4) STATUTORY BAILMENT

Contents Page No.

Introduction 01
Essentials of Bailment 01
Kinds of Bailment 02

Duties of Bailor 02

Duties of Bailee 03

Rights of Bailee 03

Rights of the Bailor 04

Case Laws 04

Introduction

Bailment as defined in Section 148 of the Indian contract Act, 1872 is the delivery of goods by
one person to another for some specific purpose, upon a contract that these goods are to
be returned when the specific purpose is complete.

Bailment is an agreement that could be oral or written mutually agreed upon between the person
giving possession and the person taking possession, which might involve consideration.

For example, A delivering his car for service at the service center is an example of bailment.

Illustration: If A gives his car to B, his neighbor, for 10 days, but at the same time he keeps one
key with himself and during this period of 10 days he used to take the car. Now this will not be a
case of bailment as A is keeping control over the property bailed.

Essentials of Bailment

i. Delivery of Possession:

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 The main characteristic of a bailment is that the delivery contemplated is for a temporary
purpose. Delivery may be actual or constructive.
 Actual delivery may be made by handing over something to the bailee.
 Constructive or symbolic delivery may be made by doing something which has the effect
of putting the goods in the possession of the intended bailee.
ii. Delivery should be upon contract:
Delivery of goods should be made for some purpose and upon a contract that when the
purpose is accomplished the goods shall be returned to the bailor.
iii. Delivery should be for the samepurpose:
Bailment of goods is always made for some purpose and is subject to the condition that
when the purpose is accomplished the goods will be returned to the bailor or disposed of
according to his mandate.

Kinds of Bailment

On the basis of reward:

Gratuitous bailment:The bailment of products without any charges or reward is Gratuitous

bailment. In this type, there is no requirement to pay any charges by the bailee for the bailment.

Non gratuitous bailment:The bailment for some reward or charges is non gratuitous bailment. It
is required to pay some charges to the bailor by the bailee.

On the basis of benefit

 Bailment contract made for the exclusive benefits of the bailor.

 Bailment made for the exclusive benefits of the bailee.

 Bailment is made for mutual benefits of both bailor and bailee.

Duties of Bailor

 Disclose the Facts- The bailor must disclose all the facts of the goods delivered
to bailee. It was defined under Section 150 of the Indian Contract Act of 1872.
 To Bear all the Expenses- The bailor must pay the ordinary expenses to bailee. If there
are any extra expenses, he is bound to pay the extraordinary expenses.
 To Indemnify the Bailee- The duty to indemnify the bailee refers to the responsibility of
the bailor to compensate the bailee for any loss, damage, or liability incurred during the
period of bailment. It is an essential aspect of a bailment relationship, where the bailor
entrusts their property to the bailee for a specific purpose.

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  Compensation for Premature Termination- It is the duty of the bailor to compensate
the bailee if the bailor has terminated the bailment; in case of incurring any loss, then it is
the duty of the bailor to compensate.
 To Take Back the Goods- The bailor must take back the goods from the bailee when
the specific purpose has been fulfilled.

Duties of Bailee

 Duty to take care of goods- Bailee must take care of the goods until he returns the goods
to the bailor. It means bailee has to take reasonable care of the bailed property. This
means the bailee has to protect the bailed property from damage, theft, and any harm that
may occur during the period of bailment.
 Duty to use the property for the agreed purpose- The bailee must use the bailed property
only for its entrusted purpose. Without the consent of the bailor, if he deviates, it would
lead to the liability of the bailee.
 Duty to not mix the property- The bailee is responsible for not mixing the bailor's
goods with the other goods. If the goods are mixed, he will be held liable if the goods are
unable to separate. If the goods can be separated, the bailee will bear the expenses to
separate the mixed goods.
 Duty to return the property- If the purpose of the bailment is fulfilled upon the agreed
period, the bailee must return the property to the bailor.
 Duty to render Accounts- When the bailor approaches the bailee for information
regarding the status of the property bailed and the condition of the property, the bailee
must provide accurate reports of all transactions connected to the bailment and the bailee
is required to maintain correct records.

Rights of Bailee

 Right to Possession- One of bailee's rights is to have possession of the goods that are
subject to the matter of the ailment. But the right to possession is limited. The Bailee has
to use the goods only for a specific purpose, not for any other purpose, without the
consent of the Bailor.
 Right to Lien- The bailee has the right to lien, which means the bailee can take back
the possession of the goods bailed by the bailor until the charges are paid in respect of the
goods. This right would be applicable when there is a legal contract between the parties,
i.e., a contract of bailment.
 Right to Recover Compensation-If the bailor does not disclose any facts, then any
expenses incurred by the bailee, the bailee has the right to compensate for the damages he
incurred.

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 Rights of the Bailor

 Right to terminate the contract- The bailor has the right to terminate the contract before
the purpose of the bailment has been completed. But the bailor has to compensate the
bailee for any loss incurred due to termination of bailment.
 Right to take the goods back- The bailor has the right to take back the goods after the
purpose of the bailment has been completed in a specified time if mentioned.
 Right to Sue- The bailor has a right to sue the bailee in case of breach of contract. If the
bailee fails to fulfill the contract terms, then the bailor can sue for the breach of contract.

Case Laws

 Jagdish Chandra Trikha v. Punjab National Bank:1 This case is related to a parcel which
was carrying some gold jewellery. The jewellery was well sealed and packed. When the
parcel reached the destination some part of the jewellery was missing. In this case,
the Delhi High Court held that the position of bank is of bailee.
 Kavita Trehan v. Balsara Hygiene Product Ltd.: 2 In this case, the Supreme Court decided
that one of the very requirements of bailment is the delivery of goods to the bailee, where
there is no change of possession, there is no bailment.
 Annamalai Timber Trust Ltd. v. Thrippunithura Dewas: 3 The Kerala High Court held that
where there is no obligation to return identical subject matter is an altered manner there
is no bailment.

1
Jagdish Chandra Trikha vs Punjab National Bank And Ors. on 24 October, 1997

2
Mrs. Kavita Trehan And Another vs Balsara Hygience Products Ltd. on 11 July, 1994

3
Anamalai Timber Trust Ltd. vs Commissioner Of Income-Tax, Kerala. on 15 March, 1962

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