State of Gujarat V. Haji Memon (1967)

This article was written by Rohini Tondare, a student of Maharashtra National Law University.

State of Gujarat V.  Haji Memon (1967)

Significance:

Laid down that if any property(movable) is seized by the police/custom officials or any other department of the government, they are under the same responsibility as a bailee to take care of the goods as an ordinary man would take care of his own goods under similar circumstances.

Firstly, what is Bailment?

Bailment is a contract resulting from delivery.

It involves change of possession and not transfer of ownership.

The duties of bailee are to take reasonable care of good as an ordinary man will do regarding as his own good, not to make unauthorize use of the good.

For example: We can consider, A person ‘X’ wants to give his clothes for some work(stitching) to the tailor ‘Y’. Here, person ‘X’ is a bailor and ‘Y’ is bailee. Now, when bailee take over the good (cloth) from bailor, it’s his duty to take reasonable care of good and he will do so, as there is a contract of bailment between them.

What happened in the State of Gujarat V. Haji Memon (1967) case?

Two trucks of the Memon Mahomed Haji Hasam (Haji Memon) who was carried on business as an exporter of fish in the State of Junagadh (State of Gujarat) and style of Ayub Iqbal and Company was seized by the police officials of Gujarat State under the case of smuggling and seized on the ground of respondent had not paid import duties on said truck, they were used for smuggling goods in state and some of the goods were smuggled good. The trucks were under the government authority for several time period that is from 1947 to October 1951. After the hearing of court for the Haji Memon case, Haji Memon appealed for return of said vehicles but later on informed that they had been disposed of under an order of magistrate passed under S.523 of code of criminal procedure (CrPC), the trucks were destructed due to corrosion and environmental changes, machinery of vehicles, tyres and even some wheels were pilfered away leaving only the skeleton of vehicle remained. The respondent filed appealed to the Home Member of State. In the meantime, State of Junagadh merged in the United States of Saurashtra which later was converted to State of Saurashtra. Thereafter, State of Saurashtra merged with Former State of Bombay. On divergence Bombay State become the part of State of Gujarat. In the meantime, the appeal was transferred to the revenue tribunal which was constituted by the State of Saurashtra and which was the competent forum to hear such appeals.

After that, Haji Memon filed a case against authority for compensation of destruction occur to the trucks. As plaintiff claims that it was bailee’s duty to take care of good, the defendant said that it was their duty to seized the truck and they didn’t come under the contract. So, there is no contract of bailment.

Both the trial court and the high court found that the said vehicles were seized by the government authority. In between the time period 1947- oct 1951, the trucks were disposed of, they were lying uncared for in an open space. Since they were seized by a government authority. In the alleged circumstances, State Government was guilty of negligence. He also contended that the State Government was not liable for any tortious act of any of its servant.

Later on, the judgement given by the honorable justice Shelat J. said that, one should not legally bound to perform the contract of bailment. If you are taking bailer’s good then its bailee’s responsibility to take care of good. No matter the bailee will be the government authority or ordinary man, same rule shall be followed.

CONTENTIONS:

Respondent: They appealed as seizure might be lawful and the seized vehicle (trucks) were under the authority of government for the said time until the decision was taken. So, it was authority’s duty to take reasonable care of the good (seized trucks) as a bailee.

Appellant: There was no bailment or such bailment be inferred as a 148 of the contract acts requires that a bailment can arise only under a contract between the parties.

Despite of being government authority same rules should be applicable to everyone. If someone is performing any contract (it may be bailment) same or the requirement of the contract should be followed by everyone as per directed by the Constitution of India.

ISSUES: Whether the state is liable to compensate or not?

JUDGEMENT:

It was held that “there being thus a legal obligation to preserve the property intact and also the obligation to take reasonable care of it so as to enable the Government to return it in same condition in which it was seized (let apart the natural depreciation), the position of the State Government until the order became final was that of bailee.”

“Bailment is dealt with by the Contract Act only in cases where it arises from a contract but it is not correct to say that there cannot be a bailment without an enforceable contract.”

There can, therefore, be bailment and the relationship of a bailee in respect of specific property without there being an enforceable contract.

Similarly, State was also obliged by the law in Pari Materia as bailee to take reasonable care of trucks. Therefore, state would be liable to the value of the trucks.

Bailment come under the Indian Contract Act ,1872 and the essentials element for the valid contract are lawful consideration and legally bound parties. In the general bailment, bailor pass over the good to the bailee which we can consider as an orally bounded contract of bailment but in the Haji Memon case, the good was seized by the government authority and they didn’t perform any legal formalities which is required to bound two parties legally in a contract. But as we know, the said good (vehicles) were under the government authority, authority could be considered as a bailee. So, it was bailee’s duty to take care of the good. Therefore, compensation was given to Hazi Memon.

As above, a finder of good can also be considered as a bailee in certain circumstances. Just as a finder of property has to return it when its owner is found and demand to return it. So, the State Government was bound to return the said vehicle once it found that the seizure and confiscation were not sustainable. There being thus a legal obligation to preserve the property and to take care the reasonable care of the property.