Contract of bailment and pledge are different from each other. According
to section 148 of the Indian Contract Act, 1872, Bailment means delivery of
goods from one person to another for some purpose. On the accomplishment of such
purpose, the person received the goods returns or otherwise disposes of them as
per the instructions of the person delivering them. The person who delivers the
goods is known as bailor.
The person to whom such goods are delivered is known
as bailee. On the other hand, a pledge is defined under section 172 of the
Indian Contract Act, 1872, states the bailment of goods as security for payment
of a debt or performance of a promise is called pledge
. The bailor in
this case called pawnor
. The bailee is called the pawnee
. Here the features and
distinctiveness of contract of bailment and pledge is discussed further.
Contract of Bailment and Pledge
Bailment, according to Chitty, is the delivery of goods to another, other than
as a servant, for some purpose upon a condition, express or implied, that after
the purpose has been fulfilled they shall be redelivered to the bailor, or
otherwise dealt with according to his directions, or kept till he reclaims
Thus it is a delivery of goods for some purpose on an understanding
that they are to be returned after the achievement of such purpose. In case of
a contract of bailment, there is only the change of possession and
Bailor remains the owner of the goods; bailee only gets the
possession of such goods. There may be actual delivery or constructive delivery
of the goods. On the other hand, the term pledge literally means thing given
over as security
. In the ordinary sense of the term, a pledge is a case in
which money is advanced on goods or chattels which are given to the person as
security against the money.
Gratuitous Bailment and Contractual Bailment
Bailment can be two types, gratuitous bailment, and contractual bailment; in
gratuitous bailment, neither the bailor nor the bailee receives any
remuneration. Such a bailment may be for the exclusive benefit of either the
bailor or the bailee. However, it terminates on the death of either the bailor
or the bailee. Section 159 states that in the case of the gratuitous bailment,
the bailor or the lender may require the bailee to return the goods any time,
even before the expiration of the period of lending.
Also, he can do so even
before the fulfillment of the purpose of bailment. However, if the bailee or the
borrower incurs any loss due to this act of the bailor, the bailor needs to
indemnify him for the loss or damages. The Contractual Bailment is for the
mutual benefit of both the bailor and the bailee. For example, A hands over
certain goods to B for transporting to Delhi. A here got the benefit of
transportation and B gets transportation charges. Thus, both are benefitted.
Bailment, involves the transfer of possession of goods to a person, who holds
the goods either for or at the direction of their owner, to whom they will be
returned. It implies a sort of relationship in which the personal property
(movable) of one person temporarily goes into the possession of another.
ownership of the goods is in one person and the possession thereof on another.
It happens in numerous situations. Delivering a car or any other article for
repair, leaving a cycle or car in a parking zone, depositing luggage in a clock
room or delivering garments to a dry cleaner for cleaning, delivering goods for
warehousing or carriage and so forth, are such situations which create the
relationship of bailment. Bailment is thus, a subject of common public
importance.  Bailment is thus said to be a relationship sui generis.
At common law, bailment is often associated with a contract, but this is not
always the case.....An action against a bailee can often be put, not as an
action in contract, nor in tort, but as an action on its own, sui generis,
arising out of the possession had by the bailee of the goods. Stated in, Lord
Denning M.R. in Builsing and Civil Engineering Holidays Scheme Management Ltd.
v. Post Office
Bailment, thus, can exist independently of any contract. For instance, it is
created by the voluntary taking into custody of goods which are the property of
another, as in case of bailment by finding. Section 148 of the Indian
Contract act, 1872, defines bailment as -'Bailment', 'bailor
' and 'bailee'
defined as A bailment
is the delivery of goods by one person 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
direction of the person delivering them. The person delivering is called the bailee.
Features of Bailment
1. Delivery of goods for some purpose. Delivery
means the transfer of
possession of the goods from one person to another. Delivery need not always be
actual. It may sometimes be a constructive or symbolic delivery. Section 149
recognizes delivery other than actual delivery.
It provides 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.
In Jagdish Chandra Trikha V. Punjab National Bank
plaintiff's father had entrusted a box containing 480 tolas, i.e., about 5600
grams gold ornaments and jewelry to the defendant Bank at Peshawar before the
partition of the country. The jewelry box was locked, wrapped, and sealed when
delivered. A proper receipt describing the contents of the box was given by the
From Peshawar, the box came to the Lahore branch of the Bank and
thereafter to the Delhi branch. It was found that when the jewelry box was
delivered to the plaintiff in Delhi, it was not in the same condition as it was
delivered at Peshwar. The Lahore branch of the bank had its own wrapper on the
box and it was not locked.
The plaintiff thereafter claimed the gold ornaments
and jewelry deposited with the bank or their value amounting to Rs. 3,72,400. It
was held that the position of the Bank was that of a bailee and it failed in its
duty to take care of the goods and return them to the plaintiff. The Bank was
held liable to pay the sum of Rs. 3,72,400 along with simple interest @ 12% p.a
from the date of the institution of the suit till the date of realization of the
If a person assumes the custody of another person's goods, even without any
formal arrangement, this is sufficient to constitute bailment. In Ultzen v.
Nichols, the plaintiff went to the defendant's restaurant for dining. When
the plaintiff went to the defendant's restaurant, a waiter took the plaintiff's
coat from him without being requisted to do so and hung it on a hook behind the
plaintiff. When the plaintiff wanted to leave, he found that the coat was
It was held that the defendant was the bailee of the coat as his
servant had assumed the possession of the same and he was, therefore, liable for
its loss which was because of the defendant's negligence. But if the owner
maintains control over the goods, there is no bailment. When a person keeps his
goods on the premises of another person but continues to have control over them,
this is not sufficient delivery for being considered to be bailment.
Porumal Pillai v. Visalakshmi,
 a lady took her old jewels to a goldsmith for
melting and converting it into new jewels. Every evening she used to receive the
half made jewels, put the same into a box, and lock and then leave it on the
premises of the goldsmith but the key to the box was in her possession. One
night the jewels were stolen. It was held that there was no bailment as she had
not handed over the possession of the jewels to the goldsmith, and, therefore,
the goldsmith could not be made liable for the loss.
Similarly, in case of a locker where the customer is given the
key of the locker, and if the bank do not keep an alternative key. In such a
case, although the locker may be on the premises of the bank, the person who has
kept his valuables in the locker has control over such goods, and there is no
bailment of such goods to the bank. The position would, however, be different if
the locker in the safe deposit vault of the bank can be operated even without
the key of the customer.
This may be explained by the case of the National Bank
of Lahore v. Sohan Lal.
 In this case, the appellant bank used to maintain a
safe deposit vault in its Jullundur City branch, where locker cabinets were
rented to customers for the safe custody of jewelry and other valuables. One key
to a locker was given to the customer, without which the locker would not open.
However, the bank manager of that branch fraudulently filed the levers of the
locker locks rented to the plaintiffs, so that the locks could be opened without
the key given to the customer.
The valuables kept by the plaintiffs in the
locker were found missing. Apart from the question of vicarious liability of the
bank for the fraud of its agent, the question of the liability of the bank as a bailee for the customer's valuable in the locker also rose.
The bank contended
to be a bailee of the valuables in the locker. It was held that, as in this
case, the locker could be operated even without the key, the customer's control
over the valuables in the locker had gone, and the same was with the bank, and,
therefore, the bank was liable.
There can be a bailment without a contract, in some cases the
question which has arisen is, can there be a bailment, when a person obtains the
possession without a contract of bailment? In Ram Gulam v. Govt. of U.P
Allahabad High Court expressed the view that obligations of a bailee can arise
only out of a contract of bailment and not otherwise. In this case, the
plaintiff's property was stolen.
The same was recovered by the police and was
kept in the police Malkhana. From there, it was again stolen and could not be
traced. The plaintiff brought an action to recover the value of the property.
The state was not held liable, firstly, because it did not occupy the position
of a bailee and, therefore, it was not liable as such, and secondly, the police,
when it took and kept the property in its possession, was acting in the
discharge of the obligations imposed by law, rather than in obedience to some
The point of decision in the above case that bailment cannot arise
without a contract, does not appear to be convincing. The law itself recognizes
the finder of goods as bailee. In some subsequent cases, it has been held
that bailment can be there even without a contract.
2. Return of the goods after the purpose is achieved, or their disposal
according to the bailor's directions. The delivery of the goods, in a bailment
of the goods, is only for some purpose, e.g., for safe custody, for carriage, or
for repair, etc.
When the purpose is accomplished, the goods are to be returned
or otherwise disposed of according to the directions of the person delivering
them. As stated in section 148, the goods shall, when the purpose is
accomplished, be returned or otherwise disposed of according to the directions
of the person delivering them.
This element distinguishes bailment from other
transactions like the sale of goods, or gifts, where the property in the goods
is transferred and they are not to be returned in any case. In every bailment,
the same thing is to be returned either in the same form or in an altered form.
When the cloth is given being stitched into a suit, or gold for being converted
into ornaments, or wheat for being converted into flour, there is bailment in
each case. When the money is deposited in a bank, it is not bailment, because
the banker do not return the same money to the depositor. 
an agent receives some payment on behalf of the principal, he is not the bailee
as he is only bound to pay an equivalent of it to the principal rather than
exactly the same currency. When the goods are delivered without an intention
to take them back and the exact cost of the goods has been charged, it would be
a transaction of sale rather then a contract of bailment.
Features of Pledge
A valid pledge must satisfy the following. There should be a bailment of goods,
i.e, the delivery of goods from one person to another. In Revenue Authority v. Sudarsanam Pictures
 it has been held that an agreement wherein, the producer
of a film agrees to deliver final prints of the film under production, when the
same is ready, to a financier-distributor in return for the finance provided is
not pledge because there is no delivery of the goods.
2. The purpose of such a pledge is to make the goods serve as security for the
payment of a debt, or performance of a promise. In Bank of India v. Binod Steel
., it has been held that when certain movables have been pledged by a
company to a bank, they cannot be attached and sold for satisfying the claim of
the creditors of the company without first satisfying the claim of the bank.
Bailment and Pledge Distinctiveness
Bailment is a wider term. It includes a pledge. Pledge is a kind of bailment,
where the goods are delivered by one person to another as security for payment
of a debt or performance of a promise. It means that if the goods serve as
security, it is a pledge, whereas when the goods are given for some other
purpose, for example, a watch is given for repairs, it is bailment.
In the case of bailment, if the bailor does not pay the lawful charges due to
the bailee, the bailee can exercise a lien over the bailed goods, i.e. he can
retain them until the necessary payment is made. In case of pledge, the pledge
has not only a right to retain the goods pledged until the repayment of debt or
performance of the promise but even may sell the goods, after giving due notice
of sale to the pawnor.
Thus to conclude we can say bailment implies a sort of relationship in which the
personal property of one person temporarily goes into the possession of another.
The ownership of the articles or goods is in one person and the possession on
The circumstances in which this happens are numerous. Delivering a cycle, watch
or any other article for repair, or leaving a cycle or car, etc, at a stand,
depositing luggage or books in a cloakroom, delivering gold to a goldsmith for
making ornaments, delivering garments to a dry-cleaner, delivering goods for
carriage, warehousing or storage and so forth, are all familiar situations that
create the relationship of bailment. Thus bailment is the subject of
considerable public importance.
On the other hand a pledge is only a special kind of bailment, and the chief
basis of distinction is the object of the contract. Where the object of the
delivery of goods is to provide security for a loan or for the fulfillment of an
obligation, it is considered a pledge.
- Chitty on Law of Contract, 1947, 843
- Anson, Law of Contract, 2002, 456
- C.V. Davidge, Bailment, (1925) 41 L.Q.R 433
- Cheshire, 5, 112
- (1966) 1 Q.B. 247
- Halsbury's Law of England, Bailment, IV, reissue Vol. 2, para 1081
- AIR 1998 Delhi 266S
- Port Trust of Bombay v. Premier Automobiles, AIR 1981 S.C. 1982
- (1894) 1 Q.B. 92
- AIR 1938 Mad 32
- AIR 1962 Punjab 534
- AIR 1950 All. 106
- Section 71
- Tata Iron & Steel Co. Ltd v. South Eastern Roadways, Jameshdpur, AIR
2012, Jhar 27
- Ichha Dhanji v. Natha, (1888) 13 Bom. 338
- Bridges v. Garrett, (1870) L.R. 5 C.P. 451
- Dinesh V Pai v. Chief Engineer, Naval Academy, Kochi, AIR 2003 Ker. 280
- AIR 1968 Mad. 319
- AIR. 1977 M.P 188