Warehouse Receipts are documents issued by warehouses to depositors against the commodities deposited in the warehouses, for which the warehouse is the bailee.
Warehouse Receipt is a proof of storage. It is an acknowledgement of the goods held by the warehouse keeper on behalf of the person named therein. It is a document issued by a warehouse keeper stating that he holds the goods mentioned in the receipt and is awaiting instructions from the person to whom it is addressed. It is a mere deposit receipt. Banker can accept it as a security to grant loans.
In India, the term, warehouse receipt, is defined in Section 2(u) of the Warehousing (Development and Regulation) Act, 2007 (WDR Act), which came into force from 25 October 2010.
Section 2(u) of the WDR Act defines a ‘warehouse receipt’ to mean “an acknowledgement in writing or in electronic form issued by a warehouseman or his duly authorised representative (including depository by whatever name called) of the receipt for storage of goods not owned by the warehouseman”.
Warehouse Receipts may be either non-negotiable or negotiable (means transferable by simple endorsement /signature). Negotiable warehouse receipts are transferred by endorsement and delivery; i.e, either the original depositor or the holder in due course (transferee) can claim the commodities from the warehouse.
WDR Act provides for issuance of Negotiable Warehouse Receipts (NWRs) by the warehouses registered under this Act. NWRs can be traded, sold, swapped and used as collateral to support borrowing.