Rights of Pawnee and Pawnor

The bailment of goods as a security for payment of a debt or performance of promise is called ‘pledge’. The person with whom the goods are pledged is known as ‘Pawnee’ or Pledgee’. The person pledging the goods is known as ‘Pawnor’.

The rights of the pledgee or pawnee are mentioned in Section 173 to 176 of the Indian Contract Act,1872.

Rights of Pawnee

  1. Right to retain the goods pledged (Section 173 and 174): According to Sec. 173, the right of a pawnee to retain the goods pledged shall not be only for payment of the debt or the performance of the promise, but he can also exercise this right for interest on the debt and all necessary expenses incurred by him in respect of the possession or for the preservation of the goods pledged. According to Section 174, a pawnee can retain the goods pledged only as a security for that debt or promise for which they are pledged, but there is a presumption that if there are subsequent advances, they are also the part of the original debt and the pawnee may retain the goods and to recover subsequent advamces also. This is merely a presumption which could be rebutted by contract to the contrary. The pawnee is bound to redeliver the goods after he gets what is due to him.
  2. Right to recover extraordinary expenses incurred by pawnee (Section 175) : According to section 175, the pawnee is entitled to receive extraordinary expenses incurred by him for the preservation of the goods pledged from the pawnor.
  3. Right of suit to recover debt etc., and sale of the pledged goods (Section 176) : Section 176 confers right on the pawnee, including right of selling the pledged goods if the pawnor makes a default in payment of debt or performance of promise at the stipulated time. This section confers following rights on pawnee on the pawnor’s default in fulfilling promise:-. a) he may bring a suit against the pawnor upon the debt or promise and retain the goods pledged as collateral security. b) he may sell the good pledged on giving reasonable notice of the sale to the pawnor.

Right of Pawnor

Right of Pawnor to Redeem (Section 177): The pawnor has right to redeem the goods pledged, i.e., take back the goods from pawnee on payment of the agreed debt or performance of the promise in accordance with the agreement. He can exercise the right to redeem before the pawnee has made an actual sale of the goods.

Legal Heir’s Right to Redeem: In case of death of a pawnor, the pledge made by him can be redeemed by his legal heirs on meeting the liabilities concerning the pledge.