53. ‘X’ employeed a goldsmith for converting her old jewellery and making new ones out of it. Every evening she received the unfinished jewellery and put it in to a box at the house of the goldsmith. However, she kept the key of the box with herself. One night the jewellery was stolen from the box. ‘X’ wants to hold the goldsmith liable as bailee. Advise.

1. Facts of the Case

• ‘X’, the owner of certain gold jewellery, engaged a goldsmith to convert her old jewellery into new ornaments.
• Every evening, after the day’s work, ‘X’ took possession of the unfinished jewellery and placed it inside a box located in the goldsmith’s house.
• The key of the box was retained by ‘X’, not by the goldsmith.
• One night, the jewellery was stolen from the box in the goldsmith’s premises.
• Now, ‘X’ claims that the goldsmith is liable for the loss of jewellery as a bailee under the Indian Contract Act, 1872.
• The question arises — whether a bailment relationship existed between ‘X’ and the goldsmith at the time of theft, and whether the goldsmith is legally liable for the loss.

2. Issues in the Case

1. Whether there existed a bailment between ‘X’ and the goldsmith under Section 148 of the Indian Contract Act, 1872.
2. Whether the possession of goods had been transferred to the goldsmith so as to create a bailee–bailor relationship.
3. Whether the goldsmith can be held liable for the loss by theft when the key of the box remained with ‘X’.
4. Whether keeping the goods in the goldsmith’s house without transferring possession or control constitutes bailment.

3. Legal Principles Covered to Support Case Proceedings and Judgements

Relevant Provisions of the Indian Contract Act, 1872:

1. Section 148 – Definition of Bailment: “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.”
   • Essential elements of bailment:
     • Delivery of goods (actual or constructive)
     • Purpose for delivery
     • Return or disposal after completion of purpose
2. Section 149 – Delivery to Bailee: “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.”
   • Therefore, possession (not mere custody or presence) must pass to constitute bailment.
3. Section 151 – Bailee’s Duty to Take Care:
   • A bailee is bound to take as much care of the goods bailed as a man of ordinary prudence would take of his own goods.
4. Section 152 – Bailee Not Liable for Loss if Due Care Taken:
   • If the bailee has taken due care, he is not liable for any loss, destruction, or deterioration of the goods.

Legal Analysis:

• For a bailment relationship to exist, there must be a transfer of possession of goods from the bailor to the bailee.
• In this case, though the jewellery was kept in the goldsmith’s house, the key of the box was retained by ‘X’, meaning the goldsmith had no access or control over the goods.
• Since the possession and control remained with ‘X’, there was no delivery of possession to the goldsmith under Section 149.
• Therefore, no bailment existed at the time when the jewellery was stolen.
• Without a bailment, there can be no liability as a bailee.
• The goldsmith was not in possession of the jewellery and thus not responsible for its safety during the theft.

Supporting Case Law:

1. Kaliaperumal Pillai v. Visalakshmi (AIR 1938 Mad 32):

• Facts: Similar to the present case, jewellery was left in a box in the goldsmith’s house, with the key kept by the owner. The jewellery was stolen.
• Held: The Court held that no bailment was created as the possession was not transferred. The goldsmith was not liable.

2. Ultzen v. Nicols (1894) 1 QB 92:

• Bailment arises only when goods are delivered into the possession or control of another.

3. Official Assignee of Madras v. Ramachandra Iyer (1916 Mad 129):

• The court reiterated that constructive possession must exist for bailment; mere presence of goods in another’s premises without control does not create bailment.

Explanation:

• The key factor is possession.
• Even though the box was physically located in the goldsmith’s premises, control over it remained with ‘X’, since she kept the key.
• The goldsmith did not have any access, custody, or responsibility over the jewellery once it was locked up each night.
• Hence, the goldsmith cannot be treated as a bailee, nor can he be held liable for theft or loss.

4. Possible Judgement

• The relationship of bailor and bailee did not exist between ‘X’ and the goldsmith at the time of theft.
• The delivery of possession, which is an essential element of bailment under Section 148, was absent, as ‘X’ retained the key and control over the jewellery.
• Since there was no delivery, the goldsmith was not a bailee when the theft occurred.
• Therefore, the goldsmith is not liable for the loss of the jewellery.
• The theft was a misfortune, but liability cannot be imposed without legal possession and duty of care.

Judgement:

• Held: The goldsmith is not liable as a bailee because no bailment existed.
• Reason: ‘X’ retained possession and control by keeping the key; hence, the goldsmith had no legal responsibility for the jewellery’s safety at the time of theft.
• Supporting Case: Kaliaperumal Pillai v. Visalakshmi, AIR 1938 Mad 32.

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