Section 148 of the Indian Contract Act, 1872 defines a contract of bailment as one in which the goods are delivered by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise be disposed of according to the directions of the persons delivering them.[2]

Chapter IX of the Contract Act deals with Sections 148 to Section 171 which pertain to the Contract of Bailment.Section 160 of the Act lays down the duty on part of the bailee to return the bailed goods.[3] Section 161 clarifies the obligations of the bailee if the goods are not returned.[4]

One of the essentials of a contract of bailment is that once the purpose for which goods are bailed is accomplished, the bailee has to return the goods back to the bailor or dispose of as per the direction of the bailor. The bailee has no right to return the goods bailed even if the purpose of bailment is not accomplished.

The bailee is under a duty to return the goods bailed on expiration of the period of bailment, unless he can show good cause for not returning them. The liability on the bailee does not exist merely for return of goods to the bailor but also for returning the bailed goods according to the directions of the bailor.

S. 160: Return of goods bailed, on expiration of time or accomplishment of purpose

Section 160 of the Indian Contract Act, 1872 is produced below:

It is the duty of the bailee to return, or deliver according to the bailors 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.[5]

Chitty on Contracts recognizes the difference between possession and ownership of the goods bailed as the fundamental principle as to why the goods must be returned back to the bailor.[6] He says that under a contract of bailment, the possession of the goods stands transferred and not the ownership and therefore, no ownership means that the bailee cannot keep the goods even after the expiration of the bailment contract.[7]

The bailee has no right to return the goods before the expiry of the time or accomplishment of purpose.[8] He continues, for example, to be liable to pay the hire charges for the entire period of bailment, unless the bailor, on receiving the goods, treats their return as ending the contract.[9]Nor can the bailee, who has given up possession of goods, bailed with the consent of the bailor, seek recovery of the goods bailed.[10]

• Duty to deliver according to bailors directions

  Directions about delivery of goods may have been given before the purpose of the bailment has been accomplished.[11] Directions about the delivery or disposal of the pledged property may be given by the bailor, and not the assignee.
  
  Case Analysis: A copy each of the completed text of a book composed by Professor Humayun Kabir on the basis of the notes dictated by Moulana Abdul Kalan Azad was deposited under sealed covers in the National Archives, New Delhi and the National Library, Calcutta with a stipulation that they should be opened thirty years after his death at the respective places as desired by Maulana Azad. But the government decided to open both the seals in New Delhi. It was held that only conclusion that can be drawn therefrom is that the government failed to perform its duty as a bailee under a contract of bailment and its action violated Section 160 of the Indian Contract Act, 1872.[12]
  
  Thus, it is an established principle that the goods/chattels necessarily need to be returned or disposed of according to the directions given by the bailor only.
  
  

• Excuses to bailees duty to return the goods

  The bailee is, therefore, normally under an obligation to return the bailed chattel to the bailor at the end of the period of the bailment, unless he can show good cause for not returning it.[13] Some situations where the bailees duty to return the goods to the bailor can be excused are:

1. Where no time is stipulated in the Contract of Bailment - It has been held in the case of Chaturgun v. Shahzady that there is an implied contract of in a bailment to return the articles in a reasonable time after the purpose is served even if no time is stipulated in the contract for return.[14]
   
   
2. Where the goods are unfit for purpose - Where the goods are found unfit for the purpose for which they were hired and for which they were bailed is not accomplished, the consequences are not provided by the Indian Contracts Act, 1872. However, the Courts have held that where an article is hired for use or a purpose but such article in unfit for such use or purpose, it is treated as a breach of warranty, and the bailee is not bound to return it to the bailor because the purpose cannot be accomplished. In such a case, the bailee may give notice to the bailor who is then bound to take it back.[15] Thus, in a case where the goods may be found to be unfit for the purpose, the onus of delivering the goods shifts from bailee to the bailor.
   
   
3. Where there is an accidental loss to the goods - If the bailee has wrongfully parted with the chattel[16] or lost it by negligence, it is no defence for him to show that he is unable to return it.[17] However, an accidental loss or destruction of the goods without there being any fault on the part of the bailee, may excuse his failure to return them.[18] Therefore, the distinction that plays a vital role here in excusing the bailees duty to return the goods is the act of the bailee himself.

S. 161: Bailees responsibility when goods are not returned

Section 161 of the Indian Contract Act, 1872 reads thus:

If, by the default 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.[19]
When the purpose of bailment is accomplished or the time for which the goods were bailed has expired, the bailee should return the goods to the bailor without demand.[20]

However, it was held in the case of Shaw & Co. v. Symmons & Sons that if the bailee fails to deliver the goods upon such expiry or fulfillment, he keeps the goods at his risk and would be responsible for any loss of or damage to the goods arising howsoever.[21]

When the loss takes place while the bailees wrongful act is in operation, there is no question of any defense like act of god or inevitable accident being set up. The bailee is liable in any case.

• Default of the Bailee
  The bailee is not liable for the loss, destruction or deterioration in goods, if such loss etc. has arisen because of a cause other than his own default. The bailee would thus be liable if he is unable to return the goods because he has already given them to a third party,[22] or has lost the goods because of negligence. But, the liability to return will stand excused if the goods are lost or destroyed without his default.
  
  Unexplained failure to return the thing bailed is presumed to be by the bailees default.[23] A bailee who refuses to give delivery, except upon some unjust or unreasonable condition, is in default.[24]
  
  This section has to be read subject to Sections 160 and 173[25] as the default referred in this section can arise only when the time for which goods had been bailed had expired or the purpose for which they had been bailed, has been accomplished. When the default of the bailee is established, and the responsibility falls to be determined by this section, the burden shifts on him to prove that the loss, for which he is sought to be made liable by the bailor, occurred prior to the commencement of default on his part.[26]
   
• Proper Time
  Proper time is a very vague in itself.[27] Though the courts have not yet defined exactly what the term means and what period of time may be referred to as a proper term, it has been held by the court that the words proper time in this section are not the same thing as reasonable time.
  
  
• Remedy available to the Bailor
  If the good are not forthcoming, the Act doesn't specify the extent of the bailors remedies against the bailee. A concurrent action can be brought in contract as well as in tort. In addition to bringing an action in contract or tort or both, the bailor also has equitable rights

It was the Law Commission of India that thought that the remedies of the bailor in the event the bailee did not return the goods ought to be specified.[28] In the event of non-delivery of the goods by the bailee, the bailor is entitled, at his election, to sue the bailee for wrongful conversion or wrongful detention of the goods i.e. in trover or in detinue.

S. 159: Return of goods lent gratuitously

The lender of a thing for use may at any time require its return, if the loan was gratuitous, even though he lent it for a specified time or purpose. But, if the loan was gratuitous, even though he lent it 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 loss exceeding the benefit actually derived by him from the loan, then, the lender must, if he compels the return, indemnify the borrower for the amount in which the loss so occasioned exceeds the benefit so derived.

Gratuitous bailments, though very common in private life, are not matters of business and therefore, do not come into court. Further, an express contract not to recall a thing gratuitously lent before the expiration of a certain time would be supported by consideration, ought to be good notwithstanding this Section. The Law Commission of India in its 13th Report thought that Section 159[29] is no bar to a contract, not to recall a thing lent gratuitously.[30]

S. 163: Bailor entitled to increase or profit from goods bailed while returning such goods

The bailee is bound to deliver to the bailor or according to the directions of the bailor, any increase or profit accruing from the goods bailed, unless there is a contract to the contrary.[31]

The section does not give to a bailor the right to claim the accretions before the purpose of the bailment is accomplished, or the bailee has become liable to return the bailed goods. In Standard Chartered Bank v. Custodian, it was contended that in the absence of the words upon redemption in this section, the bailee with whom shares were bailed was not entitled to retain the bonus shares issued in respect of the bailed/pledged shares.[32] It was held that even though this section did not expressly provide so, a pledge of shares extended to accretions like bonus shares, and the bailee was not liable to return them until the pledge was redeemed.

S. 165: Bailment by several joint owners: How to return the goods?

Section 165 of the Act provides thus:

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.[33]

The bailee may deliver the goods according to the direction of any one of the joint owners, where the joint owners have bailed the goods, unless there is an agreement to the contrary. Even if there is an agreement to the contrary, one of several joint owners cannot, after having accepted redelivery from the bailee, sue him jointly with the other owners; for one party to a contract cannot maintain an action for a breach occasioned by his own act, and neither can three parties maintain an action unless each party separately could.[34]

In contrast, under the English law, where goods belonging to co-owners are delivered to a bailee to hold on behalf of all, it is implied, unless expressly stipulated to the contrary, that he shall deliver up possession only upon the demand of all the co-owners; and the bailee is justified in refusing to redeliver them to one of them only.[35]

End-Notes

1. 148, The Indian Contract Act, 1872.
2. 160, The Indian Contract Act, 1872.
3. 161, The Indian Contract Act, 1872.
4. 160, The Indian Contract Act, 1872 (India). TA \l §161, The Indian Contract Act, 1872 (India). \s §161, The Indian Contract Act, 1872 (India).
5. Chitty on Contracts, Specific Contracts, Vol. II, p. 33-010 (13th Ed.).
6. Id. TA \l II Chitty on Contracts, Specific Contracts, p. 33-010 (13th Ed.) \s II Chitty on Contracts, Specific Contracts, p. 33-010 (13th Ed.) \c 5
7. Pollock and Mulla, Indian Contract and Specific Relief Acts, Vol. II, p. 1969 (12th Ed.). TA \l II Pollock and Mulla, Indian Contract and Specific Relief Acts, p. 1969 (12th Ed.). \s II Pollock and Mulla, Indian Contract and Specific Relief Acts, p. 1969 (12th Ed.). \c 5
8. Raman Ezhuthassan v. V Devassi, A.I.R. 1958 Ker 380 (India). TA \l Raman Ezhuthassan v. V Devassi, A.I.R. 1958 Ker 380 (India). \s Raman Ezhuthassan v. V Devassi, A.I.R. 1958 Ker 380 (India).
9. Jammu & Kashmir Bank v. Tek Chand, A.I.R. 1959 J&K 67 (India). TA \l Jammu & Kashmir Bank v. Tek Chand, A.I.R. 1959 J&K 67 (India). \s Jammu & Kashmir Bank v. Tek Chand, A.I.R. 1959 J&K 67 (India).
10. Tekchand v. Mahadeo, A.I.R. 1922 Nag 127 (India). TA \l Tekchand v. Mahadeo, A.I.R. 1922 Nag 127 (India). \s Tekchand v. Mahadeo, A.I.R. 1922 Nag 127 (India).
11. Orient Longman Ltd. v. Jayati Laila Kabir, A.I.R. 1988 Cal 410 at pp. 415, 420 (India). TA \l Orient Longman Ltd. v. Jayati Laila Kabir, A.I.R. 1988 Cal 410 at pp. 415, 420 (India). \s Orient Longman Ltd. v. Jayati Laila Kabir, A.I.R. 1988 Cal 410 at pp. 415, 420 (India).
12. British Crane Hire Corp. Ltd. v. Ipswich Plant Hire Ltd., [1975] Q.B. 303 at pp. 311, 313. TA \l British Crane Hire Corp. Ltd. v. Ipswich Plant Hire Ltd., [1975] Q.B. 303 at pp. 311, 313. \s British Crane Hire Corp. Ltd. v. Ipswich Plant Hire Ltd., [1975] Q.B. 303 at pp. 311, 313. \c 9
13. Chaturgun v. Shahzady, A.I.R. 1930 Oudh 395 (India). TA \l Chaturgun v. Shahzady, A.I.R. 1930 Oudh 395 (India). \s Chaturgun v. Shahzady, A.I.R. 1930 Oudh 395 (India).
14. IsufalliHassanally v. Ibrahim Dajibhai, A.I.R. 1921 Bom 191 (India). TA \l Isufalli Hassanally v. Ibrahim Dajibhai, A.I.R. 1921 Bom 191 (India). \s Isufalli Hassanally v. Ibrahim Dajibhai, A.I.R. 1921 Bom 191 (India).
15. Alexander v. Railway Executive, [1951] 2 K.B. 882. TA \l Alexander v. Railway Executive, [1951] 2 K.B. 882. \s Alexander v. Railway Executive, [1951] 2 K.B. 882.
16. Jones v. Dowle, (1841) 9 M. & W. 19, 20 TA \l Jones v. Dowle, (1841) 9 M. & W. 19, 20 \s Jones v. Dowle, (1841) 9 M. & W. 19, 20 \c 9 ; Reeve v. Palmer,(1858) 5 C.B. (N.S.) 84. TA \l Reeve v. Palmer,(1858) 5 C.B. (N.S.) 84. \s Reeve v. Palmer, (1858) 5 C.B. (N.S.) 84.
17. 152, The Indian Contract Act, 1872 (India). TA \l §152, The Indian Contract Act, 1872 (India). \s §152, The Indian Contract Act, 1872 (India)
18. 161, The Indian Contract Act, 1872 (India). TA \s §161, The Indian Contract Act, 1872 (India).
19. Avtar Singh, Contract & Specific Relief, p. 692 (12th Ed.). TA \l Avtar Singh, Contract & Specific Relief, p. 692 (12th Ed.). \s Avtar Singh, Contract & Specific Relief, p. 692 (12th Ed.).
20. Shaw & Co. v. Symmons& Sons, (1917) 1 K.B. 799. TA \l Shaw & Co. v. Symmons & Sons, (1917) 1 K.B. 799. \s Shaw & Co. v. Symmons & Sons, (1917) 1 K.B. 799.
21. Alexander v. Railway Executive, [1951] 2 K.B. 882. TA \s Alexander v. Railway Executive, [1951] 2 K.B. 882.
22. Annamalai Timber Trust Ltd. v. TripunnithuraDevaswom, A.I.R. 1954 Tr &Coch 305 at p. 311 (India). TA \l Annamalai Timber Trust Ltd. v. TripunnithuraDevaswom, A.I.R. 1954 Tr &Coch 305 at p. 311 (India). \s Annamalai Timber Trust Ltd. v. TripunnithuraDevaswom, A.I.R. 1954 Tr &Coch 305 at p. 311 (India).
23. GIP Rly. v. Firm of Manikchand Premji, A.I.R. 1931 Nag 29 (India). TA \l GIP Rly. v. Firm of Manikchand Premji, A.I.R. 1931 Nag 29 (India). \s GIP Rly. v. Firm of Manikchand Premji, A.I.R. 1931 Nag 29 (India).
24. 160, The Indian Contract Act, 1872; §173, The Indian Contract Act, 1872 (India). TA \l §173, The Indian Contract Act, 1872 (India). \s §173, The Indian Contract Act, 1872 (India).
25. Secretary of State v. Kesho Prasad Sheo Prasad, Belanganj, A.I.R. 1932 All 584 (India). TA \l Secretary of State v. Kesho Prasad Sheo Prasad, Belanganj, A.I.R. 1932 All 584 (India). Secretary of State v. Kesho Prasad Sheo Prasad, Belanganj, A.I.R. 1932 All 584 (India).
26. Haji Mahommad Jamaluddin Bros. v. Union of India, A.I.R. 1959 A.P. 84 (India). TA \l Haji Mahommad Jamaluddin Bros. v. Union of India, A.I.R. 1959 A.P. 84 (India). \s Haji Mahommad Jamaluddin Bros. v. Union of India, A.I.R. 1959 A.P. 84 (India).
27. Law Commission of India, 13th Report, 1958,128 (India). TA \l Law Commission of India, 13th Report, 1958,128 (India). \s Law Commission of India, 13th Report, 1958, 128 (India).
28. 159, The Indian Contract Act, 1872 (India). TA \l §159, The Indian Contract Act, 1872 (India). \s §159, The Indian Contract Act, 1872 (India)
29. Law Commission of India, 13th Report, 1958,127 (India). TA \l Law Commission of India, 13th Report, 1958,127 (India). \s Law Commission of India, 13th Report, 1958, 127 (India).
30. Pollock and Mulla, Indian Contract and Specific Relief Acts, Vol. II, p. 1979 (12th Ed. 2006). TA \l II Pollock and Mulla, Indian Contract and Specific Relief Acts, p. 1979 (12th Ed. 2006). \s II Pollock and Mulla, Indian Contract and Specific Relief Acts, p. 1979 (12th Ed. 2006).
31. Standard Chartered Bank v. Custodian, A.I.R. 2000 S.C. 1488 (India). TA \l Standard Chartered Bank v. Custodian, A.I.R. 2000 S.C. 1488 (India). \s Standard Chartered Bank v. Custodian, A.I.R. 2000 S.C. 1488 (India).
32. 165, The Indian Contract Act, 1872 (India). TA \l §165, The Indian Contract Act, 1872 (India). \s §165, The Indian Contract Act, 1872 (India).
33. Brandon v. Scott, (1857) 7 E&B 234. TA \l Brandon v. Scott, (1857) 7 E&B 234. \s Brandon v. Scott, (1857) 7 E&B 234.
34. Bailment, Halsburys Laws of England, Vol. II, 1804 (4th Ed.). TA \l ‘Bailment, Halsburys Laws of England, 1804 (4th Ed.). \s ‘Bailment, Halsburys Laws of England, 1804 (4th Ed.)

Written By: Mr. Abhinav is a 2nd year law student at National Law University, Jodhpur-342304.
I may be contacted at: Mob. – 7340107980; E-Mail – [email protected].