Bailor entitled to increase or profit from goods bailed
Section 163 of the Indian Contract Act, 1872 deals with bailor entitled to increase or profit from goods bailed. In the absence of any contract to the contrary, the bailee is bound to deliver to the bailor, or according to his directions, any increase or profit which may have accrued from the goods bailed. The Act came into force on 01 Sep 1872.
In the absence of any contract to the contrary, the bailee is bound to deliver to the bailor, or according to his directions, any increase or profit which may have accrued from the goods bailed.
Illustration
A leaves a cow in the custody of B to be taken care of. The cow has a calf. B is bound to deliver the calf as well as the cow to A.
Section 163, The Indian Contract Act, 1872 (Act 9 of 1872).
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Standard Chartered Bank v. The Custodian & Ors.
Court's Decision & Legal Precedent
Bonus shares, dividends and interest accrued on pledged securities are accretions that form an integral part of the pledged property. Reading Contract Act ss.148/160/163 with the pledge scheme in ss.172–176, the bailee/pawnee need not hand over such accretions as they arise; s.163 requires return of increase only on accomplishment of the bailment purpose (redemption of the pledge), and until then the pledgee may retain and sell the accretions with the original security.
On this section: Primary teaching construction of s.163: the bailee's duty to deliver increase/profit from bailed goods is timed to accomplishment of purpose; for pledges, accretions stay with the pawnee until redemption rather than being returned immediately on accrual.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 163
What have the courts held on Section 163 of the Indian Contract Act?
Standard Chartered Bank v. The Custodian & Ors. (18 Apr 2000) is the leading judgment on this section among those set out below: Primary teaching construction of s.163: the bailee's duty to deliver increase/profit from bailed goods is timed to accomplishment of purpose; for pledges, accretions stay with the pawnee until redemption rather than being returned immediately on accrual.
How do I find court cases under Section 163 of the Indian Contract Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Contract Act 163, section 163 Contract Act, section 163 of the Indian Contract Act. People searching for it also type 163 contract act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with Standard Chartered Bank v. The Custodian & Ors. (18 Apr 2000).
When did Section 163 of the Indian Contract Act come into force?
Section 163 of the Indian Contract Act, cited as Contract Act 163, came into force on 01 Sep 1872, having been enacted on 25 Apr 1872. It is in force as at the date shown on this page.
Other sections of this Act
- 73. Compensation for loss or damage caused by breach of contract1822 words
- 23. What considerations and objects are lawful, and what not596 words
- 74. Compensation for breach of contract where penalty stipulated for577 words
- 28. Agreements in restraint of legal proceeding void512 words
- 25. Agreement without consideration, void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law423 words
- 16. "Undue influence" defined397 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 17 Oct 2026. This page is not a substitute for legal advice.