LEGAL ASPECT OF

BUSINESS
UNDERSTANDING THE LAW ON BAILMENT BY THE HELP OF
CASE

Submitted By: Nishant Singhal

MBA19050 | SECTION A MBA 2019-21
Contents
CASE OVERVIEW.............................................................................................................................2
JUDGEMENT......................................................................................................................................4
VERDICT.............................................................................................................................................5
SECTION/LAWS COVERED............................................................................................................6
LESSONS LEARNT...........................................................................................................................7
REFERENCES....................................................................................................................................8
 CASE OVERVIEW

Case Name: T & T Motors Ltd. vs Satish Ostwal & Anr. On 4 May 2012
Parties Involved:
Plaintiff: T & T Motors Ltd.
Represented through Mr. Vinod Kumar, Asst. Gen. Manager (Legal)
Defendant: 1.) Sh. Satish Ostwal
2.) Sh. S. J. Singh (Sarabjit Singh)
Facts: The plaintiff was an authorized dealer of Mercedez Benz Passage Vehicle in
Okhla, New Delhi. He was engaged in the selling, servicing and repairing of the vehicles.
Mr. Satish Ostwal (Defendant 1) was the registered owner of the Mercedez Car. On 11 th
September 2008, Mr. S. J. Singh (Defendant 2) took the car to the Plaintiff's workshop
for the repairs as the car was badly damaged in some accident. This was confirmed by
Defendant 2 to the Plaintiff as well. Since the car was badly damaged, and to get in
original condition, the plaintiff examined the car to assess the damages and likely
repairs and prepared a schedule for the repair, replacement of various parts and
accessories with an estimated cost of repairs of about Rs. 12 Lac. Defendant 2 gave the
written approval for the repairs and then the plaintiff started to repair the car as per the
instruction by the defendant 2.
The Plaintiff issued two payment invoices of Rs. 11,37,415 and Rs. 77,095 to the
defendants to make necessary payment for the service that Plaintiff provided. The
invoice also had the 7-day deadline to make a payment, failing which Defendants were
liable to pay interest @ 18% per annum over the due amount after 7-day expiry and
also the parking charges @ Rs. 250 per day after the vehicle was ready for delivery as
per Clause No. 6 of Preorder. Many information regarding the payments of dues and
collecting the vehicle from the Plaintiff were made to the defendants, but no one
appeared for the same. The plaintiff also sent the demand notice to both the defendants,
but the letter to defendant 1 was received back with remarks ‘incomplete address’ and
the letter to defendant 2 was delivered. In the end, the Plaintiff has to file a suit against
both the defendants for the payment of an outstanding amount of Rs. 12,98,441 in the
Delhi High Court.
Argument by Defendant 2: Mr. Sarabjit Singh made two arguments regarding the suit
filed against him.
Argument 1: Mr. Sarabjit Singh claimed in the court that the vehicle belonged to
Mr. Satish Ostwal and he had taken the vehicle on lease from the arrangements
made by the M/s Transcity Travel Co. Pvt. Ltd., Connaught Place, New Delhi to
whom Mr. Satish Ostwal had given the rights, authority, and powers to lease the
vehicle. As per the agreement, the vehicle was rented for five years to Mr.
Sarabjit Singh (lessee) on advance rental payment of Rs. 150000. Also, as per the
 agreement, the first two years' insurance and road tax were to be paid by the
lessor and the last two years insurance and road tax were to be paid by lessee.
Also, as per the contract, any amount that was over and above the claim of the
insurance company had to be paid by lessee. Since the accident occurred during
the first two years of the leased vehicle, Mr. Sarabjit Singh (Defendant 2) claimed
that he was not liable to make any payment to the plaintiff, and the outstanding
amount for the expenses on repairs/denting/painting shall be paid by Mr. Satish
Ostwal (Defendant 1) or the insurance company.
Argument 2: Mr. Sarabjit Singh also denied that the estimated cost of repair to be
approx. Rs.12 lakh was orally informed to him by the Plaintiff. He also falsified
the two invoices of Rs. 11,37,415 and Rs. 77,095 sent to him by saying them to be
exaggerated and inappropriate as the market value of such an old model car in
working condition cannot be greater than Rs. 150000. Mr. Singh also denied
paying interest @ 18% per annum and parking charges @ Rs. 250 per day as no
pre-order was entered between the parties.
Argument of Plaintiff: The Plaintiff presented the argument that the vehicle at his shop
was delivered by the defendant 2 and he was claimed to be the representative or agent
of the defendant 1 by the plaintiff. The plaintiff also presented the argument that the
repair work of the vehicle was commenced only after the written approval given by the
defendant 2. The plaintiff also argued that his claim cannot be denied because of any
agreement between defendant 1 & M/s Transcity Travel Co. Ltd. and the defendant 2.
The plaintiff had repaired the car by putting his manpower and energy and the vehicle
was ready for delivery which was already communicated to the defendants via letter.
So, therefore, the suit was correct.
Note: Defendant 1 remained unserved for the suit and therefore was proceeded exparte
by the court.
Pleadings of the Plaintiff and Defendant 2:
 Whether the suit was against Defendant 2 for want of privity of contract between
the Plaintiff and Defendant 2, the latter being the representative of defendant 1.
 Whether the plaintiff was entitled to a decree of money of Rs. 12,98,441 against
the defendants
 Whether the plaintiff was entitled to interest @ 18%, if so, for what period
Case Evidence:
Written Approval by defendant 2, Invoices of the repair bill, letter issued regarding the
dues payment and delivery of the vehicle and, demand notice by the Plaintiff
The plaintiff presented two witnesses, Mr. Vinod Kumar, author of the plaint and Mr.
Bhushan Dhir, Manager Body Shop but no one from the defendant 2 side appeared to
cross-examine the witnesses.
Defendant 2 failed to present any witness on his behalf even after the last opportunity
given by the court.
 JUDGEMENT
 The defendant 2 raised the question of privity of contract between the Plaintiff and
himself. However, no one from the defendant 2 sides came to cross-examine
witnesses nor any evidence by defendant 2 led to the denial of the claim of no privity
of contract between the Plaintiff and Defendant 2.
 The document record presented by the Plaintiff of written approval of carrying the
repairs by defendant 2, the invoices and the letters for the completion of repairs by
the Plaintiff to the defendants established the argument by the Plaintiff and
therefore Plaintiff is entitled to a decree of money.
 The case of both parties was assessed on the provisions of law, particularly the
Indian Contract Act,1872 and the evidence present in the court. It was inferred by
the witnesses and evidence, that defendant 1, the owner of the car never appeared
nor made any request for the car repair at the Plaintiff workshop. The defendant 2
had brought the car to the Plaintiff workshop and had given the written approval for
the car repair. Since the owner of the car was defendant 1 and defendant 2 just
brought the car to the workshop, so the Plaintiff himself drawn the inference of
defendant 2 being the agent of defendant 1.
 The preorder and the invoices were prepared on the name of defendant 1 but did
not bear the sign of defendant 1.
 No evidence may suggest that defendant 2 was acting as the agent of the defendant
1. The written approval given by the defendant 2 to the plaintiff for carrying the
necessary repairs was solely by defendant 2 and not acting as an agent of defendant
1.
 The court gave the decision that the relation between Plaintiff and Defendant 2 was
governed by the provisions of Bailment under Chapter IX of the Indian Contract Act,
1872 under Section 148 and 158.
 The privity of contract between Defendant 2 and Plaintiff was governed by Section
148 of the Indian Contract Act. The court gave the point since the vehicle was
delivered by Defendant 2 to the Plaintiff with his authorization for carrying the
repair. Therefore, defendant 2 and Plaintiff came under the Bailment contract. Also,
the defendant 2 arguments of the agreement between Defendant 2 and Defendant 1
& M/s Transcity Travel Co. Ltd. did not affect the contract between Defendant 2 and
the plaintiff, as both were independent contracts.
 As per Section 158 of the Indian Contract Act, defendant 2 was liable to pay the
invoice amount of Rs. 12,14,510 (Rs.11,37,415 + Rs. 77,095) to the plaintiff because
of the independent contract between them.
 The preorder was not signed by defendant 2, therefore merely on the terms and
conditions in preorder, defendant 2 cannot be made liable to pay parking charges @
Rs. 250 per day and interest @ 18% per annum.
 However, in terms of Section 34 of CPC, the defendant 2 will be liable to pay interest
@ 6% per annum from the date of suit till realization of justice on the principle of
the invoice amount of Rs. 12,14,510.
 VERDICT
The verdict was in favor of the Plaintiff and was against Defendant 2. The court ordered
the defendant 2 (Mr. Sarabjit Singh) to make payment of Rs. 12,14,510 (Rs. 11,37,415 +
Rs.77,095) along with proportionate costs and interest @ 6% per annum from the date
of suit till realization in favour of plaintiff (T & T Motors Ltd.) to the plaintiff. The suit
against the defendant 1 (Mr. Satish Ostwal) was dismissed.
 SECTION/LAWS COVERED
The above case that we analyzed majorly covered Section 148 and Section 158 of the
Indian Contract Act, 1872 and Section 34 of Civil Procedure Code, 1908.
Section 148 in The Indian contract Act,1872 defines the Bailment, Bailee, and Bailor.
According to it, A ‘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, be 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 they are delivered
is called the ‘bailee’.
Section 158 in The Indian Contract Act, 1872 describes the repayment of necessary
expenses by Bailor.
According to it, Repayment, by bailor, of necessary expenses.—Where, by the conditions
of the bailment, the goods are to be kept or to be carried or to have work done upon
them by the bailee for the bailor, and the bailee is to receive no remuneration, the bailor
shall repay to the bailee the necessary expenses incurred by him for the bailment.
Section 34 of Civil Procedure Code,1908 reads that (1) Where and in so far a decree
is for the payment of money, the Court may, in the decree, order interest at such rate as
the Court deems reasonable to be paid on the principal sum adjudged, from the date of
the suit to the date of the decree, in addition to any interest adjudged on such principal
sum for any period before the institution of the suit, with further interest at such rate
not exceeding six percent, per annum, as the Court deems reasonable on such principal
sum, from the date of the decree to the date of payment, or such earlier date as the
Court thinks fit:
Provided that where the liability in relation to the sum so adjudged had arisen out of a
commercial transaction, the rate of such further interest may exceed 6% p.a., but shall
not exceed contractual rate of interest or where there is no contractual rate, the rate at
which money is lent or advanced by nationalized banks in relation to commercial
transactions.
 LESSONS LEARNT
 The major key learning from this case was about the Bailment and the law related to
it. This case helped me in having a better understanding of Section 148 and Section
158 of the Indian Contract Act, 1872.
 This case also helped me to know that the contract between the two parties is
independent of the contract between the other parties.
 It also taught me that a Bailment contract can occur between the parties without any
legal agreement and the necessary condition for it is the transfer of ownership of
goods.
 It also taught that communication of any terms and conditions to the other party
should happen before the claim made on these terms and conditions.
 This case showed that a person should be knowledgeable about the terms and
conditions of any agreement he makes
 This case also helped me in understanding the law related to the interest payment
i.e. Section 34 of Civil Procedure Code,1908.
 REFERENCES
 Case: T & T Motors Ltd. vs Satish Ostwal & Anr. on 4 May 2012 |
https://indiankanoon.org/doc/164667226/
 Section 148 of the Indian Contract Act, 1872 |
https://indiankanoon.org/doc/1928605/
 Section 158 of the Indian Contract Act, 1872 |
https://indiankanoon.org/doc/1240329/
 Section 34 of Civil Procedure Code, 1908 |
https://articlesonlaw.wordpress.com/2015/01/10/i-n-t-e-r-e-s-tsection-34-of-
cpcinterest-in-civil-suit/