Chapter IX - Of Bailment
Section 163
Section 163: Increase and profit from bailed goods
Increases or profits accruing from bailed goods ordinarily belong with the bailor, subject to a contrary contract.
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This article is for general information. Refer to the Indian Contract Act, 1872 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
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.
Rule and business relevance
The bailee must deliver the increase or profit to the bailor or according to the bailor’s directions. The statute illustrates this with a calf born to a cow in custody.
Limits and related provisions
The rule is expressly subject to a contract to the contrary. Identify the actual increase or profit from the bailed goods rather than unrelated business earnings.
Hypothetical business example
Hypothetical example: Livestock held in custody produces offspring. Unless a contrary agreement applies, the offspring must be delivered with the original animal.
Practical decision flow
Check any agreement allocating increases or profits.
Identify what accrued from the bailed goods.
Record delivery or compliance with the bailor’s directions.
Check the applicable legal framework
This guide explains the central provision. Applicable State amendments, the agreement, transaction date and other governing laws can affect its application. Check the current legal framework before relying on it for a commercial decision.
Practical checklist
Do
- Check any agreement allocating increases or profits.
- Identify what accrued from the bailed goods.
- Record delivery or compliance with the bailor’s directions.
Avoid
- The rule is expressly subject to a contract to the contrary. Identify the actual increase or profit from the bailed goods rather than unrelated business earnings.
Glossary
- Increase
- An addition accruing from the goods, as in the statutory offspring example.
- Contrary contract
- An agreement changing the default allocation.
Frequently asked questions
Can the parties agree a different allocation?
Yes. The statutory default is subject to a contrary contract.
May the bailee simply keep an increase?
Not under the default rule.
Who gives disposal directions?
The bailor, within the applicable arrangement.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026