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Section 167: Right of third person claiming goods bailed

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1872
Section 166 All 266 Sections of Indian Contract Act Section 168

Legal Commentary & Landmark Judgments: Section 167

Section 167 provides the procedural and substantive remedy for a third-party claimant to goods bailed, entitling such person to apply to the competent civil court to stop delivery to the bailor and obtain an adjudication of title to the property.

  • Adverse Claim by Non-Bailor: A third party claiming paramount title or ownership to the bailed goods asserts an adverse claim against both the bailor and the bailee.
  • Judicial Injunction / Interpleader Mechanism: The third-party claimant is statutorily authorized to approach the civil court to obtain an injunction restraining the bailee from redelivering the chattel to the bailor.
  • Adjudication of Title: Empowers the court to determine true ownership of the goods, operating in harmony with interpleader suits under Section 88 and Order XXXV of the Code of Civil Procedure, 1908.
Key Landmark Precedents:
  • Juggernath v. Syud Shah (1875) 14 Beng LR 386: The High Court recognized that a true owner claiming goods in the hands of a bailee must utilize the statutory remedy under Section 167 to restrain delivery and establish title before the court.
  • Biddle v. Bond (1865) 6 B&S 225: The Court held that a bailee is ordinarily estopped from denying his bailor's title, but may defend on the ground of jus tertii if authorized by the true owner or where an injunction has been sought under the equivalent of Section 167.
Courtroom Practice & Strategic Litigation Guidance:

If a bailee receives competing claims from the bailor and a third party, the bailee must not deliver to either. The bailee should immediately file an Interpleader Suit under Order XXXV CPC and Section 88 CPC, citing Section 167. For the third-party claimant, immediately file a civil suit with an application under Order XXXIX Rules 1 & 2 CPC for temporary injunction restraining the bailee from releasing the property.

Section 166 All 266 Sections of Indian Contract Act Section 168