Section 172 of the Indian Contract Act provides that pledge is the bailment of goods as security for the payment of a debt or the performance of a promise. Here the bailor is called the pledger or pawnor and the bailee is called the pledgee or pawnee.
Essentials of Pledge
In a pledge there is delivery of goods by borrower to the lender with the intention of the goods being treated as security agianst the advance. Therefore actual or constructive delivery is essential in a pledge.
Rights of Pawnor
The defaulted pawnor has the right to redeem the goods pledged before the actual sale of it by paying the amount due along with the expenses airsing out of such default. This is mentioned in Section 177 of the Indian Contract Act.
Rights of the Pawnee
The pledgee has every right to retain the goods until the pawnor pays him the amount due wilth interest along with the charges incurred for keeping and protecting the goods. When the pawnor fails to redeem the goods by paying off the debt, the pawnee can file a suit for the amount due to him by keeping the goods as collateral security.
He can also sue for selling the goods in his possession to make good the loss. He can do so by giving a reasonable notice also.The pawnor has the right of retainer for subequent advances and has a right to extra ordinary expenses.