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Pledge PDF

The document discusses the subject matter of pledge under Indian law. It defines pledge as the bailment of goods as security for payment of a debt or performance of a promise. The essential elements of a valid pledge are delivery of possession of goods pursuant to a contract and for the purpose of securing payment of a debt or performance of a promise. Certain types of property like money cannot be pledged. The rights and duties of pawners and pawnees are also outlined.

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Komal Sandhu
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188 views12 pages

Pledge PDF

The document discusses the subject matter of pledge under Indian law. It defines pledge as the bailment of goods as security for payment of a debt or performance of a promise. The essential elements of a valid pledge are delivery of possession of goods pursuant to a contract and for the purpose of securing payment of a debt or performance of a promise. Certain types of property like money cannot be pledged. The rights and duties of pawners and pawnees are also outlined.

Uploaded by

Komal Sandhu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Section 172

SUBJECT MATTER OF PLEDGE


Any kind of goods , documents or valuable
things of personal nature may be pledged.

 Shares, Government promissory notes may


also be subject matter of pledge.

 There cannot be a pledge of that which cannot


be the subject matter of sale , therefore money
cannot be pledged
DEFINITION
Section 172- The bailment of goods as security
for payment of a debt or performance of a
promise is called “pledge”.

The bailor is in this case called the “pawnor”.


The bailee is called the “pawnee”.
EXAMPLE
 If A hands over his gold chain to B as a security for
loan given by B to A, it is the case of pledge. As
soon as A returns the money to B,the latter will
have to return the chain to A.
 Pledge is a form of bailment, but the
characteristic feature of pledge is that there is
delivery of goods as security for a debt or promise.
Difference between pledge &
bailment
 In both cases there is delivery of movable goods

 In pledge the bailment is made as a security for due discharge of a


legal obligation. In ordinary bailment this is not so.

 In case of gratuitous bailment the bailee is bound to return the


goods on demand by the bailor. On other hand pledgee is not
bound to return the goods delivered as security on demand by the
bailor unless the debt is repaid.

 A bailee has right of lien on goods bailed but no right of sale. A


pledgee has such right under certain circumstances.
ESSENTIALS
 DELIVERY OF POSSESSION

 IN PURSUANCE OF CONTRACT

 DELIVERY OF GOODS SHOULD BE BY WAY OF


SECURITY

 SECURITY BEING FOR THE PAYMENT OF DEBT


OR PERFORMANCE OF A PROMISE
 Morvie Mercantile Bank v. Union of India
[constructive delivery]

 SC was called upon to decide whether railway receipt


could be equated with goods covered by for the purpose
of constituting delivery of goods. Subba Rao J, who
delivered the majority opinion, held,that railway receipt
was the same thing as delivery of goods, the pledge was
therefore valid and the pledgee was entitled to sue for
the loss.

 Reeves v Cappler [ pledge by hypothecation]


 Bank of Chittoor v Narasimbulu [ pledge by
hypothecation]

 Blundell Leigh v Attenborough [ delivery preceded the


pledge]
RIGHTS OF PAWNEE
o RIGHT OF RETAINER [S.173-174]

o RIGHT OF EXTRAORDINARY EXPENSES[S.175]

o RIGHT TO SELL [S.176]


RIGHTS OF PAWNER
Pawners right to redeem [S.177]
WHO CAN PLEDGE ?
 Pledge by Mercantile agent [S.178]

 Sec 2(9) SOG-Mercantile Agent is an agent


having in the customary course of business
such agent authority to sell or to consign
goods for the purpose of sale, or to buy goods
or to raise money on the security of goods.
 Pledge by a person in possession under
voidable contract[S.178-A]

 Pledge by a person who has limited


interest[S.179]

 Pledge by a seller in possession of goods after


sale [30(1)]bare act sale of goods.docx
 Pledge by a buyer in possession of goods after
sale [30(2)

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