RIGHTS AGAINST CO-SURETIES

Effect of releasing a Surety (S.138)

Right to contribution (S. 146 147)

1. Effect of Releasing a surety

S.138: Release of one co-surety does not discharge

others- Where there are co-sureties, a release by the
creditor of one of them does not discharge the others
neither does it free the surety so released from his
responsibility to the other sureties.

Sri Chand vs. Jagdish Parshad Kishan Chand,

(AIR 1966 SC 1427)

the creditor may at his will release any of his co-sureties from his

liability. But that will not operate as a discharge of his co-sureties.

However, the released co-surety will remain liable to the others
for contribution in the event of default

2. Right to contribution

S.146: Co- sureties liable to contribute equally: where two

or more persons are co-sureties for the same debt or duty,
either jointly or severally ,and whether under the same or
different contracts, and whether with or without the
knowledge of each other, the co-sureties, in the absence of
any contract to the contrary, are liable, as between
themselves, to pay each an equal share of the whole debt,
or of that part of it which remains unpaid by the principal
debtor.

S.147: Liability of co-sureties bound in

different sums- Co-sureties who are bound in

different sums are liable to pay equally as far

as the limits of their respective obligations

permit.

In State Bank of India v. Prem Dass

AIR 1998 Del 49
where there are several sureties for the same debt and the principal
debtor has committed a default, each surety is liable to contribute
equally to the extent of the default

Shirley v. Burdett, (1911)2 Ch 418 if

any of the sureties has been compelled
to pay more than his share, he can

recover contribution from his cosureties so as to equalise the loss as

between all of them

INDEMNITY

GUARANTEE

ONLY TWO PARTIES

THREE PARTIES

ONLY ONE CONTRACT

THREE CONTRACTS

LIABILITY IS CONTIGENT- MAY OR LIABILITY IS SUBSISTING THOUGH

MAY NOT ARISE

REMAINS SUSPENDED TILL DEFAULT

ARISES

NO THIRD PERSON- LIABILITY IS

PURPOSE IS TO SUPPORT A THIRD

IN ITSELF PRIMARY
PERSON

BAILMENT
S.148

S.148: 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

Delivery of
goods from one
person to
another

For some
purpose upon a
contract

Contract- the
delivered goods
shall be returned
when that
purposeis
accomplished

Person delivering
goods

BAILOR

Person to whom
delivered

BAILEE

GOODS
BAILOR

BAILEE

(Book)
(For reading)
PURPOSE
CONTRACT

Explanation if a person already in

possession of the goods of another contracts
to hold them as a bailee, he thereby becomes
the bailee, and the owner becomes the bailor
of such goods, although they may not have
been delivered by way of bailment

ESSENTIALS OF BAILMENT

1.DELIVERY OF POSSESSION
2.DELIVERY UNDER A CONTRACT

3. DELIVERY UPON SOME PURPOSE

DELIVERY OF GOODS/POSSESSION
POSSESSION

In New India Assurance Co Ltd v. Delhi Development Authority, AIR

1991 Delhi 298,
the first important characteristic of bailment is the delivery of
possession by one person to another. The essence of bailment is
possession.

Delivery of possession has to be distinguished from mere custody

eg: a servant cannot be considered a bailee.
ie; the goods must be handed over to the bailee for whatever is the
purpose.

ULTZEN vs. NICOLLS, (1894)1 QB 92

Facts:
An old customer went into a restaurant for the purpose of
dining there. When he entered the room a waiter took his
coat, without being asked, and hung it on a hook behind him.
When the customer rose to leave the coat was gone.
Observation:
The waiter by taking the coat into his possession had relieved
the plaintiff to its care and had thus assumed the
responsibility of a bailee. It was he who selected the place
where the coat should be put.
Judgement:
The restaurant-keeper was held liable as a bailee.

KALIAPERUMAL PILLAI VS. VISALAKSHMI,

AIR 1938 Mad 32
Facts:
A lady handed over to a goldsmith certain jewels for the purpose of being melted and
utlized for making new jewels. Every morning as soon as the goldsmiths work for the
day was over, the lady used to receive half-made jewels from the goldsmith and put
them into a box in the goldsmiths room and keep the key in her possession. The
jewels were lost one night.
Observation:
any bailment that could be gathered from the facts must be taken to have come to an
end as soon as the plaintiff was put in possession of the melted gold. Delivery is
necessary to constitute bailment. The mere leaving of box in a room in the defendants
house, when the plaintiff herself took away the key, cannot certainly amount to
delivery within the meaning of the provision in S. 149.
Judgement:
The goldsmith was not held liable

BANK LOCKER

NOT BAILMENT

Hiring of a bank locker and storing things in it

would not constitute a bailment. Things are put
in a hired portion of premises and not entrusted
to the bank.
In order to constitute bailment within the
meaning of S.148 it is necessary to show that
actual and exclusive possession of the property
was given by the hirer of the locker to the bank.
Only then the question of reasonable care and
damages would arise.

S.149: DELIVERY TO BAILEE HOW MADE- The

delivery to the bailee may be made by doing
anything which has an effect of putting the
goods in the possession of the intended bailee
or of any person authorised to hold them on
his behalf.
Here consider explanation S.148

DELIVERY OF POSSESSION

ACTUAL
DELIVERY

When bailor hands

over to the bailee
physical possession

CONSTRUCTIVE
DELIVERY

No change of
physical possession.
Good remains
where they are .

Bank of Chittoor vs. Narasimbulu, AIR 1966 AP 163

FACTS:
A person pledged the projector machinery of his cinema under an agreement which
allowed him to retain the machinery for the use of cinema.

OBSERVATION:
it must be held that there was a constructive delivery, or delivery by attornment to
the bank. Since then there was a change in the legal character of the possession of
goods, though not in the actual and physical custody. Even though the bailor
continued to remain in possession, it was the possession of the bailee

HELD:
There is a constructive delivery

FAZAL VS. SALAMAT RAI, (1928) 120 IC 421

FACTS:
The defendant was holding the plaintiffs mare under the execution of a decree. The
plaintiff satisfied the decree and the court ordered redelivery of the mare to the
plaintiff. The defendant, however refused to do so unless the maintenance charges
were also paid. The mare was stolen from his custody.

OBSERVATION:
After the delivery order had been passed, the relation of bailor bailee was
established by virtue of the explanation to s.148
HELD:
Defendant was held liable.

2. DELIVERY SHOULD BE UPON A CONTRACT

DELIVERY

PURPOSE

CONTRACT

Will be returned
after the fulfillment
of the purpose

IF NO CONTARCT MADE = NO BAILMENT

RAM GULAM v. GOVT Of U.P, AIR 1950 All 206

FACTS:
The plaintiffs ornaments, having been stolen, were
recovered by the police and while in police custody
were stolen again.
OBSERVATION:
The ornaments were not handed over to the
government under any contract. Therefore,
government never occupied the position of bailee
and is not liable as such to indemnify the plaintiffs.
HELD:
Government not held liable

LASALGAON MERCHANTS COOP BANK LTD v. PRABHUDAS HATHIBHAI,

AIR 1966 Bom134
FACTS:
Certain Packages of tobacco lying in the godown of a partnership firm
were pledged to the plaintiff bank. Some of the partners, having failed
to clear their income tax dues, the income tax officer ordered seizure of
the goods. The officials of the collectorate accordingly locked the
godown and handed over the key to the police. Due to heavy rain the
roof of the godown leakednand the tobacco was damaged.
OBSERVATION:
It was the duty of the government officers to take such care as every
prudent manager would take of his own goods. The government stood
in the position of bailee and it was for them to prove that they had
taken as much care as possible for them and that the damage was due
to reasons beyond their control.
HELD:
Governement was held liable.

STATE OF GUJARAT V. MEMON MAHOMED,

AIR 1967 SC 1885
FACTS:
Certain motor vehicles and other goods belonging to
the plaintiffs were seized by the state in exercise of its
powers under a sea customs act. The goods while in
the custody of the state remained totally uncared for.
OBSERVATION: 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 a bailment
without an enforceable contract.
HELD: Government held liable

RAM GULAM v. GOVT Of U.P, AIR 1950 All 206

LASALGAON MERCHANTS COOP BANK LTD v.

PRABHUDAS HATHIBHAI, AIR 1966 Bom134

STATE OF GUJARAT V. MEMON MAHOMED, AIR 1967

SC 1885

Repetition of RAM GULAM case

Contract can be
EXPRESSED or IMPLIED
eg: A, with the consent of the station master goods were stored on a railway
companys platform since wagons were not available. Later by the spark
emitted by a passing engine goods were damaged. The company was held
liable.

3. DELIVERY SHOULD BE UPON SOME PURPOSE

If the person to whom the goods are delivered is not bound to restore
them to the person delivering them or to deal with them according to
his directions, their relationship will not be that of bailor and bailee.

3 types of purposes

For the benefit of

bailor and bailee

Sole
benefit of
bailor

Sole benefit of the

bailee

SECY OF STATE vs. SHEO SINGH RAI,

(1880)2 All 756
FACTS:
The plaintiff delivered to the treasury officer at Meerut nine
government promissory notes for cancellation and
consolidation into a single note of Rs. 48,000. The defendants
servants misappropriated the notes. The plaintiff sued the
state to hold them responsible as bailees.
OBSERVATION:
There can be no bailment unless there is a delivery of goods
and a promise to return. The government was not bound to
return the same notes, nor was it bound to dispose of the
surrendered notes in accordance with the plaintiffs
directions.
HELD: Government not held liable.

BAILMENT WITH OTHER

SIMILAR RELATIONS

DUTY OF BAILOR
S. 150

GRATUITOUS BAILOR

A BAILOR WHO LENDS HIS

GOODS WITHOUT ANY CHARGE

BAILOR FOR REWARD

A BAILOR WHO LENDS HIS

GOODS FOR A PARTICULAR
AMOUNT OF CONSIDERATION

S.150- BAILORS DUTY TO DISCLOSE

FAULTS IN GOODS BAILED
The bailor is bound to disclose to the bailee faults in
the goods bailed, of which 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 directlty from such faults.
If the 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.

a) DUTY OF A GRATUITOUS BAILOR

The conditions of his liability are:
1. He should have the knowledge of the defect and the bailee
should not be aware
2. The defect in the goods must be such as exposes the bailee to
extraordinary risks or materially interferes in the use of the
goods.
Illustration 1:
Lends a vicious horse knowingly without
disclosing it

B is thrown and injured and the horse runs away.

A is responsible to B for damage sustained.

Blakemore v. Bristol and Exeter Rly Co, (1858) 8 E&B 1035

By the necessarily implied purpose of the

loan a duty is contracted towards the
borrower not to conceal from him those
defects known to the lender which may
make the loan perilous or unprofitable to
him.

b) DUTY OF A BAILOR FOR REWARD

The duty of a bailor for consideration is much greater since making

profit out of it. Therefore it is his duty to see that the goods which he

delivers are reasonably safe for the purpose of the bailment.

No defence for him to say that he was unaware of the defects.
He is bound to examine the goods and remove such defects.

Illustration 2:
Lends a carriage for hire without knowing
that it is unsafe

B is injured
A was held liable.

HYMAN & WIFE v NYE & SONS, (1881) 6 QBD 685

FACTS:
The plaintiff hired a carriage, a pair of horses and a driver. During the
journey a bolt in the underpart of the carriage broke, the splinter bar

became displaced, the carriage was upset and the plaintiff injured.
OBSERVATION: a person who lets out carriages is not responsible for all
the defects discoverable or not but is an insurer against all the defects

which and skill can guard against. His duty is to supply a carriage as fit
for the purpose for which it is hired as care and skill can render it.
HELD: defendant held liable

REED v DEAN, (1949) 1 KB 188

FACTS: the plaintiffs hired a motor lounge from the
defendant for a holiday on the river thames. The
launch caught fire, and the plaintiffs were unable
to extinguish it, the fire fighting equipment being
out of order. They were injured and suffered loss.
OBSERVATION: there was an implied undertaking
that the launch was as fit for the purpose for
which it was hired as reasonable care and skill
could make it.
HELD: defendant held liable

DUTIES OF BAILEE
1. DUTY OF REASONABLE CARE (Ss.151-152)
2. DUTY NOT TO MAKE UNAUTHORISED USE (S.154)
3. DUTY NOT TO MIX (Ss.155-157)
4. DUTY TO RETURN (Ss. 160 AND 161)
5. DUTY NOT TO SET UP JUS TERTII
6. DUTY TO RETURN INCREASE (S.163)

BAILEE

GRATUITIOUS BAILEE

BAILEE FOR REWARD

DUTY OF REASONABLE CARE (S.151-152)

S.151: CARE TO BE TAKEN BY BAILEEIn all cases of bailment 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.

ENGLISH LAW:
Earlier in English law, liability in bailment was
absolute.
It was no excuse for the bailee to say that the
damage or failure by return was due to no fault of
his own.
Subsequently through many decisions the concept
of gratuitious bailee and bailee for reward
developed.
A gratuitious bailee is liable for loss of, or damage
to, goods only if he is guilty of gross negligence.

BLOUNT v. THE WAR OFFICE, (1953)

1 All ER 1071
FACTS: A house belonging to the plaintiff was
requisitioned by the war office. The plaintiff was
allowed to store certain articles in a strong room in the
house which he locked. Of the troops sanctioned there,
some broke into the room and stole a quantity of silver
plates.
OBSERVATION: There was a voluntary bailment of the
goods to the defendant in the way of deposit and the
standard of care required of them was reasonable care
which a man would take of his own property.
HELD: The war office was held liable

Houghland V. RR. Low (Luxury Coaches) Ltd,

(1962) 1QB 694 CA

Martin v. London County Council, (1947) KB

628

INDIA- UNIFORM STANDARD OF CARE

A degree of care which a man of ordinary

prudence of his own goods of the same type
and under similar circumstances.

If the care given by the bailee falls below

the standard, he will be liable for damages.

S.152- BAILEE WHEN NOT LIABLE FOR LOSS OF, etc,

OF THING BAILED- 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 S.151

Food grains stored at bailees godown were

damaged by floods. Not liable
A man hired a wooden shop and it was burnt by
mobs during communal riots in the city. Not liable

LOSS BY THEFT:
WHERE THE BAILORS GOODS ARE STOLEN FROM
THE CUSTODY OF THE BAILEE, HE WILL BE LIABLE IF
THERE HAS BEEN NEGLIGENCE ON HIS PART.

A stayed at a hotel and his articles were

stolen while he was away, the hotelier was
held liable as the room was, to his
knowledge, in an insecure condition.

BANK/BANKER AS BAILEE
UNITED COMMERCIAL BANK v HEM CHANDRA SARKAR,
(1990) 3 SCC 389
FACTS: A banker was rendering the service of receiving goods
on behalf of its account holder and to hold them for the
purpose of delivering them to the customers of the account
holder against payment. Banker did not deliver goods to the
customers from whom payment had been received.
OBSERVATION: position of the banker was that of the bailee
and he was liable for the account holders loss inasmuch as
the banker did not deliver goods to the customers from
whom payment had been received.
HELD: bank liable

HALSBURY LAW OF ENGLAND:

where a bank delivers the goods to
the wrong person, whereby they are
lost to the owner, the liability of the
bank is absolute, though there is no
element of negligence, as where the
delivery is obtained by means of an
artfully forged order.

BURDEN OF PROOF
The burden of proof is on the bailee to show that he
was exercising reasonable care and if he can prove
this he will not be liable.
If the bailee places before the court evidence to
show that he had taken reasonable care to avoid
damage which was reasonably foreseeable or had
taken all reasonable precautions to obviate risks
which were reasonably apprehended, he would be
absolved of his liability.

LOSS DUE TO ACT OF BAILEES SERVANT- Where the loss has been due
to the act of the bailees servant, he would be liable if the servants act
is within the scope of his employment.

SANDERSON v. COLLINS, (1904)1 KB 628

FACTS: the defendant sent his carriage to the plaintiff for
repairs and for that reason he lent his own carriage to
defendant for his use. The defendant's coachman, without his
knowledge, took away the carriage for his own purpose and
damaged it.
OBSERVATION: the coachman at the time when the injury
was done to the carriage was not acting within the course of
his employment
HELD: the defendant was not held liable.

PROBLEM:
1.The bailees driver left the vehicle in which he
was carrying the bailors goods unattended
and half the goods were stolen . Whether
bailee liable?
if the bailee raise an argument that he
contracted with an agent and not directly with
bailor?

WHEN THE GOODS HAVE BEEN STOLEN FROM THE

BAILEES CUSTODY, HE SHOULD TAKE REASONABLE
STEPS TO RECOVER THEM.

Eg: A farmer accepted certain cattle for

adjustment. Some of them were stolen
without his default but he made no efforts
in informing the owner or the police to
recover them.

BAILEES OWN GOODS LOST WITH THOSE OF

BAILOR

The fact that the bailee is generally

negligent with his own goods is no
justification for his negligence towards the
bailors goods.
He can only have the defence of having
good faith of taking equal care of both his
and bailors article

INVOLUNTARY BAILEE
A person who has come into possession of a
chattel through no act of his own and without
his consent
HAWARD v. HARRIS, (1884) C&E 253
FACTS: The author of play, without being asked,
sent his manuscript to a theatre operator, who lost
it
OBSERVATION: that no duty of any kind was cast
on the defendant by receipt of something he had
not asked for.
HELD: defendant was not held liable.

 Later in many cases this rule was

not followed
The rule later was based on the
ratio that the degree of negligence
must be measured by the apparent
value of the article. (Newman v
Bourne &Hollingsworth, (1951)31
TLR 209)

2. DUTY NOT TO MAKE UNAUTHORISED USE-S.154

Liability of bailee making unauthorised use goods bailed- if the bailee
makes any use of the goods bailed which is not according to the
conditions of the bailment, he is liable to make compensation to the
bailor for any damage arising to the goods from or during such use of
them
A lends a horse to B for his own riding only. C, a member of his family,
to ride the horse. C rides with care, but the horse accidently falls and is
injured. B is liable to make compensation to A for the injury done to the
horse.
A hires a horse in Calcutta from B expressely to march to Benares. A
rides with due care, but marches to Cuttack instead. The horse
accidentally fals and is injured. A is liable to make compensation to B for
the injury to the horse.

S.153- TERMINATION OF BAILMENT BY BAILEES ACT

INCONSISTENT WITH CONDITIONS.
A contract of bailment is avoidable at the option of
the bailor, if the bailee does any act with regard to
the goods bailed, inconsistent with the conditions
of the bailment.
A lets to B, for hire, a horse for his own riding, B drives
the horse in his carriage. This is, at the option of A, a
termination of the bailment.

3.DUTY NOT TO MIX (Ss. 155-157)

The bailee should maintain the separate identity
of the bailors goods.
S.155- Effect of mixture,
with bailors consent, of
his goods with bailees

S.156- Effect of mixture,

without bailors consent,
when the goods can be
seperated.

Bailor and bailee shall

have an interest, in
proportion to their
respective shares, in the
mixture thus produced
Bailee is bound to bear
the expense of seperation
or division, and any
damage arising from the
mixture.

A bails 100 bales of cotton marked with a particular mark to B. B

without As consent, mixes the 100 bales with other bales of his own,
bearing a different mark. A is entitled to have his 100 bales returned,
and B is bound to bear all the expenses incurred in the separation of the
bales, and any other incidental damage

S.157- Effect of
mixture, without
bailors consent, when
the goods cannot be
separated

Bailee has to
compensate
bailor for the loss
of the goods.

A bails a barrel of Cape flour worth Rs. 45 to B. B, without As consent,

mixes the flour with country flour of his own, worth only Rs.25 a barrel.
B must compensate A for the loss of his flour.

4. DUTY TO RETURN (Ss. 160 and 161)

S.160- RETURN OF GOODS BAILED, ON

EXPIRATION OF TIME OR
ACCOMPLISHMENT OF PURPOSE.
S.161- BAILEES RESPONSIBILITY (for
any loss, destruction or deterioration
of the goods) WHEN GOODS ARE NOT
DULY RETURNED.

SHAW & Co v. SYMMONS & SONS,

(1917) 1 KB 799
FACTS: The plaintiff entrusted books to the defendant, a
bookbinder, to be bound, the latter promising to return them
within a reasonable time. The plaintiff having required the
defendant to deliver the whole of the books then bound, the
defendant failed to deliver them within a reasonable time and
they were subsequently burnt in an accidental fire on his
premises.
OBSERVATION: the loss took place when the bailees wrongful
act was in operation and hence there is no question of any
defence like act of god or inevitable accident.
HELD: defendant was held liable.

S.159- TERMINATION OF GRATUITIOUS

BAILMENT
S.159-RESTORATION OF GOODS LENT
GRATUITOUSLY
The bailor may at any time require its
return
If return of goods before the time agreed
upon results in any loss for the bailee then,
bailor has to indemnify the bailee.

S.162- TERMINATION OF
GRATUITIOUS BAILMENT BY DEATH

Terminated either by the

death of bailor or bailee.

S.165- BAILMENT BY JOINT

OWNERS
If several joint owners of goods bail them
the bailee may deliver them back to, or
according to the directions of, one joint
owner without the consent of all, in the
absence of any agreement to the
contrary.

5.DUTY NOT TO SET UP JUS TERTII

The bailee is estopped from denying the right of the bailor to
bail the goods and to recerive them back.
Even if there is a person who has a better title to the goods
than that of the bailor or who claims ownership of the goods,
the bailee may safely return the goods to the bailor and he
will not be liable to the owner for conversion.

S.166: BAILEE NOT RESPONSIBLE ON RE-DELIVERY TO

BAILOR WITHOUT TITLE

S.167: RIGHT OF THIRD PERSON CLAIMING GOODS BAILED

JUGGILAL KAMPLAPAT OIL MILLS v UOI, (1976)1SCC 893
FACTS:
Oil was consigned with the railways from kanpur to culcutta. It
reached culcutta intact. The sender, however, instructed the
railwaysb to bring it back to kanpur. Before the formalities for the
same could be complied with, the oil was seized by a food inspector,
who found it adulterated and had it destroyed under the order of
the high court.
OBSERVATION: Bailee is excused from returning the subject-matter
of the bailment to the bailor where it was taken away from him by
an authority of law.
JUDGEMENT: Railway not liable.

6.DUTY TO RETURN INCREASE (S.163)

S.163: BAILOR ENTITLED TO INCREASE OR

PROFIT FROM GOODS BAILED.