BAILMENT (S.

148 - 171)
 BAILMENT

Meaning in General words:

“The temporary control over articles/ goods for a purpose”
“It is generally a contractual relationship either expressly or implied, between two parties to act
according to particular terms.”
“Transfer of possession of the property not ownership interests.”
“Once the purpose for which the property has been delivered is accomplished, the property is
returned to the owner or disposed as per the contract.”
S. 148. "Bailment", "bailor" and "bailee" defined

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".
Explanation: If a person already in possession of the goods of another contract 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.

Example: A sells his watch to B, B asks A to hold his watch for one month and deliver at his
home after one month. After this A becomes the Bailee and B the Bailor.
 A 'BAILMENT' IS

 Delivery of goods (Specific movable Property)

 By one person to another
 For some purpose (express or implied)
 upon a contract (express or implied) ( with acceptance and consideration)
 on condition when the purpose is accomplished the recipient shall:
 ultimately restore them to the bailor or
 dispose of them according to the directions of the bailor.
 Either in their original form or in an altered form (depends upon the terms of the
contract).
 The essence is the transfer of possession.
 The ownership remains with the owner.
 The person delivering the goods is called the ‘bailor’
 The person to whom they are delivered is called the ‘bailee,’
 The transaction is called the ‘bailment.’
DISCUSSION: IS THIS BAILMENT?

 Library books
 Dry cleaner
 Courier
 Car hiring
 Workshops/ mechanic.
 You give your watch to your friend to wear (lending)
 Storage of sugar in a godown and keys handed over.
 Selling of a table.
 Parking by an attendant.
 Your neighbor is travelling abroad and she wants you to take care of her plants. She
physically gives you the plants or gives you the key to her garden.
 Snatching of goods/ Theft or extortion
ESSENTIALS

1. Delivery – means putting the goods in possession and could be actual or symbolic as S. 149.

You give 30 electrical appliances to a repairer. He repairs 3 on daily basis and asks you to come and
collect it. You inform him that you will come when all the appliances are repaired. Repairer assumes
the status of a bailee even though implied.

2. Presence of Contract – Factual- Contradicting opinion

Ram Gulam vs Govt. of U.P., AIR 1950 All 106 – police recovered goods of the plaintiff and they
were stolen while in their possession – Court held no contract as the police while keeping the
goods in possession was acting in discharge of obligations imposed by law. Thus, No Bailment.
L.M. Co-operative Bank v. Prabhudas Hathibai, AIR 1966 Bom. 134- In this case the goods were
collected and were destroyed while in the possession of the Income Tax Officer. Court held that it
was the duty of the Government to take care as a Bailee.
3. Goods – S. 2(7) – Sale of Goods Act, 1930-
“Goods" means every kind of movable property other than actionable claims and money; and
includes stock and shares, growing crops, grass, and things attached to or forming part of the land
which are agreed to be severed before sale or under the contract of sale

4. The goods are delivered/or some purpose.

When goods are delivered by mistake without any purpose, there is no bailment under Section 148.

5. Return or Disposal of goods.

BAILMENT VS. SALE

S. 4 (1) Sale of Goods Act, 1930 defines “Contract of sale of goods as a contract whereby the seller transfers or
agrees to transfer the property in goods to the buyer for a price.”

Bailment Sale

Object - Temporary possession Object – transfer to the purchaser

Ownership does not change After sale, the purchaser becomes the
owner

Bailee cannot dispose or sell the goods The owner can appropriate the goods
the way he likes

Nominal charges paid to the bailee for Consideration is a must – the value of
services. Sometimes no payment the good
SECTION 149

S. 149. Delivery to bailee how made

The delivery to the bailee may be made by doing anything which has the effect of putting the goods in the possession of
the intended bailee or of any person authorized to hold them on his behalf.

Types of Delivery
1. Actual/ Physical Delivery – Transfer of physical possession from one person to another.
2. Symbolic Delivery – Physically the goods are not transferred, some act is done to imply transfer. Example: Giving key
to the warehouse/Ignition keys to the car
3. Constructive Delivery – Person already in possession of goods- holds it for some other person.
Example: A sells his watch to B, B asks A to hold his watch for one month and deliver at his home after one month. After
this A becomes the Bailee and B the Bailor.

 Where the bailor has done everything to put the goods in the hands of the bailee, liability of bailee begins.

 Delivery to agent equally applicable

 KINDS OF BAILMENT

1. On the basis of benefit –

 Exclusive for the benefit of bailor.
 Exclusive for the benefit of bailee.
 Mutual Benefit.

2. On the basis of Reward –

 Gratuitous Bailment – Goods are delivered by the bailor to the bailee without any
reward .
Eg: Lending a book to a friend for reading. ( Exclusive benefit of either of the party)
 Non – Gratuitous bailment – Where bailor & bailee is entitled to reward for bailment.
E.g. A car let out for hire, Gold given to goldsmith for making jewellery for charges.
Return or disposal – after the purpose is accomplished the goods may be returned or
disposed

State Of Maharashtra V. Britannia Biscuit Co. Ltd. 1995 Supp (2) SCC 72

 The respondents manufactured and sold biscuits in tins. With regards to the tins, the
respondents took a refundable deposit (which was 20% more than the actual cost of the tin),
with the stipulation that if the tins were returned within a period of three months and in a
good condition, the refundable amount would be returned.
 ISSUE: Whether there was an obligation upon the purchaser to return the tins or was it a case
where the return or non-return of the tins lay within the discretion of the purchaser?
 HELD: Once it is held that there was no obligation to return the tins.
 “ The obligation of the Bailee to return the goods or to deal with them as per the directions of
the Bailor is the essence of Bailment.

 Similar decision in M/s Kalyani Breweries Ltd. V. State of West Bengal, AIR 1998 SC 70
 United Breweries Ltd. Vs. State of A.P., (1997) 3 SCC 530
In the former, Co. sold beer in bottles to vendors (customers). Customer to collect a deposit a refundable amount for
the bottles. This amount was a nominal charge – 40p.
The Dealers paid deposit as a security for the bottles and the crate, which was returned to them on the return of the
deposit. Circulars issued for the same stating:
1. Bottles were not sold to the customers
2. Bottles were to be returned to ensure process of bottling and supply.
Court Held that: The rate of deposit less than the price of the bottle – intention not to sell the bottle but to get them
back – no sale but bailment.

Ashby v. Tolhurst [ 1937] 2 KB 242

 Where a car was allowed to be parked on the payment, but condition printed on the ticket said that all cars were at
the owners risk.
 The relation between the Car owner and the Parking lot owner was held not to be of Bailment.
 RIGHTS & DUTIES OF BAILOR

Where there is a right there is a corresponding duty on another. Thus, the rights
of the bailor are the duties of the bailee and vice versa.

Bailor – who delivers possession of the goods to another

Duties –
 To disclose faults in the goods bailed (S. 150)
 Repayment, by bailor, of necessary expenses (S. 158)
 Restoration of the Goods lent Gratuitously (S. 159)
 Responsibility Towards Bailee (S. 164)
1) 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.
2) 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.

S. 150 is divided into – A gratuitous Bailor –

A bailor for reward – non-gratuitous
Discussion:
(a) A lends a horse, which he knows to be vicious, to B. He does not disclose the fact that the horse is
vicious. The horse runs away. B is thrown and injured. Is A responsible to B for damage sustained?
Yes
(a) A hires a carriage of B. The carriage is unsafe, though B is not aware of it, and A is injured. Is B
responsible to A for the injury?
Yes
 Second part of S. 150 – imposes higher duty on the bailor since the bailor is
drawing a profit from such bailment such as giving costumes on rent.
 Whether aware or not, the bailor is liable
 No defense – I was unaware

Discussion: If the car was hired by you and you met with an accident, the
bailor was not aware of the defaults. Damages?
- you can claim damages.
S. 158. 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 purpose of
the bailment.
Therefore, gratuitous bailment and in the favor of the bailor.

Eg. A wants supply rice to a company. B, his friend, volunteers to keep the rice in his godown
for a month before sale. After storing the rice, A gives the keys to B to keep it safely.
B undertakes measures to keep godown rodent free. He is further asked by A after a month to
deliver the rice to his shop in the other village as he is travelling. Repayment?
- B can recover both the costs of maintenance as well as delivering the rice.

Discussion: A leaves his Horse with B for one weak. Can B recover the expenses incurred by
him in feeding the Horse?
S. 159. Restoration of goods lent gratuitously-
The lender of a thing for use may at any time require its return, if the loan was gratuitous, even
though he lent it for a specified time or purpose.
But, if, on the faith of such loan made for a specified time or purpose,
the borrower has acted in such a manner that the return would cause him loss exceeding the benefit
actually derived by him from the loan,
the lender must, if he compels the return, indemnify the borrower for the amount in which the loss
so occasioned exceeds the benefit so derived.

Discussion: Your car breaks down and you have planned a road trip after 15 days. You borrow your
friend’s spare car. You make all your bookings and travel arrangements. On the 14th day your friend
calls for the car back. You inform him about your trip but he compels you to return the car. Can you
seek indemnification?

He has a duty under S. 159 to indemnify you.

S. 164 - Bailor' s responsibility to bailee –
The bailor is responsible to the bailee for any loss which the bailee may sustain by
reason that the bailor was not entitled to make the bailment, or to receive back
the goods or to give directions, respecting them.

Eg. A is not the owner of the good and the original owner sues the bailee, the bailee is
entitled to recover costs from A.

 Bailee has to be acting in good faith, if notice or directed otherwise, bailee cannot
take defense.
 Overlap with S. 158 – necessary expenses but there the expenses are to fulfil the
valid bailment.
 Under S. 164 are losses which bailee suffers due to unauthorized bailment.
1. Enforcement of Rights –

The Bailor can sue the bailee to enforce his rights or the duties and liabilities of the
bailee.

2. To avoid the contract (S. 153) -

S. 153 - Termination of bailment by bailee' s act inconsistent with conditions-

A contract of bailment is voidable 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.

Discussion: A lets to B, for hire, a car for his own driving. B runs the car as a taxi. Can
bailment be terminated?
3. Right to claim increase in profit

S. 163 - Bailor entitled to increase or profit from goods bailed-

In the absence of any contract to the contrary, the bailee is bound to deliver to the bailor, or
according to his directions, any increase or profit which may have accrued from the goods bailed.

Eg. A leaves a cow in the custody of B to be taken care of. The cow has a calf. B is bound to deliver the
calf as well as the cow to A.

Discussion: Bailor gives the car for personal use, A runs it as a taxi. if the bailor continues with the
contract and not terminate it, then who can claim the profits?

-Bailor is entitled to claim for profits that A derives from running the taxi.
4. Right to Subrogation –
S. 180 - Suit by bailor or bailee against wrong-doer-
If a third person wrongfully deprives the bailee of the use or possession of
the goods bailed, or does them any injury, the bailee is entitled to use such
remedies as the owner might have used in the like case if no bailment had
been made; and either the bailor or the bailee may bring a suit against a
third person for such deprivation or injury.

Discussion: If A gives a watch to B and C steals it from B, who has the right to
sue?
- Both. The right to sue is of the bailee and he can file for all such actions
which the bailor has under the law and similarly, the bailor can without the
bailee suing, sue C for theft.
 Kaliaporumal Pillai vs. Visalakshmi (AIR 1938 Mad. 32)
Facts: Lady wanted to convert her old jewelley into new. Every evening, as soon as the gold-
smiths' work for the day was over, the she used to receive the half made jewels from the
goldsmiths, put them into a box and lock. One night, Goods were stolen.
Held: No bailment. As she did not hand over hand over the possession.

 National Bank of Lahore vs. Sohan Lal (AIR 1962 Punjab 534)
The bank had one key of the Locker and the customer the other. The bank manager
fraudulently fled the livers, so that the locker could be opened without the customer’s key.
Issue : Bailment or not?
Held: Yes. Bank’s Key was necessary and they had the duty to take care. Also, bank was
vicariously liable for the manager.

 Mere hiring of bank locker, not Bailment (Also held in Atul Mehra vs. Bank of Maharashtra
– AIR 2003 P. & H. 11)
 RIGHTS & DUTIES OF THE BAILEE

Bailee – the one who takes possession of the goods delivered

Duties – To take care of the goods (S. 151)

To act in conformity with the terms and conditions of the contract (S. 153)
Not to make unauthorized use of the goods (S. 154)
Not to mix the goods which bailed with his own goods (S. 155, 156, 157)
To return the goods bailed, after the purpose is accomplished (S. 160)
Responsibility when the goods are not duly returned (161)
Duty to return increased profits on the goods bailed (163)
S. 151 - Care to be taken by bailee –
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.

• Bailee responsible for every kind of bailment (gratuitous/non-gratuitous) if negligent

• The burden of proof that he took reasonable care and did not act negligently lies on the
bailee.
• Bailee cannot be made liable for events beyond his control but the Court will always infer
what was reasonable and prudent – Depends on facts
• Difference in care depends on difference in goods Eg : for protecting gold and in
protecting a book
 Section 152 :
Bailee when not liable for loss, 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 section 151.

Union of India v Udho Ram & Sons, AIR 1963 SC 422 –

Facts: Articles were stolen while in rail transit – theft when the train stopped for 15 mins at a station -
plaintiff brought action to recover compensation.

Held: SC held that the railway did not take due care: - firstly, they did not prove from record that the
protection police which escorted the train was sufficient in strength and secondly, unlike a prudent man
the protection police keep an eye on wagons particularly when the train stopped to prevent the theft of
the goods. Defendants held liable.
Gopal Singh Hira Singh vs Punjab National Bank ( AIR 1976 Delhi 115)

Facts: Goods pledged before 1946, after partition that branch became part of
Pakistan. Bank failed to return the goods. Bank pleaded that the goods have
been destroyed by the rioters.
Held: The obligation of the bank to take of the goods must be seen in the
context of the extraordinary situation that developed. And thus, bank is not
liable foe the negligence.

Discussion: Is a contract exempting the Bailee from the Liability Valid ?

( Refer Central Bank of India vs. Grains and Gunny Agencies)
S. 154 - Liability of bailee making unauthorized use of goods bailee –
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.
Discussion:
(a) A lends a car to B for his own riding only. B allows C, a member of his family, to drive the car. C drives
with care, but the car by chance meets with an accident and damages the car.
B is liable.
(b) A hires a horse in Calcutta from B expressly to march to Benares. A rides with due care, but marches
to Cuttack instead. The horse accidentally falls and is injured.
A is liable to make compensation to B for the injury to the horse.
(c) You lend a watch to your friend to be worn for the party. She wears it to class and loses it.
You can claim damages from your friend.

Section 154 Read with S. 153 – If bailee does not conform to the terms of the contract – the contract is
voidable at the option of the bailor.
Duty of Bailee and Right of the Bailor
One important aspect is that bailee should maintain the identity of the bailor’s goods.

S. 155 - Effect of mixture with bailor's consent of his goods with bailee's -
If the bailee, with the consent of the bailor, mixes the goods of the bailor with his own goods, the bailor
and the bailee shall have an interest, in proportion to their respective shares, in the mixture thus
produced. (to the extent mixed)

S. 156 - Effect of mixture without bailor' s consent, when the goods can be separated –
If the bailee, without the consent of the bailor, mixes the goods of the bailor with his own goods, and
the goods can be separated or divided, the property in the goods remains in the parties respectively;
but the bailee is bound to bear the expense of separation or division, and any damage arising from the
mixture.

157. Effect of mixture, without bailor' s consent, when the goods cannot be separated –
If the bailee, without the consent of the bailor, mixes the goods of the bailor with his own goods, in
such a manner that it is impossible to separate the goods bailed from the other goods and deliver them
back, the bailor is entitled to be compensated by the bailee for the loss of the goods.
1. A bails 50 bags of cement of Ambuja Co. to B. without A' s consent, B mixes
the 50 bags of cement with other bags of his own from a different company.
A is entitled to have his 50 bags returned, and B is bound to bear all the
expense incurred in the separation of the bags (additional labour), and any
other incidental damage.

2. Above example – if B opened all the bags and mixed the cement with his, this
would be inseparable and now if A asks for his cement.. What will happen?
B will have to pay A for the entire cement.
S. 160 - Return of goods bailed on expiration of time or accomplishment of purpose-
It is the duty of the bailee to return, or deliver according to the bailor's directions, the goods bailed,
without demand, as soon as the time for which they were bailed has expired, or the purpose for which
they were bailed has been accomplished.
Obligation on bailee:
a) Once the purpose is served
b) the time expired
c) The duty to deliver the goods back to the bailor or give them to whom he was directed to under the
contract
d) Even if not demanded so by the bailor
e) Unless there is a contract to the contrary – if bailee has been told to return when the bailor
demands or bailor will himself collect them (This also the Court has interpreted to be done within
reasonable time)

Extension to this is S. 161 – loss, destruction or deterioration to goods if not delivered will make the
bailee liable for it.
S. 161 Bailee's responsibility when goods are not duly returned –
If, by the default of the bailee, the goods are not returned, delivered or tendered at the proper time,
he is responsible to the bailor for any loss, destruction or deterioration of the goods from that time.

J.K. Oil Mills vs. Union of India (AIR 1976 SC 227)

Facts: The appellants consignment of mustard was being transported by the respondent from
Kanpur to Calcutta. On reaching Calcutta, but before delivery to the Appellant, it was seized by the
Food Inspector on the doubts of being adulterated and was destroyed by the orders of the Calcutta
High Court.
Issue: Was the respondent liable for the failure of delivery of the goods and their destruction?
Held: NO. The loss and the damage was not due to the misconducts of the respondent.
Rights - Right to recover necessary expenses – S. 158
Right to recover compensation (when bailee not entitled to make the bailment) – S. 164
Right against third party – Right to subrogation – S. 180
Instances when bailee not liable – S. 152
Right to delivery to one co-owner without the consent of all - 165 + 166
Right to Lien – S. 170 & S. 171

S. 158 – Slide 16
S. 164 – Slide 18
S. 152 – Slide 25
S. 180 - Slide 21
S. 165 - Bailment by several 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.

S. 166 - Bailee not responsible on re-delivery to bailor without title-

If the bailor has no title to the goods, and the bailee, in good faith, delivers them back to, or
according to the directions of the bailor, the bailee is not responsible to the owner in respect of
such delivery.

Discussion: If A sells it to C and now C is the original owner, is B liable if he delivers it to A?

Discussion: A delivers a rough diamond to B, a jeweller, to be cut and polished, which is accordingly done.
A comes to B to collect the Diamond. B asks for the money for the services rendered, A refuses. What
option does B, the Bailee has? Is he bound to deliver the goods and then seek compensation?
B is entitled to retain the stone till he is paid for the services he has rendered.

Right to Lien – This right to retain the goods is called “Lien”.

S. 170 & 171 – Lien is the right to retain the goods till the dues are cleared.
Two types – General and Particular
S. 170 - Bailee' s ‘particular’ lien-
Particular – Only that good can be retained with regard to which the services were rendered
“Where the bailee has, in accordance with the purpose of the bailment, rendered any service
involving the exercise of labour or skill in respect of the goods bailed, he has, in the absence of a
contract to the contrary, a right to retain such goods until he receives due remuneration for the
services he has rendered in respect of them.”

Essentials –
1. The bailee should have rendered some service involving exercise of labour or skill in respect of
the goods bailed (Factual)
2. Such services should be in accordance with the terms of the contract
3. No contract b/w parties excluding lien
4. Goods in possession of the Bailee
5. Services performed in due time
Right of Lien may be lost in the cases of
1. Loss of possession
2. Payment of due amount
3. Waiver of amount
4. Accepting security instead of Lien
5. Unauthorized use

Discussion: A gives, cloth to B, a tailor, to make into a coat. B promises A to deliver the coat as soon as it is
finished, and to give a three months credit for the price. Is B entitled to ask for payment after he delivers?
B is not entitled to retain the coat until he is paid
S. 171 - General lien of bankers, factors, wharfingers, attorneys and policy-brokers-
A right to retain all the goods for security for the general balance of account until the full satisfaction
of the claim dues whether in respect of those goods or any other goods. Unless there is a contract to
the contrary.
Available to: (1) Bankers
(2) Factors
(3) wharfingers
(4) attorneys of a High Court
(5) policy-brokers
They may retain the goods as a security for a general balance of account.
But no other persons have such a right, unless there is an express contract to that effect.
1. Bankers –retain any of the debtor’s goods in the bank’s possession until any debt due from the
debtor, whether in connection with the retained goods/ securities or otherwise, has been paid.
Eg. Goods supplied as security for a loan and now a credit card bill is pending – the bank
has the right to exercise lien over those goods even though they have no connection
with the outstanding bill.
1. Factors - S. 122 - Agents – purpose to sell the goods – can retain if his charges are not paid as
long as goods were given to him in the capacity of an agent in the ordinary course of business
2. Wharfingers – Warf - permanent structure on the shore or bank of a river where ships are
docked to load and unload cargo. Wharfinger – the owner or manager of the wharf – right to
lien the goods bailed to him until his charges for use of wharf are not paid.
3. Attorneys – BCI Rules – prohibit advocates from adjusting the fees against his own personal
liability of the client. He is entitled to money from the money paid in the court but not by
retaining papers and litigation files. ( Refer R.D Saxena vs Balram Prasad)
4. Policy broker – Like an insurance agent. Right to lien can be exercised.
PARTICULAR LIEN GENERAL LIEN

Available against those goods in respect of Available against all goods

which charge were due

Purpose: Remuneration for services Also for general balancing the debt amount

Available to every Bailee Available for specific people

Available only when service involving Labour Available even when no such service has
and skill has been involved been rendered
Discussion: 100 cloth pieces given to a tailor. Payment for 60 suits made 40 left.

 Does the Tailor has a right to lien?

By law, the tailor can exercise only a particular lien with regard to the
40 suits and has to return the 60 suits.
 However, if general lien was contracted for, and tailor also has 10 shirts under
his possession. He has the right to exercise the Lien over?
The Tailor could retain all 100 or the 60 suits until the bailor paid for
the 40 suits. If some other goods like the 10 shirts are in his
possession, he could retain those as well.
 FINDER OF GOODS

 Finder – when goods don’t belong to him.

 Acts as a Bailee without a Contract, all rights and duties of bailee applicable

 S.168 - Right of finder of goods, may sue for specific reward offered.—
1. The finder of goods has no right to sue the owner for compensation for trouble
and expense voluntarily incurred by him to preserve the goods and to find out
the owner;
2. where the owner has offered a specific reward for the return of goods lost, the
finder may sue for such reward, and may retain the goods until he receives it.
(Sue for rewards)
 S. 169 - When finder of thing commonly on sale may sell it.—

 Duties of a finder:
-Find the owner with reasonable diligence
-demand the owner, to pay the lawful charges of the finder

 The finder may sell it—

(1) when the thing is in danger of perishing
(2) when the lawful charges of the finder, in respect of the thing found, amount
to two-thirds of its value
 Rights against a Third Person : Section 180, Subrogation
 Rights of a Third Person : Section 167 :
 Rights of a third person claiming goods bailed: If a person, other than the bailor,
claims goods bailed he may apply to the Court to stop delivery of the goods to the
bailor, and to decide the title to the goods.
 Union of India vs. United India Fire Insurance Co. Ltd. (AIR 1981 Mad. 162)

Facts: Cotton bales belonging to a company were unloaded by the company

and kept inside and outside the railway sheds covered in tarpaulin.
Company provided a watchmen and the railways provided the railways
protection staff. Company did not take delivery of goods despite
repeated requests. 13 days later, the goods were somehow burned.

Issue: was the railways negligent?

Held: No. they took all possible care. And cannot be held liable for the
destruction.
 Case related to the loosing the right to Lien on loosing the possession.
 Note: Unpaid seller has a right to lien under Sec. 47 of the Sale of Goods Acts.

Eduljee vs. Café John Bros. (AIR 1943 Nag. 249)

 Facts: Seller sold a second hand refrigerator , and also delivered the same to the
buyer. But the seller was not paid for. After sometime, there was some trouble in it
and two of its parts were sent for repair.
 Issue: Did the seller still had a right to lien?
 Held: Seller’s right to lien had come to an end when he delivered the goods to the
buyer.
 General Lien of Bankers
 K. Sita v Corporation Bank (AIR 1999 A.P 367)
 Facts: Petitioner pledged some gold ornaments and took a particular loan from the bank.
Later on, he took another subsequent loan. He paid the first loan but, failed to pay the
second.
 Issue: was there any power of the bank to exercise General Lien over the gold ornaments
which were given as a security for the first loan and not the second.
 Held: Yes. The Bank can retain the pledged ornaments if the debtor has not cleared another
loan advanced.

 A banker can exercise lien over the Fixed Deposits which had been given to the Bank by a
customer to avail an overdraft facility.
 as held in - Shivam Construction co. vs Vijaya Bank (AIR 1997 Guj. 24)
 Also held in – Punjab National Bank vs Satyapal (AIR 1956 Punjab 118)