X was running a business of Car on lease. One fine day, Y came to hire a car for 10 days for his business tour from Delhi to Amritsar. X offered him a Honda city for ` 50,000/- for 10 days on a condition that petrol and toll expenses will be borne by him. During the journey, engine of car was choked. Y has to spend ` 10,000/- for repair of engine. When he was coming back from Amritsar, brakes of car were not working and a major accident of Y happened due to this. Y was admitted to hospital and paid a bill of ` 50,000 on recovery. Y asked X to compensate him charges for car repair and hospital expenses amounting ` 60,000/-. X denied for compensation by saying that he was not aware about the engine and brakes fault. Y filed a suit against X for recovery of damages. Give your opinion with reference to provisions of the Indian Contract Act, 1872: (i) Whether Y can withheld the amount of hire charges ` 50,000/- on account of non-payment of damages? (ii) Whether Mr. X was liable to pay Damage as he was not aware of the fact of faults in car?

Bailment: As per Section 148 of the Indian Contract Act, 1872, bailment is the delivery of goods by one person to another for some purpose, upon a contract, that the goods shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them.\nBailor’s duty to disclose faults in goods bailed in case of non- gratuitous bailment (Section 150): If the goods are bailed for hire, the bailor is responsible for such damage, whether he was or was not aware of the existence of such faults in the goods bailed.\nDuty to pay necessary expenses in case of non-gratuitous bailment [Section 158]: The bailor is liable to pay the extraordinary expenses incurred by the bailee.\nBailor’s responsibility to indemnify losses [Section 164]: It is the duty of bailor to indemnify all the losses and expenses, which bailee has to pay on account of defective goods.\nIn the instant case, Y took a car on lease from X for 10 days for ` 50,000. During the journey, Y has to spend ` 10,000 for repair of engine and paid ` 50,000 for hospital expenses due to accident because of fault in brakes of car. These are the extraordinary expenses and losses and it is the bailor’s duty to bear such expenses and losses.\nTherefore, the answers are:\ni) Y can withhold the hire charges of ` 50,000 on account of non payment of damages and claim an additional ` 10,000, from X.\nii) X is liable for the full ` 60,000 (` 10,000 repair + ` 50,000 hospital) as it is the bailor’s duty to supply a car fit for the purpose for which it was hired.