Pledge, Pawner and Pawnee defined
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 “pawner”. The bailee is called the “pawnee”. Section 172
Pledge
A pledge is the delivery of goods by the pledger to the
pledge by way of security upon a contract that they shall when the debt is paid
or the promise is performed, be returned or otherwise disposed of according to
the directions of the pledger. To constitute a valid pledge there must be:
- a contract in relation to an identified chattel to be delivered to the pledge as security,
- actual delivery of possession of the identified chattel in pursuance of the contract
A pledge in law is neither a mortgage nor a lien and does
not pass property in the goods but only passes what is described as “special”
property, that is, no title to the goods passes but the pledgee is allowed to
retain the thing pledged till payment of the debt and in default of payment, to
sell the thing pledged so as to pass the property to the vendee.
Delivery of possession
In order to constitute a valid pledge, what is essential is
that there must be a delivery of the article, either or constructive, to the
pawnee. Possession in an equivocal ter; it may mean either mere manual
possession or the mere right to possession. Constructive delivery is adequate
to constitute a pledge, and it applies to all those cases where the pledge
remains in possession of the goods under the specific authority of the pledge.
There cannot be any rigid delimitation of the purpose for which the pledge is
permitted to retain possession of the goods. The essential test is not the
purpose, but whether the dominion over the goods of the pledge is retained, and
the physical possession or handing of the goods by the pledger is under the
delegated authority of the pledgee, or is independent.
Rights of Pawnee
The rights of a person in whose favour a hypothecation of a
chattel is made are limited strictly to actual chattel hypothecated and do not
extend beyond that. So when some animals are the subject of hypothecation, the
young ones born, when under pledge with the pledge, are not subject to
hypothecation.
Where securities have been delivered with a view to cover
the repayment of any overdraft by the pledger bank to the pledge bank and it is
agreed that they are to be disposed of on the arising of a stipulated
contingency only, then by the very fact of the delivery of the securities to
the bailee the latter becomes a trustee in terms of the contract, not for all
purposes, but only for the limited purpose indicated by the agreement. The
pledger in such a case only transfers his possession of the property to the
pledge who has a special interest in the property of enforcing his charge for
payment of an overdraft. If any, whereas the property continues to be owned by
the pledger Bank and it can ask for a return of securities at any time. And the
securities having continued to be the property of the pledger bank, the pledge
bank or its managing director has no right to deal with them.
Pawnee’s right of retainer
The pawnee may retain the goods pledged, not only for
payment or the debt or the performance of the promise, but for the interest of
the debt, and all necessary expenses incurred by him in respect of the
possession or for the preservation of the goods pledged. Sec 173.
Pawnee’s right as to extraordinary expenses incurred
It is the pawnee right to receive from the pawner
extraordinary expenses.
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