The Legal Lock



PLEDGE( Sec. 172, 178, 178A, 179) 


The bailment of products as security for payment of  a debt or performance of a promise is named ‘Pledge’. The bailor is, during  this case, referred to as the ‘pledger’ or ‘pawnor’ and  also the bailee is named the ‘pledgee’ or  ‘pawnee’. this is often outlined underneath section  172 of Indian Contract Act, 1872. 

A pledge could be a bailment for security. it’s a  special quite livery. For Example:- If A borrows  Rs. two hundred from B and keeps his watch as security for payment of the debt, the livery of watch  is a pledge. Any kind of movable property, i.e.m  goods, documents, or valuables could also  be pledged.

Even a Savings Bank Pass Book could  also be pledged (J. & k. Bank v. Tek Chand, A.I.R.  (1959) J.&K.67). however delivery is important to  finish a pledge. The delivery could also be actual or  constructive. If, attributable to the majority of the  property or for a few different reason, actual  delivery is impractiacable, a symbolic, delivery can do (as as an example delivery of the  keys to a secure deposit box). 


The producer of a movie borrowed  a total of cash from a financier-distributor  and united to deliver the ultimate prints of the  film once prepared. Held, the agreement wasn’t a  pledge, there being no actual transfer of possession  [Revenue Authority v. Sudarshan footage, A.I.R.  (1968) Mad. 319] 


1. The person delivering the great is named ‘pawnor’. 

2. The person to whom the products area unit being  delivered is named ‘pawnee’. 

A pawnor is entitled to pay back the borrowed total to the pawnee within the  time discovered within the contract created between  them. once the lapse of your time, a pawnee has  right to require legal actions over the pawnor for  recovery of his cash. 


If R delivers some gold to the bank for the aim of borrowing some quantity in exchange, here R is  pawnor and also the bank is pawnee. The bank is  entitled to recover the cash from among fixed date  back R. If the latter fails to try to to therefore, the  previous will take steps whichever is appropriate. 


1. Delivery of Property

The property vowed ought  to be sent from the pawnor to the pawnee. aboard the  property, the happiness is to boot affected. within  the event that any agreement  is framed, wherever move of money is enclosed and  spending on of property is not created, then, at that  time it’ll not be thought-about as a promise. The  conveyance may well be real or by attornment. The  immediate moving to access of the property to the  pawnee is named genuine/useful conveyance. the  opposite kind incorporates the conveyance created by the outsider for the advantage  of the pawnor. 

2. Performance of Contract

Pledge could be  a carriage in accordance with associate  degree agreement, and it’s basic for a considerable agreement that the conveyance  of plus ought to occur. However, the simultaneous conveyance of the property and  also the headway of advance is not needed. The  conveyance may be either antecedently or once the  event. 

3. Property should be goods

This fixing brings the  elemental bifurcation among pledge and livery. The  property that is being affected ought  to be merchandise, that is, they  must be transportable in nature. At the  purpose once properties like trimming, vehicles, then forth area unit place as a guarantee,  then, at that time the agreement is called as a pledge. If there ought to be an occasion of  any theft, wherever the wrongdoer denies all the  trimming of a lady on the gun muzzle, with a  condition that he can presumably save her within  the event that she’s going to move her decorations to  the stealer, this can not be named as a pledge.

4. Existence of property

The resource pawned ought  to be in gift presence. One cannot pledge over a  property he is not claiming at once or it is not existing. an overseas probability of it being  bought in what is to return is not a ground for a  pledge. 

Case law- Lallan Prasad v Rahmat Ali


The defendant borrowed Rs. 20,000 from  the plaintiff on a note and gave him aeroscrapes price regarding Rs 35,000 as security for  the loan. The litigator sued for recovery of the  loan, however was unable to provide the safety, sold  it, and, therefore, his action for the loan was  rejected. 


Shelat J. cited that ‘If a soul holding  security sues for the debt, he’s underneath associate  degree obligation on payment of the  

debt handy over the safety, which if, having  improperly created away with the safety he’s unable  to come back it to the mortal he cannot have  judgement for the debt’. 

Case Law: Revenue Authority v. Sudarshan footage

A film-producer borrowed Rs one large integer from  a financierdistributor and united to deliver the  ultimate prints of the film once prepared. This  agreement wasn’t a pledge as a result of there was no actual transfer of possession of products as security. 


The general rule is that it’s the owner United Nations  agency will commonly produce a  sound pledge. however within the following cases  even a non- owner will produce a sound pledge:

1. Pledge by Mercantile Agent- Section 178 of the  Indian Contract Act states that the pledge between  the mercantile agent and Pawnee will be legitimate if  the specialist has the possession of the product with  the assent of the man of affairs and also the Pawnee  acted nice confidence and does not have faith in the  primary title of the merchandise. The term  mercantile agent is outlined beneath sec. a pair of (9)  of the Sale of products Act, 1930. 


If A could be a mercantile agent of B  bails the bike of B that is in his possession to D. D  in honesty and doesn’t comprehend the title of the bike settle for as security. Here the pledge is taken  into account as valid. however if B is aware  of regarding title, then the pledge won’t be control valid. 

2. Pledge by seller or buyer in possession once sale A vender left in possession of products once sale and  a vendee United Nations agency obtains  possession of products with the consent of the  vendor before sale, will produce a sound pledge  provided the pawnee acts in honesty and has no  notice of the previous sale of products to the  customer or of the lien of the vendor over the  products (Sec. thirty of the Sale of products Act,  1930). 


S sells a hundred baggage of wheat to  B, delivery and payment of worth to  be created within the next 3 months. Before the  products are delivered to B, S pledges the  products with P United Nations agency acts bonafide  and has no notice of the previous sale. The pledge is  valid. 

3. Pledge wherever pawnor incorporates  a restricted interest- As per Section 179 of the Indian Contract  Act, wherever someone pledges product within  which he has solely a restricted interest, the pledge is  valid to the extent of that interest. 


F finds a pen on a road and pledges it  with P for Rs. 20. F had, however, incurred  Rs. ten in obtaining the pen repaired. The  owner will get the pen by paying Rs. 10 to P,  the grownup. 

4. Pledge by co-owner in possession- The pledge  between a co-owner and Pawnee will  be legitimate within the event that he has the consent  of alternative co-owner. However, once the co owner while not the consent of alternative co-owner  enters the contract of pledge, that contract will  be legitimate if the Pawnee acted in compliance with  common decency and does not have faith in the title  of the merchandise. 


Case 1- If A and  B collectively owned a automobile.  The automobile is within the possession of A. in the  future A needs to bail the automobile for the aim of  the pledge, he needs to take the consent of B.

Case 2- if A enters into the pledge with C and bails  the automobile to C, while not the consent of B.  That pledge is taken into account as valid given  that C acts  in honesty and doesn’t apprehend something regardi ng the title of the automobile. 

5. Pledge by someone to  

possession beneath a rescindable contract- As per  section 178 ‘A’ of the Indian Contract Act, the  pledge between the pawnor having the possession of  the merchandise beneath rescindable contract and  pawnee will be legitimate, on condition  that throughout the pledge the contract has not  been disowned and also the pawnee acted in  compliance with common decency and does  not comprehend the title of the product.  In alternative words, wherever someone obtains  possession of  products beneath a rescindable contract, the pledge  created by him is valid provided 

a. The contract has not been rescinded before the  contract of pledge, and 

b. The pawnee acts in honesty and without warning of the pawnor’s defect of the title. Illustration:- If A has possession of the  watch beneath rescindable contract, bails the watch  to B. B in honesty and doesn’t comprehend the title  of the watch, accepts it. That pledge is taken into  account as valid. however if B is aware  of regarding the title, then that pledge isn’t thought  of as valid. 


At the purpose once a private exchanges  the possession of his product to somebody else for a  few explicit reason, then, at that time it’s called the  contract of legal transfer. just in case there’s a plus of  1 gathering through the legal  transfer and alternative gathering does not receive something consequently, that legal  transfer is named unwarranted legal transfer.  Also, once the contract of legal transfer is  finished that induce the common advantage  of each as an example deliverer and agent, is  named non-needless legal transfer.  

The deliverer has the duty to reveal the state of the product and to reimburse the add led to by  a agent to stay merchandise protected and any hurts  against the harm caused to agent by the product of  the deliverer. also, the agent has the duty to stay the  merchandise of the deliverer safe and to come  back them to deliverer once completion of the  rationale that the legal transfer happens. 

In the pledge, the pawnor move/bailed his product to  the Pawnee as protection from the add he takes from  the Pawnee. The pawnor has Associate in  Nursing obligation to require care of the add to the  Pawnee and also the Pawnee has Associate in  Nursing obligation to come back the merchandise once pawnor pays the add. The Pawnee  ought not utilizes the merchandise bailed to  him within the event that he will, he are going to  be obliged to pay compensation to the pawnor.