1

KRISHA SHAH 18010200

PART 1

Controversies regarding Section 151 & Section 152

Whether a bailee can contract himself out of his obligation to the bailor for negligence in dealing with the
goods? In other words can the bailee decrease the minimum degree of care required under Section 151 by
special contract?

Section 151 sets out the absolute minimum care required to be taken by the bailee while dealing with the goods
of the bailor whereas Section 152 indicates liability for loss emerging out of a special agreement even after
required minimum amount of care had been taken by the bailee. Section 152 says that a bailee can make a
special agreement expanding his obligation. He may by making a special contract increase his obligation. But
does that imply that you can decrease the minimum level of care required under Section 151 by special
agreement. In few cases it has been held that it is open to a bailee to lessen his risk beneath the standard fixed by
Section 151. In such regard Indian position isn't clear if the standard measure of care required by Section 151 is
reducible by any special contract or not.There has been contrasting judgments given regarding exemption of the
liability of the bailee with the help of a “special contract”

In Bombay Steam Navigation Co v. Vasudev Baburao1 the court held that it was available to bailee to
contract himself out of the obligations forced by Section 151 and it would curb his freedom if he is denied to do
so. Court pursued a similar line of thinking in State of Bank v. M/s. Quality Bread Factory, Batala2 also. In
any case, this understanding of Section 152 invalidates the purpose of having minimum standard of care for the
bailee. Avatar Singh3 in his book has expressed that the words in Section 152 "in the absence of any special
contract" would allow the standard of obligation of care to be reexamined upwards and not to be reduced and
furthermore that nobody can get a permit to be careless. Even the authors of Pollock and Mulla4have expressed
that it isn't valid to absolve the bailee absolutely of his liability from negligence.The court in United Indian
Assurance Co Ltd v. Pooppally Coir Mills5 held that bailee can't ask for an absolute exclusion from the
minimum standard of care In Central Bank of India v. Grains and Gunny Agencies 6 as well, the court held
that in any event, when bailee has contracted himself out of obligation because of his own carelessness, the
bailee has to still show that he took a lot of care of the pledged goods an ordinary prudent man. From my
perspective. it will seem, by all accounts, to be a superficial reading of the law if bailee can dispose of his

1
1928 ILR 52 Bom 37.
2
AIR 1983 P&H 224
3
Avatar Singh, Contract and Special Relief, (10 th edn, EBC) 1973
4
Nilima Bhadbhade, Pollock and Mulla: The Indian Contract and Special Relief Acts, (14 th edn, Butterworths,
2012) 1905
5
1994 2 Ker LT 473
6
Ibid § 159 and § 160
 2

obligations by method of a contract. On the conjoint perusing of both Section 151 and Section 152, it appears to
be evident that unless if the standard of care of the bailee has been improved by a special agreement, he will be
at risk just when he neglects to meet the minimum required standard of obligation of care. However, Any
contract regarding exemption from liability of the bailee however, is not illegal.

PART 11

The law on dishonour of cheques should NOT be repealed.

The Constitutional Validity of Sec 138 is in debate from the day the said it was embedded in the provisions of
the NIA, 1881. The provision of Section 138 was viewed as unlawful and violative of Articles 14, 19 and 21 of
the Constitution of India. The Constitutionality of Sec 138 under Article 21 was tested in Ramawati Sharma v.
Association of India7 . For this situation it was tested that Sec 138 just gave punishment only in case of cheques
and not promissory notes or bills of exchange and that the returning of loan is just a civil offense and it couldn't
be treated as a criminal offense according to the provision of Sec 138. The Court was of the view that checks
and promissory notes can't be treated in the same way because the act of taking a loan isn't what is culpable
however the act of promising an individual to pay a specific sum by the method of cheque and later not doing as
such because of dishonour.

Further in Mohan Krishna v. Association of India 8 it was tested if the Section was violative of Article 14 of
the Indian Constitution as on the grounds that it made a line of differentiation among natural and artificial
persons. That implies that according to the arrangements of the Section the directorates, or bosses of a firm
could get away from their risk essentially by demonstrating that the cheque which was dishonoured was not
given within their knowledge yet the equivalent was not applicable to individual persons. The Court was of the
view that Article 14 of the Constitution of India prevented class legislation but it never prevented the formation
of reasonable classification based upon certain provisions.

The Court additionally held that the criminal law of the Country has made a line of differentiation in case of
natural and artificial persons in order to affix them with criminal liability. It was additionally tested on the
ground that the idea of mens rea which is the central core of any criminal offense has been excluded under
Section 138. In this case, the component of mens rea has been excluded to control the occasions of dishonouring
of checks and to give validity to the business exchanges through cheques.

7
LawTeacher. November 2013. Criminal Liability Under Negotiable Instruments Act. [online].
8
LawTeacher. November 2013. Criminal Liability Under Negotiable Instruments Act. [online].