Assignment-II

Q: Decide if the following constitute a contract of bailment. Support your

answer with statutory provisions and relevant case laws.
a) Usage of locker services of a bank.
Bailment, is defined under Section 148 of the Indian Contract Act, 1872 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
(bailor).The key element required in order to establish a contract of bailment is
“delivery of possession”.
In the present scenario usage of ‘locker services’ of a bank does not constitute a
contract of bailment since, merely hiring a bank locker does not constitute
delivery of possession which is a necessary ingredient for the contract of
bailment. The judgment of the case Atul Mehra v Bank of Maharashtra, laid
down the principle that in order to constitute a contract of bailment, the bailee
must be made aware of the contents of the locker so that it can gauge the nature
and extent of the security and possible liability.
b) Usage of valet services of a Hotel.
.The given scenario is an example of Constructive delivery of
possession-“Where there is no physical transfer of possession, but something is
done which has the effect of putting them in possession of the Bailee.
As per the judgment given by Supreme Court bench of Justices Mohan
Shantanagoudar and Ajay Rastogi for the case of Taj Mahal hotel vs United
India Insurance, once the customer hands over the keys of his car to the valet,
the possession of the car is transferred from the customer to the hotel and thus, a
'relationship of bailment' is established. Bailment refers to the transfer of
personal property from one person to another either for safekeeping or for the
other person to control or use temporarily. For example when X enters a valet
service, and hands Z the keys of his car. Though Z does not actually hold the car
in his premises, the act of handing over of the keys constitutes delivery of
possession of the goods from X to Z hence creating a relationship of bailor and
bailee.
Q: Decide if the following constitute a valid contract of pledge. Support your
answer with statutory provisions and relevant case laws.
a) Transfer of possession of the title of goods. th statutory provisions and
relevant case laws.
Pledge will be valid when the transfer of possession of title of goods occur. As
in the case of Morvi Mercantile bank vs Union of India the receipt were
considered as security against the advance of 20,000 rs. It was held that owner
of the good can make a pledge by transferring the receipt. So the delivery of the
title of the good enable the pledgee to obtain actual possession, so the transfer
of possession of good is enough to have a valid pledge.
b) Amit, a lawyer persuades his client to sell his Creta car for Rs. 1 lakh to
Amit. Amit later pledges the car to Shweta.
As per the case of Phillips v Brooks Ltd. (1919) it was stated that “Whenever
goods are pledged by a person who has obtained possession under a voidable
contract then this type of pledge is valid, provided that the contract has not been
rescinded at the time of the pledge and the pledgee has acted in good faith and
without notice of the pledger's defect of title.”
In the present Scenario Amit persuaded his client to sell his Creta car to him at a
price of Rs.1 lakh, through this act Amit created a dominance over the will of
his client. Therefore through the given course of action the contract stated is
voidable from the side of the client. Later when Amit pledged the same car to
Shweta, the pledge stands completely valid since the client did not rescinded the
contract, and as per the Section 178 of the ICA ”When the pawnor has obtained
possession of the goods pledged by him under a contract voidable under section
19 or section 19A, but the contract has not been rescinded at the time of the
pledge, the pawnee acquires a good title to the goods, provided he acts in good
faith and without notice of the pawnor’s defect of title”. Therefor the plegde
made by Amit is completely valid.