breweries Ltd. v. State of West Bengal AIR
1998 SC 70.
 pellant sold beer in the bottles.
 Customers are to pay the price of the beer as well as of
the bottle.
 If customer return the empty bottle the amount paid by
him was to be refunded to him.
 Whether this arrangement amounts to bailment or
sale??
Itwas held that there was sale of the
bottles and not bailment of the same.
So the amount is liable to sales tax.
Kinds of Bailment
Bailment may be classified into different
categories on the following points:
1. Bailment for the benefit of Bailor:
(Leaving goods for safe custody without any
payment)
2. Bailment for the benefit of Bailee: (Giving
your pen to other for use)
3. Bailment for mutual benefit: (Giving
articles on hire)
4. Gratuitous and Non-Gratuitous Bailment.
Bailor's duty to disclose faults in goods
bailed
 Sec 150: 1. The bailor is bound to disclose to the
bailee faults in the goods bailed, of which the
bailor is aware, and which materially interfere
with the use of them, or expose the bailee to
extraordinary risk; and if he does not make such
disclosure, he is responsible for damage arising
to the bailee directly from such faults.
2. If the goods are bailed for hire, the bailor is
responsible for such damage, whether he was or
was not aware of the existence of such fault in
the goods bailed.
Gratuitous Bailment
Para 1 of the sec. 150 imposes duty on the
bailor of defective goods.
He must disclose the defects in the goods
if any, which he is aware of.
If he did not discloses any such kind of
defect, he may be made accountable if
any kind of damage is caused to bailee
due to that defect.
Example
A lends a horse, which he knows to be
vicious to B,
He does not disclose the same fact to B
The horse runs away, B is thrown and
injured.
A is responsible to B for damages
sustained.
Non-Gratuitous Bailment
Para II of the sec. 150 deals with bailment
of goods for reward.
When a good is bailed for reward, the
bailor is liable for the damages caused to
the bailee by the defective goods.
It is immaterial whether bailor himself is
aware of the defect or not.
Hyman v. Nye & Sons (1881) 6 Q.B. 685.
Plaintiff
hired a carriage and horses.
Carriage was defected.
Due to which plaintiff got injured.
Defendant himself was not aware of the
defect.
Defendant was held liable for the
damages caused to the plaintiff.
 Duties of Bailee
 A bailee has to observe the following duties”
1. Duty to take reasonable care of the goods bailed
(sec. 151-152)
2. Duty not to make unauthorised use of the goods
bailed (sec. 153-154)
3. Duty not to mix bailor’s goods with his own
goods (sec. 155-157)
4. Duty to return the goods on the fulfilment of the
purpose (sec. 159-161, 165-166)
5. Duty to deliver to the bailor increase or profit
on the goods bailed (sec. 163)
1. Duty to take reasonable care of the
goods bailed (sec. 151-152)
Sec. 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,
quantity and value as the goods bailed.
Union of India v. Udho Ram & Sons
AIR 1963 SC 422
 Certain goods were consigned by M/s Radha Ram
Sohan Lal from Calcutta to Delhi by train, in favour of
M/s Udho Ram & Sons.
 Some of the goods have been stolen in the transit.
 It was found that wagon was properly locked when the
train left Howrah at 1:30 am
 The doors of the wagon were found open at Chandanpur
station at 3:30 am
 The theft took place a point when train stopped for the
signal at 2:00 am for about 15 mins.
 It was held that railway did not take due care like a
prudent man. And held liable for the damages caused to
plaintiff.
Calcutta Credit Corporation Ltd. v. Prince Peter of Greece
AIR 1964 Cal. 374.
 A car was received for repairs by a garage.
 Car was damaged because of fire in the garage.
 Garage owner was sued for the damages.
 It was found that the garage was partitioned by
wooden walls, and a part was also used for cooking.
 The room in which car was kept could not be opened
for 15 mins after the fire was noticed, as the keys of
room was not available.
 Court held that defendants had not exercise due care
as a prudent person , and held liable for the damages.
Sec. 152: Bailee when not liable for
loss, 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 section 151.
Amount to take care depends upon the
circumstances
Gopal Singh Hira Singh v. Punjab National
Bank AIR 1976 Delhi 115:
Plaintiff firm pledged certain goods with the
Jahania Branch of the bank.
After partition, plaintiff shifted to India, and
the area where bank was situated becomes
part of Pakistan.
Plaintiff brought an action to recover Rs. 2
lac (value of goods) against bank.
(Cont.)
Defendant Bank pleaded that goods were
destroyed in riots.
Court found that as there exist exta-
ordinary break down of law and order, in
these circumstances bank has to left the
property unattended.
And accordingly bank was held not liable
for the loss caused to plaintiff firm.
2. Duty not to make unauthorised use
of the goods bailed (sec. 153-154)
Sec. 153. Termination of bailment by
bailee's act inconsistent with conditions
-
A contract of bailment is voidable at the
option of the bailor, if the bailee does any
act with regard to the goods bailed,
inconsistent with the conditions of the
bailment.
Sec. 154. Liability of bailee making
unauthorised use of goods bailed -
If the bailee makes any use of the goods
bailed which is not according to the
conditions of the bailment, he is liable to
make compensation to the bailor for any
damage arising to the goods from or
during such use of them.
Extract of Sec. 153 and 154
If bailee make use of the things which is
inconsistent with the conditions of the
contract of bailment then he has the
following options:
1. The bailor may terminate the bailment (S.
153)
2. The bailor may recover the compensation
for the loss caused to him due to
unauthorised use of the goods. (S. 154)
 Illustration
A lets his horse to B for riding, but B
drives the horse in his carriage. A may
terminate the bailment.
A hire a horse to march to Haridwar, but
he marches to Mussoorie. Horse
accidentally falls and got injured. Owner
of the horse can recover the compensation
form A.
3. Duty not to mix bailor’s goods with
his own goods (sec. 155-157)
Sec. 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.
Sec. 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.
Sec. 157. Effect of mixture, without bailor's consent,
when the goods cannot be separated
If the bailee, without the consent of the
bailor, mixes the goods of the bailor with
his own goods in such a manner that it is
impossible to separate the goods bailed
from the other goods, and deliver them
back, the bailor is entitled to be
compensated by the bailee for the loss of
the goods.
4. Duty to return the goods on the fulfilment of
the purpose (sec. 159-161, 165-167)
 Sec. 159: Restoration of goods lent gratuitously:
The lender of a thing for use may at any time require
its return, if the loan was gratuitous, even through he
lent it for a specified time or purpose. But if, on the
faith of such loan made for a specified time or
purpose, the borrower has acted in such a manner
that the return of the thing lent before the time
agreed upon would cause him losses exceeding the
benefit actually derived by him from the loan, the
lender must, if he compels the return. indemnify the
borrower for the amount in which the loss so
occasioned exceeds the benefits so derived.
Sec. 160: Return of goods bailed, on expiration of
time or accomplishment of purpose
It is the duty of the bailee to return, or
deliver according to the bailor's
directions, the goods bailed, without
demand, as soon as the time for which
they were bailed has expired, or the
purpose for which they were bailed has
been accomplished.
Sec. 161. Bailee's responsibility when
goods are not duly returned
If by the fault of the bailee, the goods are
not returned, delivered or tendered at the
proper time, he is responsible to the bailor
for any loss, destruction or deterioration
of the goods from that time.
Sec. 165. Bailment by several 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.
Sec. 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.
5. Duty to deliver to the bailor increase
or profit on the goods bailed (sec. 163)
In the absence of any contract to the
contrary, the bailee is bound to deliver to
the bailer, or according to his directions,
any increase or profit which may have
accrued from the goods bailed.