THE RESPONSIBILITY OF THE STATE FOR CONFISCATED PROPERTY UNDER BAILMENT By - Siddharth Bansal & Yuvraj D Mitra
THE
RESPONSIBILITY OF THE STATE FOR CONFISCATED PROPERTY UNDER BAILMENT
Authored By - Siddharth Bansal
& Yuvraj D Mitra
INTRODUCTION
The word "bailment" is
derived from the French verb "bailer," which means "to
deliver." Another sort of special contract is a bailment, and as it is a
contract, all a contract's fundamental conditions apply. The act of delivering
items on trust for a specific purpose is known as bailment. Upon completion of
the intended use, the goods must be returned. In a bailment, ownership of the
commodities is not transferred, only their possession. Only when a bailment
results from a contract is it addressed by the contract act, although it is not
accurate to state that a bailment cannot result from a contract without an
enforceable contract.
The bailment only results from a
contract and when the Indian Constitution's provisions (Article 299) are
in effect and the state is protected from liability for its sovereign duties.
The delivery of goods must be made
for some purpose and upon a contract when that purpose of delivery gets
fulfilled, the goods are to be returned to the bailor. When a person’s goods go
to another person without any signed contract, then, there is no bailment under
the purview of Sec 148.
For many reasons, including financial
gain, we occasionally part with our personal property in order to meet our
daily necessities. In layman's terms, a bailment is a legal arrangement
between two parties with the legal capacity to enter contracts in which the
physical possession of one person's personal property is transferred to another
person who acquires that possession but is not the owner of that property
for some purpose. When the bailment's goals are achieved, the person returns
the property's possession to the owner or accounts for it. The similar concept
maybe dealt with when the state confiscates a public or private property and
needs to take proper care and handling of the property.
The idea of bailment has changed and
grown somewhat since then, as of today. Although a contract and the bailor's
assent are no longer necessary, the fundamental element of bailment remains possession.
The conventional interpretation of bailment via the prism of consent now seems
superfluous because it extends to situations in which the bailee finds the
items and situations in which the goods are confiscated by the government.
However, there is still a considerable lot of uncertainty surrounding the idea
of bailment because the Indian Contract Act of 1872 is unclear regarding a
precise provision for confiscated items. The law is also flexible enough
for judges to interpret it differently. In addition, it is to be noted that in
the cases of bailment, the onus of proof is on the bailee to demonstrate that
they were not negligent in losing or damaging the property. Furthermore, the
act is not exhaustive of contract law and is open to judicial improvisation.
Since. There is no clear-cut framework, improvisation becomes rudderless.
BAILMENT UNDER INDIAN CONTRACT ACT, 1872 [Section
148-Section 171 & Section 180- Section 181]: -
The procedure of giving someone
temporary custody or control of one's personal belongings or commodities is
known as bailment. According to Section 148 of the Indian Contract
Act,1872 the Bailee is the person who holds the property or is its
custodian and is primarily in charge of its preservation and returns; The
Bailor is the individual who gives the property to the bailee or transfers it
to them. The bailee must possess the property with the intent to hold it
for the bailment contract to be legal. Additionally, the bailee is typically
not allowed to utilize the item while it is in his custody, and the bailor may
request the retention of the goods at any moment.
Even if the items may not have been
delivered by way of bailment, the owner of the goods becomes the bailor if the
person already in possession of them undertakes to keep them as bailee. The
transfer of possession is the core of bailment. The owner still retains
ownership. There is undoubtedly a distinction between ownership and possession.
In this situation, ownership is not as crucial as possession. A bailment of
any immovable item is never possible. As per Section 2(7) of Sale of
Goods Act, 1930, ‘goods’ are defined as every kind of movable property
other than money and actionable claim.
Under certain circumstances, it is
also possible for a sub-bailment to exist, where the bailee then bails the
goods to another person, who, then becomes a sub-bailor.
ESSENTIAL
ELEMENTS OF A VALID BAILMENT:
§ Delivery of goods by Bailor: “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 authorised to hold them on his behalf.”
§ Delivery of possession upon a
contract: When the goods are delivered to another person without a
contract, there is no bailment. Although,
section 148 requires that delivery of goods must be upon a contract, it may be
submitted that it is not exhaustive and there may be bailment even without a
contract. This was finally affirmed by the Supreme Court in a recent case of State of Gujarat v. Menon Mohammad.
§ Bailee bound to return goods or to dispose of
according to the direction of bailor: Once the intended outcome has been
reached, the bailee is required to return the items or otherwise dispose of
them in accordance with the instructions of the person who supplied them. A
bailee who is not required to return the items that have been delivered to him
does not have a bailment. The bailment differs from a sale or an exchange due
to this unique characteristic. In the case of Jagdish Chandra Tikha v Punjab
National Bank, it was clearly held that Bank failed to discharge its duties as bailee and the heirs of
bailor would be entitled to the price of market value of gold ornaments at the
time of the institution of the suit.
NON-CONTRACTUAL BAILMENT: A GLANCE AT STATUTORY BAILMENT:
Bail entered under
statutory or legislative ascendancy is referred to as a statutory bailment.
This idea is not specifically addressed by the Indian Contract Act of
1872, which is why it is still unresolved. The question of whether bailment can
exist without a contract or with one, leading to an issue, or if it can exist
with a contract leads to an issue. The Supreme Court has clarified the current
ambiguity surrounding statutory bailment in the caselaws that have come after,
although the Contract Act of 1872 still does not have any provisions for it.
Even though a Law Commission Report recommended that legislation be
passed to address the issue, our legislature disregarded it.
NATURE OF
BAILMENT AND LIABILITY OF THE STATE IN CASE OF SEIZURE OF GOODS BY THE POLICE
FROM THE ACCUSED:
The obligations of the bailee are outlined in Sections 151,
154, and 161, which, in general, apply to all bailment situations in
which the state is not a party to the contract. When the state is connected to
the bailment contract, the identical clauses cease to apply in their broadest
sense.
"But in cases where police have acted based only on suspicion
and have confiscated the commodities in accordance with the criminal process
code's defined procedure. The police must therefore function as a bailee of
goods until the court's judgement is finalised, and the bailee has the
responsibility of proving that he took reasonable care.
Whether the state is held accountable for the police's seizure of
property relies on the court's decision about whether the seizure was carried
out because of an actual crime or just a mere suspicion. The police are
required to act as the goods' bailee until the court makes its final ruling and
to take necessary precautions to protect those goods. Additionally, if the
items are confiscated by the court, there is no contract, and where there is no
contract, there is no bailment. The only thing that causes a bailment is a
contract between the parties.
Only by studying previous precedents is it feasible to narrow down
on the specifics of such judicial interpretations.
The original stance on statutory bailment was that there is no
bailment under section 148 when a person's goods are transferred to another
person's possession without a contract. The Allahabad High Court's ruling in
the case of Ram Gulam v. the U.P. government[1] is a
well-known example of this. The opinion that bailment can only exist where
there is a contract was expressed in it by the Allahabad High Court. In the
subsequent case, police were able to reclaim the plaintiff's previously stolen
goods. Having no legal recourse against someone who recklessly loses his
property creates significant hardship for the owner of the products, which
should be noted. Despite all this, after being glommed once more, the property
was unable to be reclaimed despite all efforts. It was claimed by the plaintiff
that the state was acting in the position of a bailee when it was sued to
recover the value of the property that was left in the custody of the police.
The issues framed by the then court of justice were: (1) Whether or whether the
Government was responsible for paying the plaintiffs' damages given that it was
acting as a bailee and the ornaments were lost as a result of its own or its
employees' negligence? And (2) Whether or not the Government was required to
compensate the plaintiffs in line with the principle that a master is
responsible for the torts committed by his servants.
According to the ruling, unaddressed was the first problem, since a bailee's responsibility
is one that must be met under a contract, it cannot develop on its own. The
plaintiff in the cited instance chose not to turn up the ornaments to the
government. a bailment is impossible where there is no contract. The issue of
State culpability thus does not come up. Here, it was examined that the
plaintiff had sued the government in a revision action in order to recover
certain ornaments or their purchase price. Someone stole the plaintiff's
ornaments. Later, they were located in another residence. The police searched
the property and confiscated it under the authority given to them by the Code
of Criminal Procedure. After then, they were housed at the Collectorate's
warehouse. However, they were once more stolen and untraceable. The magistrate
rejected the plaintiffs' request for an order directing the restitution of the
decorations. After it was discovered that the government is not obligated to compensate,
it was, however, denied.
Due to its role as a bailee and the fact
that the ornaments were lost as a result of either its own or its employees'
fault, the Government was not held accountable for compensating the plaintiffs.
Since there was no written agreement between the parties, the court based its
decision on this. This justification is flawed. Because the bailor's
permission is no longer needed for the construction of a bailment.
The plaintiff's gold was taken from him by
police personnel acting within the scope of their official duties in the case
of "Kasturi Lal v. the State of UP[2]"
and was never given back to him. The police officers' carelessness in carrying
out a duty that provided them protection under the Indian constitution prevented
the state from being held accountable. The verdict, in this case, reads like a
carbon copy of "Ram Gulam v. Government of UP," and the wrongdoers
got off easy since they were state agents. The wrongdoers would have been held
accountable for violating section 151 of the Indian Contract Act in the
identical factual situation if they had been individual parties.
The state will not be legally obligated to
provide a bailment if the items are taken by the police on the direction of a
higher authority because this is a sovereign state duty.
The duties of police as a bailee of seized
goods with regards to the bailed goods are to:-
Ø Retain possession of the goods
Ø Take very good care of the
goods
Ø Not to use or misuse the goods
at any cost
Ø Return the goods in the same
condition as they were at the time of seizure.
In the case of LM Cooperative Banks
v Prabhudas Hathibhai[3],
it was observed that the Bombay High Court had taken up a contrary
view, there were several cigarette packets lying about in a partnership firm's
godown. To the plaintiff bank, they were pledged. Because some of the partners
failed to fulfil their income tax obligations, the Income Tax confiscated the
items. The keys to the godown were given to the police by Collectorate
officials, who also closed it. However, there were significant downpours, which
caused the godown's roof to flood and harm the tobacco. The Court ruled that
the State was in the position of the bailee and had a responsibility to treat
the property with the same care as if it were his own.
But, as held in the case of the State of Gujarat v. Memon
Mahomed[4], the State is in the position of a
Bailee with regard to the items confiscated by customs officials. When such
products are sold before a final decision is reached and the authorities are
unable to retrieve them when the decision is made, the state is held
accountable.
There was an implied legal need to take
reasonable care of the goods seized between its seizure and the sale. This is true since the
confiscation order was not final and was open to an appeal and a modification,
both of which the State was aware of. The state was also aware that, if the
aforementioned decision were overturned, the item would have to be restored to
its rightful owner in the same condition that it was taken, with the exception
of natural depreciation. Despite this unambiguous stance, the state permitted
its police officials to dispose of vehicles as unclaimed property while the
appeal was still underway.
The State Government's position up until
the order became final was that of a bailee because of the legal obligation to
keep the property intact and the obligation to care for it reasonably so that
the Government can return it in the same condition in which it was seized
(aside from natural depreciation). It is not good for the State's position that
there cannot be a bailment without a contract. It is incorrect to state that
there cannot be a bailment in the absence of an enforceable contract since
bailment is only addressed by the Contract Act in situations when it results
from a contract. Even, in the absence of a written agreement to that
effect, a finder of goods must take reasonable care of the items until the
owner so that his rights and responsibilities resemble those of a bailee. In a
similar vein, State was required to take appropriate care of the vehicles as
bailee by the legislation in pari materia. As a result, State would
be responsible for the vehicles' worth.
Also, considering the case of Basavva
Kom Dyamangouda Patil v. the State of Mysore[5], In this case, the
plaintiff's stolen ornaments that the police had previously recovered were
taken once more from their possession. The State was ordered to "pay the
value of the ornaments to the victim of theft" after it was determined
that it was a case of bailment. The articles were lost, while they were kept in
the police guard room. In a proceeding for the restoration of the goods, it was
held that when there was no prima facie defence made out, that due care
had been taken by officers of the State to protect the property, the court can
order the State to pay the value of the property to the owner.
CONCLUSION AND SUGGESTIONS
In India, the field of law governing
contracts is still relatively young and has experienced rapid growth. From a
point where "permission" and "contract" were necessary to
create bailment to the elimination of such strict prerequisites that
constrained bailment. Dealing with the issue of ambiguity in the field of
bailment of commodities confiscated by the state is the final step in the
evolution of bailment that is necessary for contract law to grow and operate on
the principles of fairness. Because the contract law framework has not yet been
made clear on this matter, as was previously indicated, the breadth of judicial
improvisation is still startling.
The Indian Constitution's declaration
of sovereign immunity adds more complexity to the issue. Although "State
of Maharashtra v. Memon Mohamed Haji Hasan" is a sound legal precedent,
the above-mentioned barriers offer more room for divergence than a single
precedent can curtail. More harm is caused by the Indian Contract Act's
ambiguity than it is mitigated by the case State of Maharashtra v. Memon
Mohamed Haji Hasan.
The concept of a State as a bailee
for the confiscated commodities or the seized properties, which tends to cause
a state of confusion about the rules linked to statutory bailment in a nation like
India, is still subject to differing interpretations in different landmark
judgments today.
The idea of bailment has grown and
changed somewhat in our time. Possession remains the core of bailment, but a
contract and the bailor's approval are no longer essential. The traditional
interpretation of bailment via the prism of consent now seems superfluous
because it extends to situations in which the bailee finds the items and
situations in which the goods are confiscated by the government. The Indian Contract
Act does not specifically mention confiscated commodities, hence there is still
a considerable degree of uncertainty around the notion of bailment.
The reach and influence of tort law
in India are just too limited to have any bearing on contract law. Contrarily,
in England and some other countries, tort law not only supports but actually
promotes the dominance of contract law. If the bailor unlawfully retains the
goods, the Torts (Interference with Goods) Act of 1977 offers a basis for suit
and offer remedies, respectively. This demonstrates how clear-cut the other
countries’ position on contract law as a complement to tort law is. India might
adopt a similar strategy by bolstering its tort law, which would help contract
law.
REFERENCES
Websites
Statutes
Indian Contract Act, 1872
Sale of Goods Act, 1930
Indian Evidence Act, 1872
[2] Kasturilal Ralia Ram Jain vs The State Of Uttar
Pradesh on 29 September, 1964 ; 1965 AIR 1039, 1965 SCR (1) 375
[3] The Lasalgaon Merchants vs Prabhudas Hathibhai And
Ors. on 16 March, 1965 AIR 1966 Bom 134, (1965) 67 BOMLR 823, ILR 1966 Bom 526
[4] State Of Bombay (Now Gujarat) vs Memon Mahomed Haji
Hasam on 5 May, 1967, 1967 AIR 1885, 1967 SCR (3) 938
[5] Basavva Kom Dyamangouda Patil v.
State of Mysore ((1977) 4 SCC 358)