TAMILNADU NATIONAL LAW UNIVERSITY

TIRUCHIRAPPALLI
(A State University Established by Act No.9 of 2012)

PROBLEM SOLVING

Subject: Law of Contracts

Course: B.Com. LL.B ( Hons.)

Second Year – Odd Semester, 2020

Submitted by:
Kiran Khanna A.P (BC0190023)
Hasthisha Desikan (BC0190017)
PROBLEM

Nazir, was a small scale milk distributor in the rural village of Sonapet. He owns around 25
cows and 14 buffalos. He decided to expand his business and therefore, shifted his working
place from his home to a new factory nearby. In order to transport his cows and buffalos, he
sought the service of Stephen’s Transporters. When Stephen’s Transporters, transported the
cows and buffalos, it was found that many had red bruises and scar marks and two of the
animals indeed has fatal injuries. Enraged by the same, Nazir decides to seek the help of
court.

INTRODUCTION

The main concept involved in the instant case is that of bailment. The contract of Bailment is
a special class of contract. These are dealt within the Chapter 9 from section 148 to section
181 of the Indian Contract Act, 1872.

The section 1481 of the Indian Contract Act provides the definition of bailment and states
that, “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 who is delivering
the goods is known as the bailor and the person to whom they are delivered for the fulfilment
of a purpose is called the bailee. The circumstance in which this happens are numerous.
Delivering a chair, watch or any other article for repair, delivering gold to a goldsmith for
making ornaments, delivering clothes to a drycleaner, delivering goods for carriage etc. are
all some of the familiar conditions which would create the relationship of bailment.

In the instant case, it is a bailment for reward. Hence there is a mutual benefit for both the
parties (bailor and the bailee). In our case, Nazir hands over his cows and buffalos (goods) to
Stephen’s Services for carrying them from Nazir’s home to a new nearby factory. Here Nazir
or the bailor gets the benefit of transportation and Stephen’s Services or the bailee gets their
transportation charges in return. Hence, both the parties are benefitted.

ARGUMENTS FOR THE PLAINTIFF

1
Indian Contract Act, S 148, No.9, Act of Parliament, 1872 (India).
 (NAZIR)

We have to note that the bailor is the actual owner of the goods. The goods are given to the
possession of the bailee, by the bailor for the accomplishment of the purpose. In our instant
case, Nazir is the real owner of the goods (cattle) and therefore he is the bailor. He hands over
the goods to the possession of Stephen’s Services for the fulfilment of the purpose of
transportation of the same. Section 1492 allows this delivery of goods to the bailee by the
bailor to be made through any means and it is the duty of the bailor to do so.

Bailment arises when there is a successful transfer of possession of goods (not transfer of
ownership) from the bailor to the bailee. The importance of possession was upheld by the
court in the case of Kaliaperumal v. Visalakshmi 3. If the possession of goods (actual delivery
or constructive delivery) doesn’t pass to the bailee, then there is no valid bailment 4. Nazir has
successfully completed his duty of transferring the possession of the bailed goods to the
bailee.

Under the English case of R v Macdonald5, Lord Coleridge (Chief justice) observed that
bailment could exist, even without the existence of the contract. In the Indian case of State of
Gujarat v. Memon Mohamed6, the court observed that bailment can arise even without a
proper contract.

Section 151 talks about the duty of the bailee to take care of the goods that has been bailed
and this care must be reasonable in nature and should be proportional to the way an ordinary
prudent man would do in a similar situation. In the case of Kavita Trehan v. Balsara Hygiene
Products Limited7, the High Court of Delhi reiterated the duty of the bailee to take reasonable
care of the goods bailed to him as a man of ordinary prudence would do under similar
situations.

The English case of Thomas Giblin v. John McMullen 8 reiterated the importance of
reasonable care that is to be taken by the bailee irrespective of whether the bailment is
gratuitous or non-gratuitous. Additionally, the court mentioned that the bailee has another

2
Indian Contract Act, S 149, No.9, Act of Parliament, 1872 (India).
3
AIR 1938 Mad 32
4
Ashby v. Tolhust [1937] 2 All ER 837
5
2014 SCC 3
6
1967 AIR 1885
7
AIR 1992 Del 103
8
(1869) LR2 PC317
obligation to avoid the risks but also the “duty of taking all proper measures for the protection
of the goods when such risks arise.”

In the case of Cochin Port Trust v. Associated Cotton Traders Ltd. 9, a fire broke out at the
port and this led to the destruction of the goods that were stocked there. After hearing the
case, the court held that the port trust will be liable as they failed to take reasonable care.

The case of Union of India v. Sattur Nataraja Traders observed that the responsibility of a
bailee commences from the moment the goods are entrusted to them for transportation and
this responsibility continues until these goods are successfully unloaded at the destination
point.

If a bailee negligently loses or damages the bailed goods in his possession, he is bound to pay
for the value of lost goods. In the case of Trustee Madras Port Trust v. Home Insurance Co.
Ltd10, it was found that the loss or damage to the goods entrusted to the bailee is prima facie
an evidence of his negligence. As a result, the burden of proof will fall on the bailee to
disprove that that he was not negligent in his actions 11. In the case of Kuttappa v. State of
Kerala12, the court stated that it is the duty of the bailee to show that he had exercised his
reasonable care. Moreover, it has to be noted that section 152 is not meant to limit the
bailee’s liability and it shouldn’t be considered as a route for escape for the bailee from his
liabilities and the same was reiterated by the court in the case of Sheik Mohamed v. the
British Indian Steam Navigation Co. Ltd13.

ARGUMENTS FOR THE RESPONDENT

(STEPHEN’S SERVICES)

The main contention put forth by the petitioner is that the respondent failed to follow a
standard of care required in the transportation of his goods, in this case, the livestock. Under
Sec. 151 of the Indian Contract Act, 1872, it is mentioned that a bailee is bound to take as
much care of the goods bailed to him as a man of ordinary prudence would, under similar

9
AIR 1983 Ker 154
10
AIR 1980 Mad 48
11
Rangaraju Vs Muthukrishnan (1963) 2 MLJ60
12
(1988) 2KLT 54
13
(1908) 32 Mad. 95
circumstances, take of his own goods of the same bulk, quality and value as the goods
bailed.14 But this standard of care differs on a case-to-case basis with no set guidelines
governing or encompassing the entire range of situations or events that can arise. For this
purpose, Sec.151 is read in consonance with Sec. 152 which states that the bailee, in the
absence of any special contract, is not responsible for the loss destruction or deterioration of
the thing bailed, if he has taken the amount of care of it described in Section 151.15

By considering both these provisions it leaves no doubt that the reasonable care depends on
the case at hand. This is what was held in the case of Shanti Lal v Tara Chand Madah Gopal 16
in which it was stated that, “No cast-iron standard can be laid down for the measure of care
due from a bailee and the nature and amount of care must vary with the posture of each case."
It is the argument of the respondent that the due reasonable care was followed during the
transport of the livestock and it was accidental loss without any default on the part of the
bailee and, hence, the respondent is not liable for the damage to the goods caused. A similar
stance was taken in the case of Bachraj Dugar v. Lalchand Todi.17

It is stated in the facts of the case that the cows and buffalos had sustained some form of an
injury with two of the animals fatally injured. But it remains to see whether this damage
occurred during the transportation. If these animals were already injured beforehand or if
their injury were aggravated, due to some reasons, during the transport, it is not justified to
hold the respondent liable for such damage. The bailor is under obligation to the bailee to
inform him of any faults or damage to the goods that he delivers to the bailee for bailment
under Sec.150 of the Indian Contract Act, 1972 which states that “The bailor is bound to
disclose to the bailee faults in the goods bailed, of which the bailor is aware, and which
materially interfere with the use of them, or expose the bailee to extraordinary risks; and if he
does not make such disclosure, he is responsible for damage arising to the bailee directly
from such faults. If such goods are bailed for hire, the bailor is responsible for such damage,
whether he was or was not aware of the existence of such faults in the goods bailed”. 18 Going
by the conditions given in the provisions, the bailor, Nazir, can be held responsible for
delivering damaged goods to the bailee without informing him regardless of the fact whether
Nazir was aware of any damage to the livestock.

14
Indian Contract Act, S 151, No.9, Act of Parliament, 1872 (India).
15
Indian Contract Act, S 152, No.9, Act of Parliament, 1872 (India).
16
Shanti Lal v Tara Chand Madah Gopal, AIR 1933 All 158.
17
Bachraj Dugar v. Lalchand Todi, AIR 1962 Assam 23.
18
Indian Contract Act, § 150, No.9, Act of Parliament, 1872 (India).
 CONCLUSION

Nazir can approach the court and claim a certain sum from Stephen’s Transporters on the
ground of negligence by the bailee. The onus of proof is on the respondent to prove that he
followed due care while handling the goods either personally or through his employees. If the
respondent is unable to prove the same Nazir is entitled to be compensated not only for the
fatally injured cows but also for any damage that occurred as result of the negligence of the
bailee.

Stephen’s Transporters, however, can approach to defend this suit in two ways. The obvious
one is to prove that the damage was not due to the negligence of the bailee and was due to
some unforeseeable or uncontrollable event and hence absolving themselves of any liability
by the grounds stated in Sec.152 of Indian Contract Act, 1872. Another way is to prove that
the goods were already damaged when it was delivered to him and he was, further, not
informed of the fault in the goods by the bailor. This is a valid defence for the respondent
under Sec.150 of the Act.