CHAPTER V

ANALYSIS OF SECTION 71

SYNOPSIS .

1. The Section Generally 4. The Right and Obligations of,

finder ofa goods: in relation to
2. Section 151; Scope and Object 4.1. Section 154
2.1. Standard of Care 4.2. Section 155
4.3. Section 156
3. Interpretation 4.4. Section 157
3.1. English Law 4.5. Section 168
3.2. Indian Law. 4.6. Section 169
5. Resume ofthe Chapter
 185

Section 71 of the Indian Contract Act, 1872 is envisages that,

“Responsibility of a finder of goods - A person who

finds goods belonging to another and takes them into
his custody, is subject to the same responsibility as a
bailee.”

1. THE SECTION GENERALLY:

The terms of the section contemplates another quasi-contractual

obligation. The section clearly postulates that a person who finds goods

belonging to another takes them into his custody, is in the position of a

bailee with all his responsibilities. Though no contract exists between the

finder and the owner of the goods, yet an obligation, a responsibility in

the eyes of law has been fixed on the finder of goods.

Section 71 requires that, to be responsible for the goods, the finder of the
goods have to take them into his custody. Therefore, it is necessary to

prove that the finder of goods took custody of the goods i.e., Animus

Possidendi is required to amount to possession in law. Then alone he can

■e

be saddled with the responsibility of a finder of goods.1 If a person leaves

the goods, and another person takes them into his custody, his
responsibility in regard to the said goods would be that of a bailee. But
Section 71 will not be applicable if the owner of the goods authorises
another person to take and keep the goods as his agent, or as his bailee.2

Therefore, when a finder of goods accepts the responsibility of the goods,

he is placed, vis-a-vis the owner of the goods, in the same position as a

bailee.

As the position of the finder of goods is similar to that of a bailee, the

study in this chapter extends to the person who finds lost goods takes
1. Union of India v. Mohammad Khan, AIR 1959 Orissa 103.
2. Union of India v. Amar Singh, AIR 1960 SC 233.
 186

them into his custody becomes in effect a_ bailee as regards the duties
incumbent on him. Having assumed custody he must take care of the goods
as a man of ordinary prudence.1 If he makes use of the goods, he may
become liable to make compensation to the owner, for any damage arising
to the goods from or during such use.2 Similarly, he should not mix the
goods found by him with his own goods.3 The finder of goods may retain
the goods against the owner until he receives such compensation; and 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 so
receives.4 Even if no specific reward has been offered, but, if after the
goods are found the owner promises to pay something to the finder for
his services, the finder can enforce this promise under Section 25 (2) of
the Contract Act. The finder of goods has, however, been authorised to
sell the goods found by him under Section 69.s If the circumstances of a cast
is not covered by Section 169 and the finder sells the goods he can be
made liable for conversion.

Under the provisions of the Indian Penal Code, Section 403 fixes the guilt
on a person with criminal misappropriation of property if a finder of goods
converts them to his own use dishonestly. Here it is required to prove that
there must be actual conversion of the thing misappropriated to the
accused’s own use. where, therefore, the accused found a thing, and merely
retained it in his possession, he was acquitted of this offence.6 A finder
of goods comes to possess a thing rather innocently without any criminal
1. Section 151 and 152, Indian Contract Act 1872.
2. Section 154.
3. Section 156 and 157.
4. Section 168. ------
5. Section 169.
6. Abdool, (1868) 10 WR (Cr.)23A.
 187

intent. But subsequent change of intention may render the retention, entails
deprivation, to the owner,and thus becomes wrongful and fraudulent.1 The
offence consists in the dishonest misappropriation or conversion, either

permanently or for a time, of property which is already without wrong in

the possession of the offender.2

1.2 English Law:

Under English law, a finder of goods is liable with that of a bailee as in

India. A finder of goods will not be guilty of conversion if he removes the
goods to place of security.3 He has all the rights in it against the whole
world except the true owner. lnBrJggesv.Jfawke_sworth,4 case a person

entered a shop and found a bundle of bank notes on the floor of the shop.

The owner could not be found. In such a situation it was held that the finder

has a right to the property. Similarly, a person in possession of a house or

land and in actual control of it has superior right to the goods found therein,
by his employee or a stranger. A presumption is drawn in favour of the
possessor of the house that the goods found in the house or land is in
actual possession of the possessor of the house or land.5

2. SECTION 151: Scope and object.

Section 151 of the Indian Contract Act, 1872 says :

“In all cases of bailmentthe 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.”

1. Bhagiram Dome v. Abar Dome, (1988) 15 Cal. 388, 400; Paramode, (1965)2 Cr.
L.J. 562.
Ramakrishna, (1888)12 Mad.49,50.
hi

Hollins v. Fowler, LR 7 HL 757,766,796.

U>

Bridges v. Hawkesworth, 21 LJQB 75.

5. South Staffordshire Wafer Co. v. Shannon, (1896)2 QB 44.
 188

Since a finder of goods is at par witha bailee, it is essential to analyse the

be. ct|>pl£ cable.
liability of a bailor so as to in case of a finder of goods. The
terms of the section clearly defines the extent of care to be taken by a
bailee. The bailee must take reasonable care of goods entrusted in bailment
to him as a man of ordinary prudence would take of his own goods of
similar bulk, quality and value. So an obligation has been set out on the
bailee under this section. The section is not concerned with any degree of
care and negligence. It declares a uniform standard of care without even
recognising any distinction between gratuitous and non-gratuitous
bailments. Therefore, it is difficult to fix an inflexible standard for the
measure of the bailee’s care as it depends on the facts and circumstances
of each case.1 It varies with the situation and the nature of goods too.2 So
the section prescribes an irreducible minimum care required from bailees
in general.3 A finder of goods steps into the shoes of a bailee.

Section 151 postulates a rule general to all kinds of bailment whether

gratuitous or for hire. The duty of a bailee for hire is not greater than the
duty of a gratuitous bailee. Both are to take the same care of goods
entrusted to them as a reasonably prudent and careful man may fairly be
expected to take of his own property of the same bulk, quality and value.4
A ‘sanctioning right’5 has been allowed to the bailor to claim damages
from the bailee for wrongful detention of the goods bailed or for their
loss; destruction or deterioration, if the bailee will not take reasonable
are of the goods. Therefore'the obligation .of the bailee starts as soon as
the bailee accepts delivery or receives property.for a certain purpose.6

1. Secretary of State v. Ramadhan Das Dwarka Das, AIR 1934 Cal. 151.
2. Lakshmi Narayan v. Secretary of State, AIR 1924 Cal. 92.
3. Alibhai v. B.J.S.N.Co., ILR 52 Cal. 296.
4. Secretary of State v. Ramadhan Das Dwarka Das, AIR 1934 Cal. 151.
5. Ramlal Jain v. Central Bank of India Ltd., AIR 1961 Punjab 340.
6. Secretary of State v. Ramadhan Das Dwarka Das, AIR 1934 Cal. 151.
 189

In the absence of any special contract between the parties limiting the
liabilities of the carriers under Section 72 of the Railways Act, the
defendant Railways, were bailees for the goods consigned to them, and

therefore responsible for the loss, destruction or deterioration thereof

under Section 151,152 and 161 of the Contract Act, 1872. where Section
71 admits a fiction of recognition of a contract of bailment implied by
law in circumstances, Section 151 imposes an obligation on the finder of
goods, who accepts the responsibility of goods vis-a-vis the owner of the
goods in the same position as a bailee. Under Section 151 of the Contract
Act, the bailee is bound to take care 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 of the goods
bailed.1 Therefore, the obligation of the bailee starts as soon as the bailee
accepts delivery or receives property for a certain purpose. He will be
liable for loss or damage caused to the goods due to his negligence,2 as he

is required to take all care as a man of prudence would do.

As the bailee possess the bailed goods the essence of bailment is

possession and a bailment may arise even when the owner of the goods
has not consented to their possession by the bailee.3 Therefore, the bailee
should take reasonable care of the bailed goods as a man of ordinary
prudence would, under similar circumstances, take of his own goods.

Where the possession of the truck was handed over to the defendants when

the truck was parked in the parking center of the defendants, on receiving

a valuable consideration for the safe keeping of the vehicle, a contract of

1. Union of India v. United India Fire and General Insurance Co. Ltd., AIR 1981
Mad. 162 at pp. 162-163,166,167.
2. The Dhanlakshmi Bank Ltd. v. K.K. Josh @ Josh Mohan and others AIR 1991
Ker. 388.
3. The Trustees of Port of Bombav v. The Premier Automobiles Ltd., AIR 1981 SC
1982.
 190

bailment came into force. The defendants as bailee having failed to deliver-
the vehicle back to the second plaintiff within the contracted period and
not having shown any prudent care for the safety of the truck, are held
liable for its loss.1 Similarly, a surety in possession of attached goods by
order of Court, has to produce the same when the Court calls for it. The
surety’s possession is possession of the Court. He is in the position of a
bailee and so is liable under Section 151 of the Contract Act.2 His liability
can be executed under Section 145, C.P.C. fdr the value of the goods. The
surety bond is not a special contract within the meaning of Section 152 so
as to absolve him of the obligation under Section 151.

The scope of Section 151 of the Contract Act has been extended to a
trustee which is similar to that of a bailee. Under Section 15 of the Indian
Trusts Act, a trustee is bound to deal with the trust property as carefully
as a man of ordinary prudence would deal with such property if it were his
own. So, a trust is an obligation annexed to the ownership of the property,
and arising out of a confidence reposed in and accepted by the owner, or
declared and accepted by him, for the benefit of the beneficiaries. The
exception is where there is a contract to the contrary. If a trustee takes
the same care of the trust property that a man of ordinary prudence would
take of his own, he will not be liable for any loss, destruction or
deterioration of the trust property.

Similarly, the pawnee has a duty to take care of the goods as a man of
ordinary prudence would take of his own goods and will be liable to the
pawner for the loss or damage caused to the goods on account of his
negligence. It necessarily follows that the goods to be returned by the
1. The New India Assurance Co.Ltd. and Another v. The Delhi Development
Authority and Others, AIR 1991 Del. 298.
2. Bachraj Dugar v.' Lalchand, AIR 1962 Assam 23 at pp. 26-27.
 191

pawnee should be the same goods pledged by the pawner and they should

be in the same condition in which they were entrusted to the pawnee

meaning thereby that no damage should have been caused to those goods

on account of the negligence of the pawnee.'

In the absence of any special contract, a bailee is not liable for the loss,

destruction or deterioration of the things bailed if he has taken reasonable

care. The effect of Section 152 is that degree of care enjoined under

Section 151 is subject to the contract to the contrary. When the goods

entrusted to the bailee are lost or damaged, there is initial presumption of

negligence or failure to take reasonable care by the bailee.1

2 The care

required of the bailee under Section 151 is a finding of fact only, and so it

cannot be opened to question in reversion.3 Where a bank takes possession

of documents of title, it is responsible for the safe custody of the title

deeds and not of the goods.4 Act of bank in collection of bills, remittances

to bills, meeting expenses of storing goods and debiting same to current

account even without cheques from plaintiff, would lead to inference that

creation of fiduciary relationship or agency in respect of goods not

warranted. Where the bank delivers goods to wrong person, the liability

of bank is absolute.5

2.1 Standard of care :

The standard of care required of a bailee is that of a man of ordinary

prudence, who would, under similar circumstances, take of his own goods
of the same bulk, quality and value as the goods bailed. As the words of
1. DIumalakshmi Dank Ltd. v. K.K. Josh, AIR 1991 Ker. 388.
2. Coachin Port Trust v. Associated Cotton Traders Ltd. and Others, AIR 1983
Ker. 154.
3. Sital Baksh Singh v. Baijnalh, AIR 1936 Oudh. 264,265.
4. Duli Chand v. Jwala Prasad, AIR 1934 All. 568.
5. United Commercial Bank v. Hem Chandra Sarkar, AIR 1990 SCI329.
 192

this section are vaiy wide, no hard and fast rule can be laid down for fixing

the measure of care due from bailees in general. Rather it should invariably
depend upon (he facts and circumstances of each ease.1 Thus, to leave a
bicycle in an open yard in charge of a contractor, who left the stand in
charge of two boys, without locking the bicycle is not at all prudent.2
Similarly, for a bailee to keep the bullion3 or money 4 entrusted to him

unlocked is not prudent. Where bailed goods are perishable a bailee is

expected to take special care.5 Where a bailee exercises due care in the
selection of servants, he is not liable if the servant steals the article bailed.6
But he will be liable for the servant’s negligence during the course of his
employment.7 If the care required under Section 151 is not proved, it is
no defence for a bailee that he lost his own goods also alongwith the bailed

goods.8 If the bailee deposits in a bank which fails, bailee is not

responsible.9 When grain was damaged by a flood which was

unprecedented, it was held that-~-the-ba-i-lee--has not been remiss in his
obligations and he was not responsible for the loss, destruction or
deterioration of the thing bailed.10 11
The burden is on the plaintiff to show
that the defendant bailee was guilty of want of diligence either by himself
or by his agents or servants." Where the pawnee kept the pawned ornaments
1. Santi Lai v. Tara Charni, AIR 1933 All. 158; Secretary of Stale v. Ramadhan Das
DwarkaDas, AIR 1934 Cal. 151; LakshmiNarayan AIR 1957 Mys. 55; Kanakaiya
Chetty & Co. u Union of India, AIR 1961 Mad. 98.
2. Samaraj v. Knppiiswamy, AIR 1957 Mys. 55.
3. Lakhaji v. Boomgu Mahadeo, AIR 1938 Bom. .101.
4. Saraswati Kiinwar v. Badri Prasad, 36 IC 31.*
5. Commissioner for Port of Rangoon v. MooIUawDawood & Sons, 9 IC 470.
6. Jobson v. Palmer, (1893)1 Cli. 71.
7. Sanderson v. Collins, (1904)1 KB 628; Secretary of State v. Ramdhan Das
Dwarka Das, AIR 1934 Cal. 151.
8. Doorman v. Jenkins, 111 ER 99.
9. Saraswati Kimwar v. Badri Prasad, 36 IC 31.
10. Santi Lai v. Tara Chand, AIR 1933 All. 158.
11. Secretary of State v. Ramadhan Das Dwarka Das, AIR 1934 Cal. 151.
 193

in an iron box with his own ornaments and the key was kept in a cash box
and the room was locked. The burglars took the key from the cash box and
burgled. It was held that the pawnee had not taken all the care which an
ordinary man would take of his own goods.1 Where the defendant placed
the money entrusted to him by the plaintiff in a box with his own money
and subsequently it was theft. It was held that the defendant was liable as
he was not prudent.2 A gratuitous bailee is also bound to take the same
care as a prudent man would take in respect of his own goods.3

Under Section 151, the liability is for negligence in absence of a special

contract. In Union ofIndia v. Amar Singh,4 it was held that the Railway
was guilty of negligence and did not act as a prudent man and hence liable
for the loss and deterioration of the articles. Misdelivery is also a loss
under certain circumstances and therefore, the defendants are held liable
for the price of the goods which the plaintiff had lost.5 But where
misdeliveiy has taken place in spite of due care and caution, the defendants
would not be responsible for resulting loss to the plaintiff.6

The measure ofdiligence, demanded of a bailee, is, as a rule, that degree

of deligence which men of common prudence generally exercise about
their own affairs. As a general rule, the fact that he keeps the goods bailed
in the same manner as he keeps his own may be, but it is not necessarily
sufficient to exempt him from liability. If, however, the thing bailed is
injured or destroyed, while in the custody of the bailee, although similar
1. Rampal v. Goitri Shankar, AIR 1951 Nag.8.
2. Nagalinga u Kayarohana, AIR 1915 Mad.80.
3. Mimna Lai u (laiiya Pras<uL AIR I955 VP 30,
4. AIR 1966 SC 233.
5. Mohammad Ekram v. Union of India, AIR 1959 Pat. 337 at P. 339.
6. Ibid., Governor General in Council v. Kaliram, AIR 1948 Pat. 345; AIR 1957
Cal. 573
 194

things belonging to him sustain no damage, it seems that the onus of proof
rests on the bailee to show that he has not unduly favoured his own things.
In Dwarka Nath v. Rivers Steam Navigation Co. Ltd.,1 the Privy Council

held that a plaintiff claiming damages for failure to take care on the part
of a person to whom Section 151 of the Contract Act applies may succeed
in discharging his onus in two ways :____________

(i) He may show that the defendant has failed to place

before the Court all the materials available to him, as
required under Section 106 of the Evidence Act, and
ask the Court to presume that if produced such materials
would have gone against the defendant,

(ii) He may also show, on such materials as have been

produced by the defendant, that he has not taken as much
care as is required of him under. Section 151 of the
Contract Act.

This view of Privy Council has been taken in subsequent judicial

pronouncements.*
2 It is therefore essential to establish, whether the bailee
has used all reasonable diligence and hence in each case it is a question of
fact.

In case of a sudden emergency the standard of care expected from the

bailee cannot be the same as in the ordinary circumstances. Where the
damage is caused to the goods by an unprecedented flood, it cannot be
attributed to any negligence. In law, that being the effect of vis major and
hence compensation cannot be awarded.3 The expression vis major or ‘act
of God’ is merely a naturally caused incident directly and exclusively .
without human intervention and cannot be prevented by any amount of
foresight and pains and care reasonably to be expected from a common

__ man.
___________
In such circumstances, a common carrjer is not liable.4

, 2. Calcutta Credit Corporation v. Prince Peter of Greece, AIR 1964 Cal. 374. Sand
Lai v. Tara Chand, AIR 1933 Alt. 158 at P. 159.
3. Baldeo Narayan v. State of Bihar, AIR 1959 Pat. 442 at pp. 443-444.
4. Province of Madras v. Ls. & Co. Machado, AIR 1955 Mad. 519; Bachraj Dugar v.
Lai hand, AIR 1962 Assam 23 at pp. 26-27.
 Therefore, if a man who encounters a sudden emergency does something
which he might reasonably think proper under those circumstances, he

should not be held guilty of negligence.1 In an emergency, the bailee has

the same power to act as an agent under Section 189 of the Contract Act
and in cases of difficulty, he is under the same duty as has been cast upon
the agent under Section 214 of the Contract Act, which makes it incumbent
on the agent to use reasonable diligence in communicating with his

principal and in seeking to obtain his instructions.2

Where there is a complete loss of property, the measure of damages is

the price of the goods.3 The word “loss” appears in the sense of something

that happens to the goods, as distinct from any loss or injury sustained by
the owner. Therefore, the bailee should act in an emergency in a particular
manner, like a man of ordinary prudence, under similar circumstances.

Otherwise he will be saddled with liability. Where the Government official

attached and seized goods, and due to rains the goods were damaged it was
held that heavy rains is not an act of God or vis major. It is the duty of the

official to take such care of the goods as a prudent man would take of his
own goods. The bailee Government must prove that the damages was due
to reasons beyond their control.4 Where the customer entrusted ore to a
company for transport and a shortage resulted, the onus lies on the
transport company to prove its prudent care.5
1. Dwarkanath v. Rivers Steam Navigation Co. Ltd., AIR 1917 PC 173, 175.
2. Santi Lai v. Tara Chand Madan Gopal, AIR 1933 All. 158 at p. 159.
3. Munna Lai Pansari v. Ganga Prasad, AIR1955 VP30atp.3l.
4. Lasalgaon Merchants Co-operative Dank v. Prabhndas, AIR 1966 Bom. 134.
5. M. V. Sastry u Rai Bahadur Seth Shree Ram, (1963)2 Andh. LT. 59.
 196

Where the goods in a Railway open wagon was looted by a large gang of
organised thieves, the Railway is not guilty of negligence and is not liable
for the loss.1 Where on account of the partition of the country a bank had

to flee along with mass exodus from Pakistan to India, the bank was held

to be not liable for goods bailed to it in Pakistan and which were thus lost

there.2 Therefore, it is a question of fact and circumstances in each case

for determining whether proper care has been taken or not. Where a bailee
kept the bailer’s ornaments in a locked safe and kept the key in a cash-box
in the same room. The room was situated in the ground floor and was
locked from outside, the ornaments having been stolen, the bailee was
held liable.3

It is now clear that the principle under Sections 151 and 152 of the Indian

Contract Act, 1872, that the loss or damage of goods entrusted to the

bailee is prima facie evidence of his negligence. The burden to disprove

in existence of negligence would lie on the bailee. Any contract regarding
exemption from liability of the bailee however, is not illegal.4 Where
American cotton bales were unloaded from a ship and stacked in the open
premises uncovered by tarpaulin and continued to remain so in spite of
the warning of the approaching storm by meteorological office and
consequently goods so kept in the open werq spoiled, it was held that the
Port Trust is liable for damages as that of a bailee.5 Similarly, where

damages to the machine is caused by several-employees appointed under

the Bombay Port Trust Act the liabil ity is no more than that of a bailee

1. Kanakayya Chetty & Co. v. Union of Indict, AIR 1961 Mad. 398.
2. Gopal Singh v. Panjab National Bank, AIR 1976 Delhi 115.
3. Rampal v. Gouri Shankar, AIR 1952 Nag.8.
4. Central Bank of India v. M/s Grain and Gunny Agencies and Others, AIR 1989
MP-28.
5. Trustees of Port of Madras v. Home Insurance Co. AIR 1970 Mad. 48.
 197

under Section 151,152,156 and 161 of the Contract Act. The burden of
proof is, therefore, on the bailee to disprove negligence when damage or
loss is established.'

INTERPRETATION :

3.1. English Law

The English Law postulates different grades of care to different kinds of

bailment whether gratuitous or for reward.1

2 In a gratuitous bailment, the
bailee is liable for loss of, or damage to, goods only if he is guilty of
gross negligence. Where 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. On negligence of
*

the troops stationed there, a quantity of silver plates were stolen. It was

held that the defendants were liable for the loss.3

The standard of care expected of a paid bailee has been expressed in almost
similar terms. In Martin v. London County Council,4 it was held that the
defendants as bailees for reward were liable for the loss as they had failed
to exercise a care, which the nature and quality of the articles required. In
Newan v. Bourne & Hollingsworth,5 it was held that the defendant was
liable as he had not exercised that degree of care which was due from one
who had found an article and he had assumed possession of it. The degree

of negligence must be measured by the apparent value of the article.

1. Trustees of Port of Bomhav u Premier Automobiles Ltd., AIR 1981 SC 1982 at p.

1988.
2. Houghhmd v. A’./v’. Low (Luxury) Coaches Ltd., (1962)1 QB 694, CA.
3. Blount v. The War Office, (1953)1 All ER 1071.
4. (1947) KB 628.
5. (1951)31 TLR 209.
 198

But if an involuntary bailee, without negligence, does something, which

results in the loss of the property, he will not be liable for conversion.1

A gratuitous bailee is a bailee for reward only and his liability comes only
at his gross negligence.2 In case of mandate, a reasonable care has
enjoined, while in deposit, liability existed only for gross negligence.3
English decisions vary in their views. But the balance of authority enjoins
on the gratuitous bailee, reasonable care, no matter if it is mandate or
deposit.4 Therefore, gratuitous bailments are for the benefit of the bailee
and the bailment for valuable consideration may be received either by the
bailee or for the bailer. But in Houghland v. R.R. Low (Luxury) Coaches
Ltd.,5 the Court held that there is no difference between these two classes
of bailments as far as the standard of care required. To sum up, the bailee
must take reasonable care in a bailment whether gratuitous or for reward,
according to the circumstances of the particular case.

3.2. Indian Law

In India, the English pronouncement m-Haugland’s case continues to be a

matured precedent.

The provisions under Section 151 of the Indian Contract Act, 1872,
provides a uniform standard of care in all cases of bailment, that is, a
degree of care which a man of ordinary prudence would take of his own
goods of the same type as under similar circumstances. If the care devoted

1. Elvin and Powell Ltd., v. Plummer Roddis Ltd., (1933)50 TLR 158; (1960)75 LQR
364.
2. Shiells v. Blackburne, 1 HB 1 158 (Mandate) and III-ER 99 (Deposit).
3. (1703) 2 Lord Rayin 909, 918., Cogss v. Bernard.
4. Portland Cement Co. v. Weber, (1905) AC 66; (1868)LR 2 PC 317; ( 1953) 1 WLR 736,
739.
5. (1962) I QB 694, 698'.
 199

by the bailee falls below the standard, he will be liable for the loss or
damage to the goods, but not otherwise. So, the section is concerned only
with the scope and extent of care to be taken by a bailee. It has not provided
any degree of care and negligence. It declares a uniform standard of care
without recognising any distinction between gratuitous and non-gratuitous

bailments.

The phrase ‘in all cases of bailment’ used in Section 151 has given wide

scope and applicability. It is immaterial whether the bailment is gratuitous

or for reward as under English law.

The liability of a bailee has been derived from the term ‘negligence’.1 So,
where the plaintiff stayed in hotel and during absence of the plaintiff from

the hotel, his articles were stolen, it was held that the hotel keeper is
liable for his negligence.2 Similarly, where the bailee kept the bailer’s
ornaments in a safe custody, but the ornaments having been stolen, the
bailee was held liable.3

The question of negligence is always a question of fact or at the most

mixed question of fact and law. In a case governed by Section 151 and 152
of the Indian Contract Act, the non-return of articles entrusted by the

plaintiffs to the defendant by itself is prima facie proof of negligence of

the bailee. It is not for the bailer to lead positive evidence proving the
negligence of the bailee in respect of unreturned articles entrusted by the
bailer to the bailee. It is for the bailee to prove that the bailee is duly
exempted from his liability to pay the reasonable amount of compensation
for the value of the articles not returned or that his liability is restricted
1. Union of India v, A mar Singh, AIR 1960 SC 233.
2. John & Sons u Commeron, 1922 All. 735.
3. Rampal v. Gouri Shankar, AIR 1952. Nag.8.
 200

or rescued one and that the alleged stipulation is binding on the bailer
under the law of the land. No exemption clause, total or partial, can be
invoked where the bailee has recovered insurance amount from the

insurance company in respect of article entrusted to him by his customer

the bailer. No bailee is entitled to unjustly enrich himself by retaining

the insurance amount recovered by the bailee in respect of his customer’s

articles. The defendant is not entitled to withhold the relevant information
from the Court or from the plaintiff on this aspect and,refuse to give
inspection of relevant documents.

Section 152 of the Indian Contract Act, 1872, however, provides that in
the absence of a special contract, the bailee is not responsible for any

loss, destruction or deterioration of the thing bailed, is only he had

exhibited the standard care set out in Section 151. Therefore, by a special
contract the bailee can enlarge his liability. If the bailer requires a complete
protection, he will have to insure the goods. Similarly, a bailee should
take reasonable care and if he has done, he is not liable for any loss,
destruction or deterioration of the thing bailed. In other words, the bailee

can be absolved where he has done the act like an ordinary prudent man do

under similar circumstances.'

Under English Law, the duty of a bailee to take reasonable care has been
explained by the I louse of Lords1
2 in two directions :

(i) The duty to take all reasonable precautions to obviate the risks which
may be reasonably apprehended.

(ii) The duty to take all proper mensures for the protection of the goods
when such risks are imminent or had actually happened.

1. Volkart Brothers v. Vettivelu, (1887)11 Mad. 459.

2. Brabant & Co. v. The King, (1895) AC 632 at p. 640.
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Therefore, the directions made by the House of Lords is quite synonymous

to the words used under Section 151 of the Contract Act. Since the
standard of care is that of a reasonable or prudent man, he is required to
use reasonable care to avoid dangers which are reasonably foreseeable
but not to guard against ‘fantastic possibilities ’.1 At the same time the
standard of a reasonable man is an impersonal standard and leaves out all
account the personal equation of the man concerned.2 The degree of care
required varies with the degree of risk involved in the operations in which
the person is engaged. The more dangerous the act the greater is the care
that must be taken in performing it.3 Similarly, where the work requires
special skill, the standard of care is raised, in as much as the person who
undertakes such work must possess the skill which is required to perform
that work and he must conduct himsiTlTiundalful manner.4

As the standard of care and diligence imposed on the bailee on receiving

a valuable consideration, an obligation implies, for which, he is bound to
use due care and diligence in keeping and preserving the things entrusted
to him. If it is injured through his negligence, he cannot be excused on the
ground that it has been subsequently destroyed by inevitable mischance.
A question may arise whether it is possible to reduce the prescribed
quantum of care and diligence. From the wording of Sections 151 and
152 it seems that an irreducible minimum is-suggested. Section 151 is
applicable to “all cases of bailment” and there is complete absence of
words ‘permitting any contract to the contrary.’

1. Pardon v. Harcourl Rivinglon, All. ER. 81 (H.L.); Bolton V. Slone, 1951 n A.C.
850 at p. 856; Calcutta Credit Corporation Ltd. u Prince Peter, AIR 1964 Cal.
374,379.
2. Glasgow Corpon. v. Muir, (1943) A.C. 448 at p. 457.
3. Read v. Lyons <& Co. Ltd., (1946)2 A!I. ER 471 at p. 476.
4. Philips v. William, (1938)1 Ail.ER 566.
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The bailee is not, apart from special contract, an insurer of the thing bailed,1
and therefore, in the absence of negligence on his part he is not liable for
loss or damage to the thing due to some accident,2 fire, the acts of the
third parties, or the unauthorized acts of his servants acting outside the
scope of their employment.3 But the bailee must deal with the thing in the
manner authorised by the bailment, otherwise he takes upon himself the
risks of so doing.

4. THE RIGHTS AND OBLIGATION OF AFINDER OF GOODS:

in relatioin to Sections 154,155,156,157,168 AND 169 :

4.1 Section 154 of the Indian Contract Act, 1872 says :

“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 bailer for any damage
arising to the goods from or during such use of them.”

The terms of the Section are very clear. The section makes a bailee liable
for the unauthorised use of goods bailed. If a'bailer 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 bailer for any damage caused to the
goods from or during such use of them. So, a liability is infered on the
bailee for unauthorised use of the goods bailed. A breach of the conditions
of bailment will result in the bailee’s being liable to compensate the bailer
for any damage caused to the goods from or during such use of them.

Where a car was entrusted to the defendent as a bailee and the evidence
establishes that he was using the car for his private purposes in
1. Cogg.s v. Bernard, 2 Lord Raymond. 909, 915 at p.918.
2. Searle v. Laverick, L.R. 9 QB 122.
3. Finucane v. Small, 1 Esp. 315; Mintz v. Silverlan, 36 TLR 399.
 203

contravention of'this agreement with the plaintiff, the bailer, it was held
that the defendant was liable for the damages arising from such use.1
*

A horse lent for riding should not be used for any other purpose and if it
is used outside the scope of the bailment, the bailee would be liable for
any damage to the horse howsoever happening. So, the goods must be used
by the bailee strictly for the purpose for which they have been bailed to
him. Any unauthorised use of the goods would make the bailee absolutely
liable for any loss of or damage to the goods. And no plea of act of God or
inevitabale accident would avail.

4.2 Section 155 of the Indian Contract Act, 1872 says :

“If the bailee, with'the consent of the bailer, mixes the

goods of the bailer with his own goods, the bailer and
the bailee shall have an interest, in proportion to their
respective shares, in the mixture thus produced.”

The section provides the effect of mixture of goods of bailee with that of
the bailer with the bailer’s consentrlmsuGh an-event each will command

an interest proportionate to his respective share in the mixture. So, the

bailee should maintain the separate identity of the bailer’s goods. He

should not mix his own goods with those of the bailer and without his
consent. Once there is the mixture or confusion it becomes the common
property. It is immaterial whether the things remain distinguishable or
not.2

In the case of confusion of goods, the English Law partly agrees with and
partly differs, where those of two persons are so intermixed that the several
portions can be no longer distinguished. If the intermixture be by consent,

1. HqfizuIIah u Montague, 165 IC 354 : 35 PLR. 705.

2. Cunningham and Shepard, Contract Act; \ \ "'Edn., p.437.
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in both the cases the proprietors have an interest in common in proportion

to their respective shares. But il'one wilfully intermixes his money, corn
or hay with that of another man without his approbation or knowledge or

casts gold in like manner into another’s melting pot or crucible, the civil

law to guard against fraud, gives the entire property without any account

to him whose original dominion is invaded and endeavoured to be rendered

uncertain without his own consent.1

Where goods of two owners are mixed together, by consort or by accident,

the owners of the goods so mixed become tenant-in-common of the whole,
in the proportion which they have severally contributed to it. But if a person

willfully mixes and confuses goods which he holds with those of another,

so that he cannot distinguish what was his own, the whole must be

considered as belonging to the others.2 In these circumstances Section

156 will be applicable.

In India, it is however satisfactory that all the above confusions are absent ■
in the provision in Section 155 of the Contract Act, where it is specifically

stated that if the goods are mixed with the consent of the bailer, both will
have a proportionate interest in the mixture thus produced. The bailer and
the bailee become tenants in common of the whole in the proportion of
their respective contribution.J Sections 155,156 and 157 provide rules
for three different sets of circumstances under which the bailer’s goods

may become mixed or confused with those of the bailee.

Blackstone, Black CommAO 5.

2. Lupton v. White, 15 Ves 432,439,440.
3. Spence v. Union Marine Insurance Co., LR 3 CP 427-437.
 205

4.3 Section 156 of the Indian Contract Act; 1872 says :

“If the bailee, without the consent of the bailer, mixes

the goods of the bailer with his own goods, and the goods
can be separated or divided, the property in the goods
remains in the parities, respectively; but the bailee is
bound to bear the expenses of separation or division,
and any damage arising from the mixture.”

The section postulates the situation of a case where the bailee, without
the consent of the bailer, mixes the goods of the bailer with his own goods
but the goods can be separated or divided. In other words, where the mixture
is made without the bailer’s consent, both the bailer and the bailee retain
their separate interest in their respective goods.1 In such a case, the
property in the goods remains in the parties, respectively, the bailee incurs
only an obligation to bear the expenses of separation or division and to
compensate the bailer for any damage arising from the mixture. So, where
there is a possibility of separation of goods, the separate interest in the
goods continues to exist in the bailer and the bailee respectively and the
bailee will be held liable for any resulting damage to the goods bailed.

However, when a separation of goods is effectuated the cost of separation

has to be borne by the bailee. So, there is a duty cast on the bailee not to
mix the goods bailed with his own. But if he does so, then he is answerable
to the operation of Section 155,156 and 157 of the Contract Act.

4.4 Section 157 of the Indian Contract Act, 187*2 says :

“If the bailee, without the consent of the bailer, mixes

the goods of the bailer wif'h 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 bailer
is entitled to be compensated by the bailee for the loss
of the goods.”

l. Colwill v. Reaves, 2 Camp, 576.

 206

This section applies to a case, where the bailer has not given consent for
the mixing of the goods anil it is loundimpossible to separate the goods
on mixture, the bailer who is entitled to return of his goods can demand
compensation for the loss of the goods. The section, however, silent as to

the effect of the mixture in the property in the goods.

In India, the right of the bailer and the measure of damages payable by the
bailee, has been developed through judicial pronouncements. The Court
held that it rests only on damages payable to the bailor by the bailee and
the bailee is otherwise left in cuslodia regis oflhe mixed goods in entirety.

The option lies with the bailer and once he exercises it, the bailee is liable

for the damages caused and compensate accordingly.1

Section 66 of the Indian Trusts Act also lays down a proposition which is
analogous to that contained under Section 157. If a person wrongfully
mingles trust property with his own, the beneficiary in entitled to a charge
on the whole fund for the amount due to him. No provision in made for

cases where the mixture is caused by the act of a third person.

In England, the judicial pronouncement on this doctrine in well established.

If a trustee or an agent mixes and confuses the property which he holds in

a fiduciary character with his own property and which cannot be separated
with perfect accuracy, he will be liable for the whole.2 The reasons
explained by Blaekstone is that “the English Law is to guard against fraud,
gives the entire property without any account to him whose original domain
is invaded and endeavoured to be rendered uncertain without his own
consent.”

1. Dhanpal Ram v. Jaynarayan, 27 Cut. LT 340 relies on AIR 1938 PC 67 distinguishes

AIR 1958 SC 274.
2. Cook v. Addison LR 7 Eq 466 ; Referring to Lupton v. White, 15 Ves 432.
 207

4.5 Section 168 of the Indian Contract Act, 1872 says : ,

“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; but he may retain the goods against the owner
until he receives such compensation; and 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.”

The section provides the right of a finder of goods. Accordingly, a finder

of goods has no right to sue the owner for trouble and expense voluntarily
incurred by him to preserve the goods and to find out the owner. He has,
however, the right of particular lien in respect of those goods. He may
retain the goods against the owner until he receives compensation for
trouble and expense voluntarily incurred by him to preserve the goods and
to find out.the owner. In short, what a finder of goods cannot recover
r
directly he can get indirectly by detaining the goods under a right of lien.1

Under Section 71, a person who finds goods belonging to another and
takes them into his custody in entitled to retain the goods against the owner
until he receives compensation. But if he has delivered them over to him,
he cannot sue the owner for compensation for trouble and expense incurred
by him to preserve the goods, and he is also subject to the responsibility
as a bailee to take due care of the goods and try to find out the owner.

Comparing the sections 168 and 71 it can be said that a person who finds
goods and takes them into his custody, is subject to the same responsibility
as a bailee. So, a finder of goods has all the obligations ofa bailee. Since
the position of the finder of goods is that o£ a bailee, he is supposed to

Wilson v. Anderson, 1 B & Ad. 450.

 208

take the same amount of care with regard to the goods as is expected of a
bailee under Section 151. He is also subject to all the duties of a bailee,
including a duty to return the goods after the true owner is found. If he
refuses to return he could be made liable for conversion. Moreover, if by
his default in returning the goods, there is some loss, destruction or
deterioration of the goods, lie will be liable for the same.

The term ‘finder’ means an innocent finder. Such a finder has possession,
and is entitled to assert his rights against third parties who have no title to
the thing. The right to claim the reward being a statutory right would be
available even in the absence of any conteacttojhe effect. However, such
right under Section 168 is in respect of the lost goods only. If the reward
does not pertain to the goods, then the same cannot be claimed unless
there is a contract for the payment of the same.' If the goods have been
found by the finder voluntarily, and then the owner of the goods promises
to compensate the finder for his past voluntary services, the contract is
binding and the owner is bound to pay the promised amount.

So where a conscientious finder spends for the preservation of the goods

the owner should compensate him before he claims possession. Hence it
is Section 168 which extends a lien to the finder. The finder has no lien
for his expenses in caring for the thing, or for removing it. But on ground
ofjustice the expenses incurred by the finder-should be paid by the owner.
Though no lien is created, but restitution fol reasonable expenses may,
certainly, be allowed, if the owner claims to recover the thing. The finder
is justified in taking steps for the protection and safe custody of the thing,
*

until he finds the true owner, unless the expenses are out of all proportion
to the value of the thing and seem to be unreasonable.
1. Lalman Shukla v. Gouri Diitta, (1913)11 All. LJ 489.
 209

Salvage lien is a right to retain property of another or an action of saving

a ship or its cargo from wreck, capture etc. belonging to another until a
debt from the actual owner of the property is paid.1 In India, the principle
of salvage lien has been recognised.2 But where a person makes a payment
for his own benefit in order to save a property belonging to him of if he
was under a personal covenant which he was duty bound to carry out,

salvage lien will not be applicable.3

Under the English Law, if the thing is really lost, the finder who takes it to
save it for the owner, is not a trespasser, as he becomes a bailee by the
implied consent of the owner and with an intent of appropriation, is a
trespasser. So if the thing is apparently and not really lost, the taker is a
trespasser, though excusable so long as he acts for the owner.

Where a finder of goods lost in public place or a quasi-public place can

claim right to hold it against all except the true owner.4 The finder can
even maintain an action against any person except the true owner.5 If the
goods are found in a private place the presumption is it belongs to the
owner of the place and so the finder cannot maintain an action for
possession in such a case.6

A finder at best has no higher claim or duties than a bailee.7 The Section
168 is based on natural justice permitting a lien till compensation or reward
is paid. In the case of an offer of specific reward, the finder has a lien on
the goods and can sue for the reward. Under Section 168 the finder’s lien

1. Vijay Kumar v. M/s Jullender Body Builders, Delhi, 1981 Delhi 126.
2. Nagendra Chander v. Kaminee, II MIA 241; Dukhina Mohan w.Saroda Mohan,
LR 20 IA 160.
3. Lankaram v. Sundaragopala, AIR 1941 Mad. 208 at p. 216.
4. Bridges v. Hawkesworth, (1851)21 LJQB 75.
5. Jeffries v. Great Western Railway Co., (1856)119 ER 916.
6. South Staffordshire Water Co. v. Sharman, (1896)2 QB 44.
7. Issac v. Clork, (1115)2 Bulsr. 306 at p. 312.
 210

on the goods extends till he is paid compensation. This lien is absent in

English Law.1 Where the finding was done without a request from the
owner, the compensation is denied under the English Law but in India only
a lien is given and not a right to sue’. '

4.6 Section 169 of the Indian Contract Act, 1872 says :

“Where a thing which is commonly the subject of sale

is lost, if the owner cannot with responsible diligence
be found, or if he refuses, upon demand, to pay the lawful
charges of the finder, the finder may sell it -

(1) when the thing is in danger of perishing or of losing

the greater part of its value, or

(2) when the lawful charges of the finder, in respect of

the thing found, amount to two-thirds of its value.

The section provides where an ordinary saleable object is lost and it is

found by the finder and if the finder cannot with reasonable diligence find
the owner or if the owner on demand by the finder refuses to pay the
lawful charges, an option is then given to the finder to sell the goods -

(a) when the tiling is in danger of perishing or losing

the greater part of its value; of

(b) when the lawful charges of the finder amount to two-

thirds of its value.

Therefore, if a sale is made in accordance with the provisions under Section

169, the finder is entitled to his costs out of the sale proceeds. The rest
of the amount belongs, not to the finder, but’ to the true owner. Sections
168 and 169, however protect the interest of a finder. Of cause, sale by
finders of goods and action by true owner are rare in India.

1. Nicholson u Chapman, (1793)126 ER 536.

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Under the English Common Law, a person in respect of goods found, has
no right of sale and a sale by him vvilfhe aiTIict^'of conversion.1 The same
would be true under the Indian law except when the conditions laid down
in Section 169 are satisfied in which case the finder of the goods has a
right to sell them. It should, however, be remembered that out of the sale-
proceeds the finder is entitled to his costs, and compensation only. Balance
if any belongs not to him but to the true owner.

5. RESUME OF THIS CHA PTER ;

Section 151 of the Indian Contract Act, 1872 prescribes the amount of
care to be taken by a bailee. It does not lay down the consequences, if the
bailee fails or neglects to take the statutory amount of care. Section 152
rather enacts that the bailee is not.responsible.fbr the loss, destruction or
deterioration, if he has taken the amount of care as described under Section
151. But it has not been discussed in the entire chapter of bailment. The
terms of the provisions contained in the Indian Contract Act, 1872, has
been amply simplified through judicial pronouncements. In India, to this
chapter the rule of ordinary prudence is applied in case of the goods bailed.
In England, however, it turns on the purpose of the bailment and whether it
was gratuitous or not.

Section 156 and 157 provide the situations where without the consent of
the bailor, the bailee makes a mixture of the'goods bailed with his own.
But Section 155 deals with cases where there is bailer’s consent. Neither
the Section 156 nor the Section 157 deals with the cases where the mixture
takes place either by an accident or by the act of a third party. It is however
clear that the rights of the bailer and the bailee remain unaffected, provided
1, Hollins v. Fowler, (1875)7 ML 757.
 212

their goods can be distinguished. If they cannot be so distinguished they

become tenants in common as in a mixture resulting from consent.1

Section 168 allows the finder to retain the goods against the owner until
he receives compensation for trouble and expenses. Further, where the
owner has offered a specific reward for the return of the goods lost, the
finder may sue for such reward, and may retain the goods until he receives
it. But the section does not say that the finder of goods is a bailee except
in the case of a deposit. If he lakes charge of the goods he stands in the
shoe of a gratuitous bailee. He can only institute where a reward is
announced and not paid. Therefore, he who finds the goods is not bound to
preserve them from putrefaction. No law compels the finder to keep the
thing safely. If he is not negligent in keeping the thing, the finder cannot
be held responsible.2 Unlike in English Law, in India the finder has the
right to sell the goods if the conditions provided in Section 169 are
fulfilled. He can recoup his costs and compensation out of the sale
proceeds.

1. Spence u Union Marine Insurance CoLT 3 CP 438; Buckley v. Grose, 31 LJ QB 129.

2. Mosgrave v. Agden, Owen 141; Midgrave v. Ogden, Cm. Eliz.219 :1 Leon. Rep.224.