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„ The bailment of goods as security for

payment of a debt or performance of a
promise is called ³Pledge´

„ The bailor is called as the µpledger¶ or

µpawnor¶ and the bailee is called as the
µpledgee¶ or µpawnee¶
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„ Pledge is a bailment for security

„ Any kind of movable property may be pledged

„ Delivery of goods is necessary to pledge

„ Delivery may be actual or constructive

„ Even the symbolic delivery will suffice, when the

actual delivery is impracticable
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„ Pledge is the bailment of goods „ Bailment is for a purpose of
as a security for the performance any kind
of a specific promise

„ In case of default by the pawnor

„ In case of default by the bailor
to repay the debt, the pawnee
bailee may either retain the
may sell the goods pledged with
him goods or sue the charges

„ The pawnee has no right to use „ The bailee may use it if the
the goods pledged with him terms of bailment so provide
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„ Right of retainer
 According to section 173, the pawnee may retain
the goods pledged until his dues are paid

 He may retain it for the

„ interest due on the debt

„ Expenses incurred by him

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„ Right of retainer for subsequent advances

 According to section 174, the pawnee lends
money to the same pawnor after the date of
pledge, it is presumed that the right of retainer
over the pledged goods extends to subsequent
advances also
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„ Right to extraordinary expenses

 The pawnee is entitled to receive extraordinary
expense from pawnee

 For such expenses he can only sue to recover but

not recover it by the pledged goods
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„ Right against true owner, when the pawnor¶s

title is defective
 According to section 178-A, pawnee can hold the
title of the goods, if the goods are obtained by
pawnor under voidable contract
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„ Pawnee¶s rights where pawnor makes default

 According to section 176, where the pawnor fails to redeem
his pledge, the pawnee can exercise some rights
„ He may file a suit

„ He may sell the goods

„ He can recover from the pawnor any deficiency arising on sale

of the goods
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„ Right to get back goods
 On the performance of the promise or repayment of loan
and interest, the pawnor is entitled to get back the goods

„ Right to redeem debt

 According to section 177, if pawnor makes default in
payment or performance of promise at the stipulated time,
he may still redeem the goods pledged at any subsequent
time before the actual sale of goods by paying the extra
expenses incurred
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„ Preservation and Maintenance of the goods

 The pawnor has a right to see that the pawnee preserves
the goods pledged and properly maintains them

„ Rights of an ordinary debtor

 In addition to the above rights he also has the rights of an
ordinary debtor which is meant for protection of debtors
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„ Pledge by mercantile agent

 According to section 178, where a mercantile
agent is in possession of goods with consent of
the owner, the pledge made by him is as valid as
if he were expressly authorised by the owner of
the goods to make the same
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„ Pledge by seller or buyer in possession after

sale
 Seller left in possession of goods after sale and a
buyer who obtains the possession of goods with
the consent of the seller before sale, can create a
valid pledge
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„ Pledge where pawnor has a limited interest

 According to section 179, a person having a
limited interest, can pledge the goods only to the
extent of that interest

„ Pledge by co-owner in possession

 With the consent of the other owners one of the
several owners can create a valid pledge
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„ Pledge by person in possession under a voidable
contract
 According to section 178-A where a person obtains
possession of goods under a voidable contract, the pledge
created by him is valid if,
„ The contract has not been rescinded before the contract of
pledge

„ The pawnee acts in good faith and without notice of the

pawnor¶s defect of the title