This article is written by Aniket Sachan, 3rd-year student from Dr. Ram Manohar Lohiya National Law University, Lucknow
here he discusses the statutory bailment jurisprudence.
Bailment in common parlance is basically the conveyance of goods for some particular purpose. Change of possession is the main essential attribute of bailment.
According to Section 148 of the Indian Contract Act, 1872: “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, returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the “bailor”. The person to whom the goods are delivered is called the Bailee”.
The definition of word Bailment undoubtedly provides for the existence of the contract. Hence, whenever bailment occurs through contract only then Indian Contract Act, 1872 is applicable but it is however, incorrect to say that there cannot be bailment without a contract which is enforceable. The Contract law has progressed to verbalize that the standard of care is identically tantamount for all types of bailment.
The definition as provided in section 148 of the Indian Contract Act, 1872 provides for following essential components- i) Delivery of goods ii) Delivery for some purpose iii) Goods must be returned to bailor when purpose accomplished or be disposed of according to directions of the bailor.
Delivery in general sense means the transmission of possession of the goods from one person to another. It need not be actual. It can be constructive or symbolic. Section 149 of Indian Contract Act, 1872 provides that “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 authorized to hold them on his behalf.”
Statutory bailment generally refers to bailment entered by statutory or legislative ascendancy. The Indian Contract Act of 1872 remains silent on the following concept and does not exclusively deal with it. Hence, it leads to an embroilment whether bailment can subsist only with a contract or it can arise independently of the contract. The present mystification regarding statutory bailment has been settled by the Supreme Court in following case laws but still, there has been no enactment in the Contract Act of 1872 for the same. Even there has been a Law Commission Report which provided for the need to take legislative action for the same yet our legislature did not pay heed to it.
Initially, the position regarding statutory bailment was that when a person’s goods go into the position of another without any contract there is no bailment under sec 148. A well-known illustration for the same is the decision of Allahabad High Court in Ram Gulam v. Govt. of U.P. In it, Allahabad High Court had articulated the view that bailment can be there only when there is a contract. In the following case, the plaintiff’s property which previously had been stolen was recovered by the police. It may be mentioned that great adversity is shaped for the owner of the goods when he is not able to have any remedy against another person, who negligently loses it. The Property was glommed again and it despite all efforts could not be recovered. The State was sued to recuperate the value of the property with the police, plaintiff contended that the state was in the capacity of a Bailee. It was held that when there was no contract there can be no bailment. Therefore the question of State’s liability does not arise.
“But where the police have acted on mere suspicion and have seized the goods according to the procedure established under criminal procedure code. Then until the final decision of the court is declared the police have to act as a Bailee of goods and the burden of proof is upon Bailee to show that he has exercised reasonable care.”
English law recognizes bailment without the contract. In the words of Cheshire and Fifoot “We put at the present day no doubt at most instances where goods are lent or hired or deposited for safe custody or security for a debt, the delivery will be the result of a contract.”
With the passage of time Supreme Court and other High Courts realized the importance of bailment which existed independent of the contract between the parties. In the case of L.M. Co-Operative Bank v. Prabhudas Hathibhai, the Bombay High Court has taken the contrary view. In the following case, some packages of tobacco belonging to A had been pledged to the plaintiff bank but they were still lying in A’s godown. Owing to the non-payment of some income-tax dues by A, the said goods were affixed by the Collector. Hefty rains led to leak and the goods kept inside were damaged. Although goods were not in the possession of the Government under a contract yet the state was still held liable as a Bailee.
Similarly, Honourable Supreme Court in the landmark case of State of Gujarat v. Memon Mahomed held that the position of the State in respect of the goods seized by the customs authorities is that of a Bailee. If such goods are disposed of before the matter is finally decided and the authorities are not able to return the same when the final order is made, the state was held liable for the same.
Law commissions of India report
The Law Commission of India, 13th Report recommended: “In our opinion, the present definition of the bailment should not be altered. But the case of what has been described as quasi-contract of bailment should be provided for in a separate section stating that the bailor and Bailee in such cases, must, so far as may be, perform the same duties, as if they were bailors and Bailee under contract express or implied as provided in Section 148.”
Even if we consider common law or civil law we find that they have a well-developed jurisprudence regarding statutory bailment.
Position in England
In England, in the case of R v. Macdonald, Lord Coleridge, C.J. observed that “it is not correct as it appears to me, to use the expression ‘contract of bailment’ in a sense which implies that every bailment must necessarily in itself be a contract. It is perfectly true that in almost all cases a contract either express or implied by low accompanies a bailment, but it seems to me that there may be a complete bailment without the contract.”
Position in America
The American law also recognises a contract of bailment by implication of law. “It has previously been observed that an actual contract is not always necessary to create a bailment; Where, otherwise than by a mutual contract of bailment, one person has lawfully acquired the possession of personal property of another upon principles of justice, to keep it safe and restore it to the owner, it shall fall under a contract of bailment.”
To conclude, the present judicial position regarding statutory bailment is that there can be bailment without a contract. The Law Commission of India in its 13th report suggested that “bailment without a contract should also be included in the Indian Contract Act, 1872 but no concrete steps have been taken as yet.” In some of above-mentioned cases, the liability of Government as a bailor has been proved even when there was no existence of the contract.
In the State of Gujarat vs. Memom Mahomed, the Supreme Court of India accepted this view and stated that “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 bailment without an enforceable contract”
There has been a shift in position from Ram Gulam case to Memom Mehmood case. It was a very great move by our apex court as it preserved the rights and interests of the parties who relied on implied contracts. Even developed legislatures and judicial authorities of nations like the USA and Great Britain have recognised non-contractual bailment as valid. Our judiciary too correctly interpreted the decision but to our dismay, at the hard note, the legislature has not made any concrete step to include this provision in Indian Contract act, 1872. There is a desideratum and need of the hour to include this provision in our Act governing Bailment so that our act is habituated to transmuting desideratum of time and judiciary also get some help from the legislature in settling issues concerning with statutory bailment.