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State the respective rights and responsibilities of pledger and pledgee.

State the respective rights and responsibilities of pledger and pledgee.

Owlgen
Course: B.Com

1 Answer
The person taking the loan is called the pledger or pawnor and the person with whom the goods are pledged is called the pledgee or pawnee.
Rights of the Pledger or Pawnor.
  • If a time is stipulated for the payment of the debt, or performance of the promise, for which the pledge is made, and there is any default from the pawnor with respect to the payment of the debt or performance then he may redeem the goods pledged at any subsequent time before their actual sale, for which he needs to pay in addition any expense caused due to his default.
  • It is the right of the pawnor to get the duties of the pledgee or the pawnee duly enforced.

Responsibilities of the Pledger or Pawnor.

  • It is the duty of the pawnor to comply with the terms of the pledge and to replay the debt on the stipulated date or to perform the promise at the stipulated date.
  • The pledger needs to compensate the pledgee for any extraordinary expenses incurred by him for preserving the goods pawned.
Rights of the Pledgee or Pawnee.

Right of retainer: According to Section 173 and 174, the pawnee has the right to retain the pledged goods till his payments are made. The pawnee may retain the goods for the following payments:

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  • For the payment of the debt or performance of the promise.
  • Interest on the debt.
  • For all the necessary expenses incurred by him in respect of the possession or for the preservation of the pledged goods.

This right of the pawnee to retain the pledged goods till the time of payment is also referred to as the pawnee’s right of particular lien. However, in case where there is no contrary contract, the pawnee cannot retain the goods pledged for any debt or promise other than the debt or promise for which the goods are pledged.

Right to Extraordinary Expenses: According to Section 175, the pawnee is entitled to receive extraordinary expenses incurred by him for the preservation of the goods from the pawnor. However, this right does not entitle him to retain the good for the recovery of such expenses.

Right to Sale: According to Section 176, on the default made by the pawnor with regards to the payment of the debt or the performance of the promise the pawnee is entitled to the following rights, namely; he may sue the pawnor for the recovery of the due amount or retain the goods as a collateral security and secondly, he may sell the goods pledged after giving reasonable notice of the intended sale to the pawnor.

Right against the true owner of goods: Section 178 A states that in case the pawnor has acquired the possession of the pledged goods under a voidable contract, but the contract has not been rescinded then the pledgee acquires a good title to the goods even against the true owner of the goods provided the pawnee had no notice of the pawnor’s defect in the title.

Duties of the Pawnee.
  • Duty to take reasonable care of the pledged goods.
  • Duty not to make unauthorized use of goods pledged.
  • Duty to return the goods when the debt has been repaid or the promise has been performed.
  • Duty not to mix his own goods with the goods pledged.
  • Duty not to do any act which is inconsistent with the terms of pledge.
  • Duty to deliver increase to the goods pledged.

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September 11, 2019
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