Write a note on Bailee's duty of care and support it with statutory provisions and decided cases.

Question: Write a note on Bailee's duty of care and support it with statutory provisions and decided cases. [JJS 2018]

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Answer

Bailment is one form of contract that involves the transfer of possession of goods from one person who is called bailor to another, termed as bailee for a specific purpose. The transfer of possession happens with the understanding that the goods transferred will be returned by the bailee to the bailor once the purpose is fulfilled or it may also be disposed of by the bailee on the instructions of the bailor.

Section 151 and 152 of the Indian Contract Act, Chapter IX outlines the duties and responsibilities of both the bailor and the bailee. The provision lays down the duty of care imposed on a bailee to ensure that he takes reasonable care of the goods as a person of ordinary prudence would.

Section 151 of the Indian Contract Act, 1872, states:

"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."

Section 151 mandates that the bailee must exercise a standard of care that an ordinarily prudent person would take of their goods under similar circumstances. The bailee is expected to take reasonable care of the goods, and this duty does not vary with the type of bailment.

Section 152 - Bailee when not liable for loss, etc., of thing bailed states herein as under:

"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 described in Section 151."

If the bailee has taken reasonable care as required by Section 151, they are not liable for loss, damage, or deterioration of the goods bailed.

Section 161 - Bailee’s responsibility when goods are not duly returned states herein as under:

"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."

If the bailee fails to return the goods at the stipulated time, they are responsible for any subsequent loss, destruction, or deterioration of the goods.

In the case of Central Bank of India v. Grains and Gunny Agencies, AIR 1989 MP 28, the Hon’ble High Court of Madhya Pradesh held that even if the bailee has an exclusion clause limiting their liability, they must still prove that they took as much care of the goods as a person of ordinary prudence would have taken. It was also held that contractual clauses cannot override the statutory duty of reasonable care imposed by Section 151.

In Union of India v. Udho Ram and Sons, 1963 AIR 422, certain goods consigned to the respondents were stolen during transit. The Hon’ble Supreme Court held that the railway authorities, as bailees, failed to take reasonable care of the goods. The Court noted that a prudent person would have taken extra precautions to safeguard their belongings, especially during transit. The railway authorities were held liable for the loss due to their negligence.

In Gour Chandra Mukherjee v. Andrew Yules Co-op Credit Society Ltd., AIR 1977 Cal 336., the director of the co-operative society followed a usual practice for keeping the society’s cash, which was later stolen. The Hon’ble High Court held the director liable for negligence, stating that following a usual but insecure practice does not absolve one from the duty of taking reasonable care.