Pledge

PLEDGE :-

It is defined in the following words, "Bailment
of goods as a security for the payment of a
debt or performance of a promise is called
pledge."

Bailor is called pledgor or "Pawnor" and Bailee
is called "Pawnee" or pledgee.

Example :- Mr. Shukla borrows Rs. Ten
thousands from Mr. Pritam and keeps his
motor cycle as security for payment of the
debt. The bailment of motor cycle is called
pledge.

Note : In this example Mr. Shukla is a Pawnor
and Mr. Pritam is a Pawnee.

BASIC ESSENTIALS OF PLEDGE :-

Following are the important essentials of
pledge :

1. Moveable Property :-
The pledge is concerned with the moveable
property. All types of goods and valuable
documents are included in it.

2. Transfer of Possession :-

In case of pledge only possession of goods
transferred by the pawnor to the pawnee.

Example :- Mr. Nelson ledges car with Mr.
Mcculan and gets Rs. 100,000. He gives the
possession of car to Mr Mcculan.

3. Ownership Right :-

In case of pledge, the ownership of the goods
remains with the pawnor. It is not transfered
to pawnee.

Example :- Mr. Wali pledges the plot with Mr.
Raffel and gets 10 lac. The ownership of the
plot remains with Mr. Wali.

4. Case of Mere Custody :-

Those people who have only mere custody of
the goods cannot pledge them.

Example :- A custodian cannot pledge his
masters banglow. It will be invalid pledge.

5. Limited Interest :-

Pledge property cannot be used for unlimited
interest. When a person pledges goods in
which he has only limited interest, the pledge
is valid to the extent of that interest only.

Example :- Mr. Nelson gives car to Mr. Andre
for repair, but does not pay Rs. 20,000 repair
charges. Mr Andre pledges the car with Mr.
Smith and borrows Rs. fifty thousands. This
pledge is valid only up to ten thousands.