Bailment and its essentials under the Indian law and English Law

Etymologically the word ‘Bailment’ can be derived from the French word ‘Bailler’ meaning ‘to deliver’. Though bailment in its similar form existed in the ancient and early medieval India, the current perceived concept of Bailment was bought to India along with the English Common law and the Statutory Law by the Charters of the East India Company in the 18th century and was enacted under the Indian Contract Act, 1872[1]. This Act is the main statutory act governing the contract law of India where the principles and concepts under the contract law of India and the United Kingdom have been pretty much the same with slight differences. Sir William Jones’s definition of bailment which is the most often quoted one, defines bailment as “a delivery of goods on trust, on a contract expressed or implied that the trust shall be duly executed, and the goods redelivered, as soon as the time or the use for which they were bailed shall have elapsed or be performed”[2]. Section 148 of the ICA[3] similarly defines bailment adding that a bailor delivers the goods (which are only movable in nature) to the bailee.

There are certain essentials to call a transaction as a bailment. The first essential which is same under the Indian law and English Law is that the goods must be delivered to the bailee and there should be a transfer of possession from the bailor to the bailee. Actual delivery and constructive delivery[4] of the goods can both be admissible as delivery of possession. Knowledge of possession may not be necessary for a bailment to commence as in certain circumstances such as the finder of goods, a bailment contract automatically commences between the finder of the good who will be the bailee and the original owner of the good who will not be having the knowledge of possession. The second essential was only applicable in India where the ICA says that the delivery of the goods must happen upon an express contract but in the English law, bailment is considered to be an “independent legal relation having qualities not complemented by the normal law of contract or tort”, so when a bailment takes place without a contract, then it is called as ‘bailment without contract’. Initially the courts in India looked for expressed bailment contracts while assessing bailment claims and the same can also be seen in the Ram Gulam v Govt of UP[5] case where it was clearly held that bailment cannot arise independently out of a contract. But in Lasalgaon Merchants Cooperation Bank Ltd. V Prabhudas Hathibhai,[6] for the first time, the court acknowledged the presence of the bailment when there wasn’t an expressed contract and since then, the courts have been accepting the existence of implied bailment contracts. The third essential under Indian and English law is that the goods should be bailed for some purpose and after the accomplishment of the purpose, the goods should be dealt as per the agreed terms of the bailment.

[1] Indian Contract Act, 1872, No. 9, Acts of Parliament, 1872 (India).

[2] A.R. Carnegie, Bailment And Contract In English Law Today, ADEL. L. REV. 7. (last visited Dec. 15, 2004)

[3] Indian Contract Act, 1872

[4] The transfer of goods can be done even when the transfer is effected without a change in the possession or custody of the goods.

[5] AIR 1950 All 206

[6] AIR 1966 Bom 134

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