Point out an example not related to a contract of bailment

Question

The doctrine of promissory estoppel is by now well recognized and well defined by a catena of decisions of this Court. Where the Government makes a promise knowing or intending that it would be acted on by the promise and, in fact, the promise, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promise notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 229 of the Constitution. The rule of promissory estoppel being an equitable doctrine has to be moulded to suit the particular situation. It is not a hard-and-fast rule but an elastic one, the objective of which is to do justice between the parties and to extend an equitable treatment to them. This doctrine is a principle evolved by equity, to avoid injustice and though commonly named promissory estoppel, it is neither in the realm of contract nor in the realm of estoppel. For application of the doctrine of promissory estoppel the promise must establish that he suffered in detriment or altered his position by reliance on the promise.
Normally, the doctrine of promissory estoppel is being applied against the Government and defence based on executive necessity would not be accepted by the court. However, if it can be shown by the Government that having regard to the facts as they have subsequently transpired, it would be inequitable to hold the Government to the promise made by it, the court would not raise an equity in favour of the promise and enforce the promise against the Government. Where public interest warrants, the principles of promissory estoppel cannot be invoked. The Government can change the policy in public interest. However, it is well settled that taking cue from this doctrine, the authority cannot be compelled to do something which is not allowed by law or prohibited by law. There is no promissory estoppel against the settled proposition of law. Doctrine of promissory estoppel cannot be invoked for enforcement of a promise made contrary to law, because none can be compelled to act against the statute. Thus, the Government or public authority cannot be compelled to make a provision which is contrary to law.
[Extract from the judgment of the Supreme Court in Shree Sidhbali Steels Limited v. State of Uttar Pradesh, (2011) 3 SCC 193, decided on January 20, 2011, hereafter ‘Shree Sidhbali Steels’].

Answer 1

The single test that separates bailment from other contracts is whether there is an actual delivery of movable goods.

Watch for repair, car at parking, luggage in cloak room: All three involve physically handing over goods to another person for a specific purpose, with an obligation to return them, satisfying the delivery requirement of Section 148.
Shareholder's bond to the company: No goods change hands here at all, it is purely a promise to compensate the company for a potential future loss caused by the shareholder's own act, which is the essence of an indemnity, not a bailment.

Since this option is the only one lacking any delivery of goods, the correct answer is the shareholder's bond agreeing to satisfy the company for loss caused by his own act.

Answer 2

Another way to separate these examples is to ask what is actually being protected, a physical thing, or a possible future financial loss.

Watch, car, luggage: In each case, a specific physical object is entrusted to someone else's custody. The bailee's obligation concerns that particular object, returning it, repairing it, or keeping it safe.
Shareholder's bond: There is no physical object entrusted to anyone. Instead, the shareholder is simply agreeing to cover a future monetary loss the company might suffer because of the shareholder's own conduct. This is a promise about compensating for loss, the hallmark of an indemnity contract, and has no bailed object at its center at all.

Because bailment always centers on a specific entrusted object while the shareholder's bond centers only on a possible future loss, the shareholder's example stands apart from the other three.

Therefore, the correct answer is a shareholder executing an agreement/bond favoring the company thereby agreeing to satisfy the company for any loss caused as a consequence of his own act.

Answer 3

Another way to separate these examples is to ask what is actually being protected, a physical thing, or a possible future financial loss.

Watch, car, luggage: In each case, a specific physical object is entrusted to someone else's custody. The bailee's obligation concerns that particular object, returning it, repairing it, or keeping it safe.
Shareholder's bond: There is no physical object entrusted to anyone. Instead, the shareholder is simply agreeing to cover a future monetary loss the company might suffer because of the shareholder's own conduct. This is a promise about compensating for loss, the hallmark of an indemnity contract, and has no bailed object at its center at all.

Because bailment always centers on a specific entrusted object while the shareholder's bond centers only on a possible future loss, the shareholder's example stands apart from the other three.

Therefore, the correct answer is a shareholder executing an agreement/bond favoring the company thereby agreeing to satisfy the company for any loss caused as a consequence of his own act.

Point out an example not related to a contract of bailment

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The Correct Option is D

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