Cotracts Submission

CONTRACTS INTERNAL I
CONTRACTS INTERNAL 1
A CASE ANALYSIS : BAILMENT
The matter of
Forbes Forbes Campbell and Co. Ltd
v.
Board of Trustees, Port of Bombay
NIKITA SAURABH
13010123348
BA LLB
II YEAR
Forbes Forbes Campbell v. Port of BombayPage 1
TABLE OF CONTENTS
INTRODUCTION:.................................................................................................
Forbes Forbes Campbell v. Board of
Trustees, Port of Bombay AIR 2006
Bom 162....................................................................................................................
ISSUES.....................................................................................................................
ANALYSIS...............................................................................................................
CONCLUSION.......................................................................................................
INTRODUCTION:
The concept of Bailment in Specific Contracts of the Indian Contract Act,

1872 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. 1
It 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 with one
person and the possession with another.2 For instance,
- delivering a cycle
- a watch given for repair
- leaving a car at a stand
The essence of a bailment contract is the transfer of possession. Ownership remains with the
owner. There cannot be a bailment of immovable property.
Bailor The person who delivers the goods to another i.e the owner of the goods.
Bailee The person to whom the goods are delivered.
1 Section 148, Indian Contract Act 1872
2 Contract and Specific Relief,

Avtar Singh; 11th Edition, 2013
Forbes Forbes Campbell v. Board of Trustees, Port of Bombay

AIR 2006 Bom 162
Facts of the Case
1. One M/s Metal Fabs India Pvt. Ltd. was the consignee of 7 cartons of Ball Bearing
which landed on the Port of Bombay, carried by the vessel S.S. President Madison.
The Steamer Agent for which was Forbes Forbes Campbell Pvt, Ltd.
2. The goods remained uncleared for a long period from the lade of landing despite
many efforts of the port to contact the Consignee and the Steamer Agent.
3. The Port Trust, after receiving no response to their multiple correspondences, served
a notice of sale upon the steamer agent with a request to issue the same to the
ultimate consignee.
4. The Port Trust sold the goods at a public action and realized Rs. 62,000 as sale
proceeds.
5. They found that after the deduction of the due amount such as port charges, suctom
duty etc, an amount of Rs. 4752 was still due and payable to them.
6. The Port Trust filed a suit for the recovery of the aforementioned amount.
7. The trial court however, dismissed the charges against the Steamer Agent.
8. The matter found its way to the Bombay HC by way of appeal.
ISSUES
1. Whether a steamer agent can be construed as owner of the goods

carried in his principal's vessel?
2. Whether the steamer agent at all can be made liable for payment of
storage charges/demurrage, which are uncleared by the consignee?
ANALYSIS
On behalf of the Steamer Agent it was contended that he was not
the owner of the goods which had been landed in Mumbai and
therefore he could not be liable to pay any amount due in respect
of the said goods such wharfage, demurrage, custom duty or any
other dues which would accrue in respect of the said goods. Apart
from relying upon the definition of the term "owner" reliance was
placed upon a judgment of the Single Judge of the Calcutta High
Court in the case of Seahorse Shipping and Ship management
Private Ltd. and Anr. v. The Board of Trustees for the Port of
Calcutta and Ors.3 By this judgement it was held that a steamer
agent cannot be construed as an owner. He was however, still liable
to pay demurrage charges. Trustees of the Port of Madras through
its Chairman v. K.P.V. Sheikh Mohd. Rowther and Co. Pvt. Ltd4
and second being the judgment in the case of The Board of
Trustees of the Port of Bombay v. Sriyanesh Knitters .
It was however found that the issue raised was no longer resintegra
as by a judgment passed by the Single Judge of this court (S.R.
Sathe, J.) it had been categorically held that Steamer agents (such
as the present Forbes Forbes Campbell) were owners within the
meaning of Section 2(o) of the Major Port Trusts Act,1963. The
Single Judge in that case was considering a fact situation where a
steamer agent had not issued any delivery order and it was held by
the Single Judge that such a steamer agent could be said to be an
agent with "custody" in respect of the goods prior to the issuance
of a delivery order. It was also held by the Single Judge that the
3 AIR1989Cal212
4 AIR 1995 SC 1922, (1997) 10
SCC 285
steamer agent in that case was liable to pay demurrage charges.
The definition of the term "owner" as contained in Section 2(o) of

the Major Port Trusts Act,1963 is in the following terms.
"(o) "owner", (i) in relation to goods, includes any consignor,
consignee, shipper or agent for the sale, custody, loading or
unloading of such goods; and (ii) in relation to any vessel or any
aircraft making use of any port, includes any part owner, charterer,
consignee, or mortgagee in possession thereof;"
It can be seen from the aforesaid definition that the definition is
inclusive and includes any consignor or consignee, shipper or
agent for the sale, custody, loading or unloading of such goods.
From the above, it is clear that an agent for the sale, custody,
loading or unloading of goods is a category by itself. On a bare
reading of the definition of the word owner, it is clear that the term
has a very wide import and is not restricted to person who had title
over the goods in question. This can be inferred from the fact that
agents who have mere custody are included in the term owner as
are also agents appointed for loading or unloading the goods.
Now that the steamer agent can be considered the owner or the
bailor, we move on to the second issue.
It is contented that the Steamer Agent is liable to pay the Port
Charges. It is clear from the that on the delivery of goods by the
steamer agent to the Port trust and on the issuance of a receipt,5 the
contract of bailment comes into existence under Section 148 of the
Indian Contract Act, 1872.
5 Section 42(2) of the Major
Port Trust Act,1963
Under Section 158 of the Indian Contract Act,1872 the bailor is
duty bound to repay to the bailee the necessary expenses incurred
by him for the purpose of the bailment.
Section 158 of the Indian Contract Act, 1872 enumerates the
Rights of a Bailee namely the Right to expenses or remuneration.
The bailee is entitled to lawful charges for providing his services.
Where the bailee is required by the terms of the bailment to keep
or carry goods or to do some work upon them for the benefit of the
bailor, and the contract provides for no rewards, the bailee has the
right to ask the bailor for payment of necessary expenses incurred
by him for the purpose of the bailment.
These expenses are interalia in the nature of wharfage or
demurrage charges. It is only the steamer agent acting on behalf of
the carrier who puts the goods into the custody of the Port Trust. It
is the possession of such goods in their custody that gives rise to
port charges.
This is however distinguished from the Right of Lien provided for
in Sections 170 and 171 of the Indian Contract Act, 1872
If the Bailees lawful charges are not paid he may retain the
goods. The right to retain any property until the charges due in
respect of property are paid, is called the right to lien.
Both provisions require the bailor to have enjoyed the benefit of
bailees services, but the right to lien can e exercised only as long
as possession is retained whereas the right to charges remain alive
even when possession has been pared with. It was laid down by the
Calcutta High Court in the matter of Surya Investment Co. v.
Trading Corporation of India (P) Ltd.6
CONCLUSION
The Court rightly held that the port trust will be entitled to
recover the demurrage charges and other charges interalia
from the steamer agent, in conforming with the principles of
Bailment.
6 AIR 1987 Cal 46


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CONTRACTS INTERNAL I

Forbes Forbes Campbell v. Port of BombayPage 1

Forbes Forbes Campbell v. Port of BombayPage 2

The concept of Bailment in Specific Contracts of the Indian Contract Act,

1 Section 148, Indian Contract Act 1872

2 Contract and Specific Relief,

Forbes Forbes Campbell v. Board of Trustees, Port of Bombay

1. Whether a steamer agent can be construed as owner of the goods

Forbes Forbes Campbell v. Port of BombayPage 4

The definition of the term "owner" as contained in Section 2(o) of

Forbes Forbes Campbell v. Port of BombayPage 7

6 AIR 1987 Cal 46

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