Introduction

Section 148 of the Indian Contracts Act defines a bailment contract as “ the delivery of goods by
one person to another for some purpose, upon a contract that they shall, when the purpose is ac-
complished, be returned or otherwise disposed of according to the directions of the person deliver-
ing them”.1

This paper delves into the concept of bailment, substantiating its essential features by analysing the
existing jurisprudence on the subject. Considering the interpretation of the concept under different
circumstances by the judicature, relevant case laws have also been introspected.

Concept of Bailment:

‘Bailment’ is a delivery of a thing entrusted for some particular object or purpose upon a contract,
express or implied, to conform to the object or purpose of the trust.2 It is important to note that au-
thors like Chitty (2018) acknowledge that the idea of bailment is more of an amalgamation of con-
cepts than a comprehensive theory.3

As a result, under common law, it is a legal relationship in which the owner temporarily transfers
physical possession of the personal property while retaining ownership. The person who accepts
custody of the goods is referred to as the "bailee," while the owner of the goods who relinquishes
control is known as the “bailor.”

Contractual bailment's basic tenet is that parties can create unique bailment agreements by modify-
ing the rights and obligations imposed by the Indian Contract Act,4 with the caveat that these provi-
sions must be derogable and that the contract itself must be valid under Section 23.

Essential Features:

Bailment suggests a particular arrangement whereby one person temporarily gives their personal
property to another. It is a unique form of contract because one person has ownership over the prop-

1 Indian Contracts Act, 1872, §148

2 2 Cent Commn Lect 40.558; quoted with approval in Emperor v. Ghanshamdas, AIR 1928 Sind
106 at 107.
3 CHITTY ON CONTRACTS, Vol. 2, 227 (33rd ed., 2018) [hereinafter CHITTY]; See also TRM Copy
Centres (UK) Ltd. v. Lanwall Services Ltd. [2009] UKHL 35.
4 Bailments, Special Contract, Liability of Bailee, VIRGINIA LAW REVIEW, Vol. 3, 239-240 (1915).
erty while another has possession of them. On bare perusal of the wordings of the definition, the
following essential features of ‘bailment’ are emphasised:

Delivery of Possession:

It is almost universally agreed that no one can become a bailee without possessing a tangible chat-
tel.5 It is this change of possession which transfers to the bailor from the bailee, which is essential to
establish a contract of bailment.6 An exclusive right to possession, or being in de facto control of a
property, must be transferred for a delivery to occur.7 Ergo, a servant merely using his master’s
goods or a guest using his host’s goods won’t be considered a bailee.

A good explanation of this section was given in Tilendra Nath v United Bank of India8, where the
Court held that a contract of bailment is established only when there is a delivery of goods by one
person to another for a specific purpose and when the said purpose is achieved, the goods must be
disposed off or returned as per the directions of the bailor. It is not necessary for the bailor to pos-
sess a title to the goods bailed; any person keeping the capacity of giving physical possession of the
goods can create a contract of bailment.9

In Taj Mahal Hotel v. United India Insurance Co. Ltd., the Supreme Court opined that a change of
possession is essential to constitute bailment.10 However, the Contract Act draws a distinction be-
tween actual and constructive delivery.11 The transfer of physical possession over the goods by the
bailor to the bailee is called an actual delivery and is a common form of transfer of property. In con-
trast, the transfer of possession with the effect of putting the bailee in control over the goods with-
out actual change of physical possession is constructive delivery.

Constructive delivery has also been interpreted to be equivalent to possession required for bailment.
For instance, a warehouseman holding goods as an agent agrees per the owner’s instructions to keep
them for another person.12 In this case, a change in possession took place without any tangible trans-
fer. Possession need not imply immediate physical custody, given that the bailee enjoys the means

5 NORMAN PALMER, PALMER ON BAILMENT, 134 (3rd ed., 2009). [hereinafter PALMER]
6 Supra, Note 1.
7 Asaram v. Hyderabad Government, AIR 1952 Hyd 78.
8 Tilendra Nath v United Bank of India, AIR 2002 Gau. 1
9 Rasiklal Kantilal & Co v Port of Bombay, (2017) 11 SCC 1, 23.
10 Taj Mahal Hotel v. United India Insurance Co. Ltd., (2020) 2 SCC 224, 241.
11 Indian Contracts Act, 1872, §149
12 POLLOCK & MULLA, THE INDIAN CONTRACT AND SPECIFIC RELIEF ACTS, Vol. 2, 1497 (14th ed., 2012) [hereinafter
MULLA].
and mentality of some immediate control.13 Thus, there must be a delivery of ‘control’ over the
goods by the bailor to the bailee to fulfil the purpose of bailment.

Delivery & Return of goods upon some ‘purpose’:

The previously mentioned definition of ‘bailment’, as per Section 149,14 clearly mandates the exis-
tence of a purpose for forming such a contract. Bailment of goods is always made with the under-
standing that the goods would be returned to the bailor or otherwise disposed at  his discretion when
the purpose behind the contract has been achieved.15

The obligation of the bailee to return the goods or to deal with them according to the directions pro-
vided by the bailor is the essence of a bailment contract.16 Therefore, a deposit of money with a
banker is not bailment as he is not bound to return the same notes and coins.17 Thus, there can be no
bailment unless there is a delivery of goods and a promise to return.

Similarly, in Secretary of State v. Sheo Singh Rai,18 a man went to a Treasury Officer to seek the
cancellation and consolidation of nine government promissory notes into a single note for Rs.
48000. The treasury employee later misappropriated the notes, and the victim sued the State as a
bailee to hold it accountable.19 He was unsuccessful because there is no bailment without the deliv-
ery of a good and a commitment to restore it. Thus, the government was not bound to return the
notes or administer them in the way the individual desired.20

However, it is not necessary that the goods bailed have to be returned in the state they were bailed
in. In Sitla Bakksh Singh v Baij Nath,21 silver was entrusted to another person to be returned as a fin-
ished article; the court held that this was a contract of bailment.

As a result, a contract of bailment arises for the fulfilment of a specific reason, and the delivery of
the goods must take this purpose into consideration as well. Therefore, the correlation will not be

13 PALMER at 136.
14 Indian Contracts Act, 1872, §149.
15 Gangaram v. Crown, AIR 1943 Nag 436.
16 State of Maharashtra v Britannica Biscuits Co Ltd., (1995) 2 Supp SCC 72
17 Devendrakumar v. Gulab Singh, AIR 1946 Nag 114: ILR 1946 Nag 210.
18 Sheo Singh Rai And Anr. vs The Secretary Of State For India (1880) ILR 2 All 756.
19 Id.
20 Id.
21 Sitla Bakksh Singh v Baij Nath, AIR 1936 Oudh 264
that of a bailor and bailee if the person to whom the goods are delivered is not required to return
them to the person providing them or to handle them in accordance to his directions.

Reasonable Care of the Bailed Goods:

As per Sec 151 of the Indian Contract Act,” the bailee is bound to take as much care of the goods
bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own
goods of the same bulk, quality and value as the goods bailed .”22 As mentioned before, the stan-
dard of care expected from a bailee is that of reasonable care. In the case of the ordinary bailee for
storage, the execution of a contract of bailment adds nothing to his common-law obligation to take
reasonable care of the bailed article.23

Under English common law, the standard of ‘care’ varies case-to-case basis,24 with as many as six
types of bailments recognised in Coggs v. Bernard.25 In Brabant &Co v King,26 the court held that
the bailee’s duty for reward in English law is to exercise the same degree of care towards preserving
goods in his care as can be reasonably expected from a skilled storekeeper.

However, under the Indian Contract Act, the standard of care expected from a bailee is fixated as
that of a prudent man.27 This essentially implies that it must be shown that the bailee took as much
care of the goods as any ordinary prudent person would, of their own goods of the same quality and
value.28

While judging the amount of care to be taken by the bailee, a note must be taken off the mean and
opportunities appropriately and reasonably available to the bailee.29 Shipping Corporation of India
Ltd v Gamlen Chemical Co. (A/Asia) Propriety Ltd.30 is an excellent case to illustrate the same. In
this case, goods were damaged due to heavy weather on the high seas. The weather, though unusual

22 Indian Contracts Act, 1872, §151

23 Bora Laskin, Limitation and Exclusion of Liability in Bailment, THE UNIVERSITY OF TORONTO, Vol. 11, 202-223
(1956).
24 Hoguhland v R R Low (Luxury Coaches) Ltd., [1962] QB 694 at 698
25 Coggs v. Bernard, (1703) 2 Ld Raym 909.
26 Brabant & Co. v King, (1895) AC 632 at 640
27 Sec of State v Ramdhan Das Dwarka Das Firm, AIR 1934 Cal 151
28 Lakshmi Das v. Babu Mehg, 1990 Pun Rec No. 90; Rampal Ramchand Agarwal v. Gourishankar Hanuman Prasad,
(1952) Nag 49, AIR 1952 Nag 8.
29 Union Bank of India v Lakshminarain Harnarain, (1963) 13 Raj 40
30 Shipping Corporation of India Ltd v Gamlen Chemical Co. (A/Asia) Propriety Ltd, (1980) 147
CLR 142.
and unforeseeable, damage could have been avoided if the goods had been appropriately stowed.
Therefore, the bailee was held to be liable.

Thus, depending upon the circumstances of the case, the bailee must take reasonable care. A point
to note here is that Sec 151 and 152 do not apply to common carriers- they only apply to bailees
other than common carriers.31 A common carrier is defined as a person other than the government,
engaged in the business of transporting goods by land or inland navigation for all persons indiscrim-
inately.32

Conclusion:

Contract of bailment involves the transfer of possession of the good from the bailor to the bailee for
a specific purpose, and for the contract of bailment to be valid, all the essential features need to be
fulfilled. The contract of bailment, therefore, revolves mainly around the delivery of the possession
of the goods, the purpose behind the said delivery and the reasonable care that a bailee is expected
to take off the bailed goods. This paper tries to identify the myriad characteristics and highlights the
intricacies surrounding the essential feature which form the very crust of the contract of bailment
and is of utmost significance.

31 Supra, 6
32 Carriers Act, 1865, §2