Bailment – Responsibility of Bailee
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Section 166 of Indian Contract Act 1872: “Bailee not responsible on redelivery to bailor without title” 166. 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.
Ques- Can the bailee be sued for not delivering goods to the real owner as he assumes another person to be the real owner in good faith?
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Section 166 of Indian Contract Act 1872: “Bailee not responsible on redelivery to bailor without title”
166. 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.
Ques- Can the bailee be sued for not delivering goods to the real owner as he assumes another person to be the real owner in good faith?
If the bailee knows that the person claiming the goods is not the real owner of the goods and is misrepresenting himself, the bailee can file a suit against that person and prevent the delivery of the goods to him.
Example- A went to bail some diamonds to C. Upon taking the delivery B goes to C, representing himself to be the real owner of the diamonds. But B suspects him not to be the real owner and files a suit against and stops the delivery of the goods.
If the bailee delivers the goods to a person who is not the real owner of the goods and acts in good faith assuming him to be the owner of the goods, the real owner cannot sue the bailee for delivering the goods to the other person. According to the section, if the bailee delivers according to the direction of the bailor or delivers them in good faith then is not liable or responsible for such delivery.
Example- A and C together went to bail some diamonds to B. Upon taking the delivery C alone went. B in good faith gives the diamonds to C assuming him to be with A. Later turns out that C was not the representing A and had stolen the diamonds. Now the real owner cannot sue B the bailee for his action.Thank you for the question.
Let me first quote the provision. It reads that; if the – bailor has no title, the bailee can have none, for the bailor can give no better title than he has. Therefore, if the bailor has no title to the goods, and the bailee in good faith, delivers them back to or dealt with them according to the directions of the bailor, the bailee is not responsible to the owner in respect of such delivery (The Indian Contract Act 1872 § 166).
There is a landmark judgment of the year 1940 which may help in answering your question: The case was K.G. Patel v. T.K.V.R.V. Chettyar
In this case, following principle was laid down: If someone other than the bailor is claiming the goods bailed from the bailee, then in such case bailee may apply to the court to stop delivery of the goods to the bailor and to decide the title to the goods. So if the bailee had the notice from the third party about the defective title of the bailor, than the bailee is not supposed to deliver the goods, back to the bailor, if he does so, liability to pay damages can be fixed on the bailee (The Indian Contract Act 1872 § 167).
I will also quote the facts of this case in short, here, the paddy was brought to the mill by the bailor for milling and the miller was informed that the rice had been sold to a particular person but later on the bailor gave a notice to the miller asking him not to send the rice to that person and therefore miller delivers the rice back to the bailor, the miller who is in the position of a bailee was held liable to pay damages for his act (K.G. Patel v. T.K.V.R.V. Chettyar A.I.R. 1940 Rang. 249 at 249:191. IC. 532).
Ergo, in the example mentioned by you, so if the bailee is acting under good faith and then re-delivers the goods to the bailor then he has no liability but where he knows that the person asking for the goods is misrepresenting him as a bailor and that person categorically has no title, then if the bailee delivers goods to that person, so he can be sued and is also liable to pay damages.This question is primarily related to Section 166 of ICA, 1872.
As we know that the ‘bailee’ is the person to whom the goods are delivered by the ‘bailor’ for some purpose and when such purpose is accomplished, the goods delivered must be returned to the bailor or dispose of the goods at the direction of the bailor.
Section 166 of ICA, 1872 talks about the non- liability of bailee when he delivers the goods to the bailor without the title. It states that if the bailee delivers the goods to the bailor or according to his direction in good faith to the bailor, who does not have any title to it, then the bailee is not liable to the actual owner of the goods.
In Bank of Bombay v. Nandlal [(1910) 12 BOM LR 36], N entrusted certain bales of cotton to L, a warehouseman. L bailed the cotton with B to secure the advances made by B to L. Subsequently, L redeemed the bail and cotton was returned by B to or to the order of L. N sued B and L claiming the delivery of the goods or their value. It was held that whether the bailment by L to B was or was not valid under section 178 but the return of goods by B, in good faith, to L was a complete defense to the suit as per section 166.
The rule of the common law is that generally a bailee is estopped from denying his bailor’s title. He is justified in delivering to the bailor or according to his directions but he is not justified in refusing to deliver the bailor unless he is under the effective pressure of an adverse claim and defends upon the right and title and by the authority of third persons so claiming.The question mentioned above is related to section 166 of Indian Contract Act, 1872. The section clearly states that “if the bailor has no title to the goods, and the bailee, in good faith, delivers them back to, or according to the direction of, the bailor, the bailee is not responsible to the owner in respect of such delivery.”
The interpretation of this section clarifes that the bailee cannot be sued if the baluee deliver them back in good faith. If the bailee has delivered tha good as per the direction of bailor, he can not be held responsible for the same.
Similar, if it any suspicion appears to the bailed that the person claiming the good, may not be the owner, then in such case the bailee can sue to find out whether the person is real owner or not. In both the situations, the bailee can not be sued as the bailee was acting in good faith.This question can be answered through section 166 of Indian Contract Act, which states that “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”
The purpose of law in India is not to held liable but to make people accountable for their actions. The intention is one of the main objects or we can say criteria to make someone liable for their actions, as this question specifically shows that bailee assumes another person as real owner, there is no bad intention so he cannot be liable or we can say he cannot be sued .
For example: If A and B are partners and C is bailee who gets the truck for purpose of Bailment by A, after sometimes C returns Truck to B in the assumption of B being partner so he can have title. So A cannot sue C for not delivering Truck to himA bailee is an individual who gets temporary possession of the goods for the purpose of repair. A bailor is a person who gives temporary possession of the goods for the purpose of repair. It is to be noted that the bailee receives only the possession of the goods and not the complete ownership. And the act of giving away the temporary possession of the goods is called bailment. The given question is related to Section 166 of the Indian Contract Act. According to Section 166 of the Indian Contract Act 1872, “Bailee not responsible on re-delivery to bailor without a title.”
According to the interpretation from the above statement, it can be said that if the bailee delivers the goods to the fraud bailor in good faith then he cannot be blamed for such delivery by the real bailor but can be blamed if he knows that the false bailor is misrepresenting and still delivers the goods. It can also be said that if the goods are delivered upon the instructions of the bailor then the bailee cannot be blamed.
For example, A gave her necklace to QPR Jewelers for some repair work for three days. In this case, A is the bailor and QPR Jewelers is the bailee and the bailment between them is repairing the necklace and returning it after three days. After three days, B came to collect the necklace on behalf of A by misrepresenting herself and the bailee was not aware of the same and in good faith delivered it to B. Hence, QPR Jewelers cannot be sued by A for mistakenly delivering the goods.
Another example can be, A gave his car for service to DEF garage for three days. In this case, A is the bailor and DEF garage is the bailee and the bailment between them is servicing the car and returning it back after three days. After three days, C came to collect the car of A misrepresenting himself and the DEF garage was aware of the misrepresentation but still delivered it to C. In this case, A being the bailor and the act of bailee not being in good faith can sue the bailee DEF garage.A bailee cannot be sued for not delivering goods to the real owner as he, in good faith, assumes another to be the real owner. This can be established by the following—
Section 166 of the Indian Contract Act, 1872- If the bailee returns back to the bailor and it is subsequently established that the bailor had no title to the goods in practice, the bailee is not responsible to return the goods to the actual owner. It is necessary that the act were done in good faith and the bailee acted upon the directions of the bailor.
Section 117 of the Indian Evidence Act, 1872- The bailee cannot be permitted to deny that the bailor had the authority to make such bailment at the time when the bailment commenced. It is somewhat implied that the bailee should accept the title of the bailor over the goods when he delivers the goods for bailment. It is further explained that if the bailee delivers the goods not to the bailor but to some other person, the duty lies upon him to prove that the person had a right to the goods against the bailor.
Section 167 of the Indian Contract Act, 1872- If some person other than the bailor demands delivery of goods from the bailee, he has the option of applying to the court to stop the delivery of the goods to the bailor and decide the title of the goods.
Therefore, the bailee cannot be held responsible for not delivering goods to the real owner as he assumes another person to be the real owner in good faith.No, the Bailee will not be liable for the loss of good if he has taken reasonable care of goods as a ordinary man of prudence in the similar circumstance will take care of his own goods as mentioned in the Section 151 of the Indian Contract Act, 1872.
In the Case of Union of India v. Udho Ram and sons, the respondent consigned some goods to the railway department. The goods were lost before reaching the actual destination. The respondent filed the suit against the railway authorities for the loss of the goods caused. The suit was dismissed by the trial court and it said that the railway authority took proper care of the goods and the reason for the loss was beyond the control of railway authorities. The present suit went to appeal in Supreme court of India. It was held that- The railway authority was not able to show an evidence which could prove that they acted according to Section 151. Thus, they are liable for the loss caused to the respondent because of their negligence.
If bailee has entered into a special contract then he has to abide by the terms and condition of the contract and took the care of the goods as mentioned in the contract. The standard of care to be taken can be maximized or minimized by the special contract and then on that basis the liability of the bailee will be examined. But if no such contract is signed than in such a condition bailee will not be liable for any loss, destruction or deterioration to the thing bailed if he has taken care of the goods as mentioned in the Section 151 of the Indian Contract Act, 1872.
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