A STUDY ON LAW RELATING TO DUTY OF CARE OF BAILEE

A Project submitted to Manipal University Jaipur

In partial fulfillment of requirements for

Semester II, B.A. L.L.B. (Hons.)

IN

LAW OF CONTRACT II

SUBMITTED TO- SUBMITTED BY-

DR. SUNITA SINGH KHATANA NAME- BHOOMIKA PUNDIR
ASSISTANT PROFESSOR REGN. NO.- 181301028
DEPARTMENT OF ARTS & LAW GROUP- B

1
TABLE OF CONTENTS

S.N O. TOPIC PG NO.

1. Introduction 6

2. Evolution of the concept of standard of care of 7

Bailee in common law

3. Whether the burden is on the bailee to disprove 9

negligence on his part

4. Whether the bailee can escape liability by virtue 9

of a contract to that effect

5. Case law 10

6. Conclusion 12

7. Bibliography 13

2
 CERTIFICATE OF GUIDE

This is to certify that the project report titled A Study on Law Relating to Duty of
care of Bailee submitted to Manipal University Jaipur in partial fulfillment of
requirements for Semester II, B.A. LL.B. (Hons.) course is an original bona fide
research work carried on under my supervision and guidance. No part of this
research has been submitted to any university, institution or organization for any
research or award of any degree or diploma whatsoever.

Dr. Sunita Singh Khatana

Assistant Professor

3
 CERTIFICATE OF STUDENT

This is to certify that BHOOMIKA PUNDIR student of B.A. LL.B.(Hons.) II

Semester have completed the project work and have submitted the report for the
same in partial fulfillment of requirements of the course by Manipal University
Jaipur on the topic ‘A Study on Law relating to Duty of Care of Bailee’. The
student has worked under our guidance as directed.

Dr. Sunita Singh Khatana

4
 ACKNOWLEDGEMENT

I express deep sense of gratitude to our teacher Dr. Sunita Singh Khatana under
whose guidance, valuable suggestions, constant encouragement and kind
supervision the present project was carried out. I am also grateful to college faculty
of law for their feedback and for keeping us in schedule.

I also wish to express my sincere thanks to my friend who helped me by giving

their valuable suggestions.

BHOOMIKA PUNDIR

5
 INTRODUCTION

The project will primarily deal with the concept of duty of care of a bailee1 in common law
in general and more specifically deal with the S.151-152 of The Indian Contract Act of 1872.
The three major issues related to the doctrine of ‘Reasonable Care’ with respect to duty of
care of bailee, which have been discussed in the project, are:

 The evolution of the concept of standard of care for bailee in common law.
 Whether the burden is on the bailee to show reasonable care was taken by him.
 Whether the bailee can escape liability by the virtue of a contract to that effect.

In this article, the researcher has dealt with the responsibilities of Bailee for lost goods in
Common law as well as in Indian law. The origin of Indian Contract Act, 1872 is also in
Common law. As a result, there is not too much difference between the two.

DEFINITIONS

Bailment- According to section 148 of The Indian Contract Act, 1872, “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 be disposed of according to
directions of the person delivering them”.

Bailor- According to S.148 of The Indian Contract Act, 1872, “The person delivering the
goods is called the ‘bailor’.”

Bailee- According to S.148 of The Indian Contract Act, 1872, “The person to whom the
goods are delivered is called the ‘bailee’.”

1
In the context of the project, the bailee will be considered to be of general (i.e. not including special cases of a
bailee, for example, being a carries or sub-bailee or a pledgee) in nature; as defined in The Indian Contract Act,
1872 Section 148.

6
  EVOLUTION OF THE CONCEPT OF STANDARD OF CARE FOR A
BAILEE IN COMMON LAW

In the beginning in English Law, the liability in bailment for a bailee was absolute. Hence,
when goods were robbed from the bailee who was in charge of its safe custody, he was
automatically held liable absolutely2. However with Coggs v Bernard3 , we see that the
modern English Law as made a distinction in measuring the duty of care between bailees of
two types, namely, gratuitously bailee and bailee for consideration. The duty of bailee for
consideration is to exercise the same degree of care towards the safeguarding of the goods
kept with him which might be expected from a reasonable prudent man responsible for the
safety of such goods. Lord Holt, in the same case said that, in case of duty of care for a
gratuitous bailee, the latter has no responsibility except for a case of gross negligence, the
reason being that the bailee himself is not deriving any benefits out of the goods.

However, in more recent times, common law has adopted a more consistent yardstick of
reasonable standard of care of bailees for both types of bailment. The Court of Appeal in
Houghland v R.R. Low (Luxury Coaches Ltd)4 said that the standard of care of a bailee was
that of reasonable care and was same, irrespective of the bailment being gratuitous or for
reward.

Under the Indian Contract Act, the duty of care for a bailee applies across the board
uniformly in all cases of bailment and it is provided for in the S.151-152.

The Standard of Care in the present scenario:

According to S.151of The Indian Contract Act, 1872, in 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.

S. 152 of Indian Contract Act, 1872, adds that if the care given under the above section is
taken, then the bailee will not be liable unless, there is a contract to the contrary.

2
Southcot v Bennet, (1601) 78 ER401.
3
1554-1778 AII ER Rep 1.
4
(1962) 1 QB 694 CA: (1962) 2 All ER 159

7
 As an example, when a port trust stores imported cotton bales as a bailee, then he is bound
to take as much care as an ordinary prudent man in similar circumstances, and if fire breaks
out at the port, in turn destroying the goods, the port trust will be liable on failure to show
reasonable care.5

The duty of care also depends on type and quality of goods. If the bailee is not negligent such
as in the Sitla Baksha Singh case6, where silver was entrusted to a goldsmith for making
jewels and silver was lost notwithstanding all the care taken for its safety, viz., by keeping it
locked in an almirah and employing a watchman for the night, the court held the goldsmith
absolved from liability.

When the Bailee’s goods are stolen, the onus is on him to show that he made all reasonable
efforts to retrieve them; otherwise he will be liable for negligence.

The bailee’s duty does not end with the expiry of the contract of bailment. After the expiry of
the contract, it is the bailee’s duty to ask the bailor to collect the goods and if need be serve a
notice of sale to the bailor. He will be liable for the safety of the goods as long as they are in
his possession.7

The defenses bailee cannot take-

The bailee cannot take the defence that others too would have acted in the same way. Or if
the bailee’s goods are stolen along with the bailor’s he cannot take just the defence of acting
his best possible ability or take the defence of generally being a negligent man, unless bailor
knew of the fact, but even then, reasonability of the degree of care in the given case would be
explored.

Thus in all the cases, test of an ordinary prudent man will be applicable.

5
Cochin Port Trust v Associated Cotton Traders Ltd. AIR 1983 Ker 154: Ker LT 562.
6
Sitla Baksha Singh v Barij Nath, [AIR (1936) Oudh.264].
7
Nilima Bhandbhade, Pollock & Mulla: Indian Contract & Specific Relief Acts (12th edn, Butterworths, 2001)
1959.

8
  WHETHER THE BURDEN IS ON THE BAILEE TO DISPROVE
NEGLIGENCE ON HIS PART
When the goods are delivered back to a bailor in a damaged state or not returned at all, the
law presumes negligence to be the cause and casts the burden on the bailee to prove that he
was exercising due care during the course of bailment or show that loss was caused,
irrespective of his negligence.

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. In the case of a bailee, the goods get lost or damaged
from his possession; therefore, it is prudent enough to ask the bailee to show how the goods
were dealt with, when they were in his possession. All the bailor has to do is to show the
absence of due care on the part of the bailee, from the evidence advanced by the latter8.

 WHETHER THE BAILEE CAN ESCAPE LIABILITY BY VIRTUE

OF A CONTRACT TO THAT EFFECT
The words, “in the absence of any contract” in S.152 of the Indian Contract Act, 1872 may
indicate that the law-makers objective was to limit the extent of his liability. The Law
commission of India in its thirteenth report had cognizance of this view and recommended to
S. 151 to enable reduction of liability of bailee9.

A plausible interpretation can be that S. 151 requires the bailee to have a minimum standard
of care and if that standard of care has not been enhanced with the help of a contract as given
in S.152, then the bailee will only be liable when he fails to meet the obligations under
S.151. This interpretation also hints at the unjust and unreasonable notion of allowing a
bailee to escape liability in cases of his negligence. In M Siddalingappa v T. Nataraj 10, a dry
cleaner could not escape liability for damage to clothes based on the terms on the back of the
receipt, because the court said that he could not contract himself out of the minimum duty of
care given in S.151.

Therefore, we see contrasting judgments on this aspect. Although, the words in S.152 make
it clear that a bailee can absolve his liability, it is for the courts to decide after taking into
considerations the facts of a case, whether the bailee can be exempted from his liability
because of a contract to that effect.
8
Dwarka Nath V Rivers Steam Navigation Co LTd. AIR 1917 PC 173, 175: 46 IC 319 (PC)
9
Thirteenth Report of the Law Commission of India 1958, para 125 recommended amending S.151 by adding the
words ‘in the absence of any special contract’ in it as cited in Nilima Bhandbhade, Pollock & Mulla: Indian Contract
& Specific Relief Acts (12th edn, Butterworths, 2001).
10
AIR 1970 Mys 154

9
  CASE LAW

Ram Ghulam v. State of U.P.11

Facts: In the present case, certain ornaments of the plaintiff were stolen. When police made a
search then the ornaments were found in another house and it seized the ornaments as stolen
property. The seized property was produced as evidence at the time of the trial of the person
who was alleged to be a thief. Then the property was taken in collectorate Malkhana but
from there also the ornaments were stolen and were untraceable. A suit was instituted by the
plaintiff against the government of U.P for the restoration of the ornaments and an alternative
remedy as compensation.

Issues before the court:

1. Whether the government was liable to indemnify the loss caused to the plaintiff as it
was holding the seized property at the time of the theft?
2. Whether the government was liable to compensate the plaintiff for the negligence of
its servant on the basis of the rule “a master is liable for the acts of his servants”?

The ratio of the judge: The government was holding the property not as a bailee, but for the
fulfillment of the duty imposed by the law. The duty of bailee is a contractual duty but there
was no such contract between the parties. Hence the government is not liable to indemnify
the plaintiff for the loss caused.

Considering the second issue, the government was only discharging the duty imposed by
law, therefore it is not liable for the act, alleging to be tortuous.

Decision given by court: Thus the suit was dismissed on the ground that government is not
liable for the act of its servant because the act was just the performance of the obligation
imposed by the law and, therefore, not liable to compensate for the loss of ornaments.

11
AIR 2006 All 206

10
Chittagong Port Authority v. Mohd. Isaque12

A port authority was held liable in the absence of proof that they took as much care of the
goods landed at their port as satisfied the requirement of S. 151. They neither informed the
consignee of the arrival of the goods nor made any serious effort to find out what had
happened to the goods.

12
(1983) 35 DLR 364

11
 CONCLUSION

Through this project, we have seen how the ‘reasonable care’ doctrine with respect to duty of
care of a bailee has evolved with time in common law. The degree of liability has
transformed from absolute to reasonable. In India, though, it was always uniform. The
standard of care expected of a bailee as given in S.151 is that of an average prudent man
taking care of his goods of the same type in the similar circumstances. Though the words in
this section might be apparently subjective, there are numerous case laws to establish the
standard of care of a bailee. In addition, the circumstances prevailing in a given case will also
play a major role in determining the bailee’s liability.

S.152 says that if the bailee takes due care that is prescribed in S.151, then he will be
absolved of his liability unless there is a contract to the contrary. The burden, though, is on
the bailee to show that he acted as a reasonable prudent man or loss had happened to the
goods, irrespective of his negligence.

12
 BIBLIOGRAPHY

1. Contract & Specific Relief 12th Edition – By Avtar Singh

2. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2373722
3. https://www.lawctopus.com/academike/case-commentary-ram-ghulam-v-government-of-u-p-2/

13