Define Pledge? Discuss the main essentials of pledge

Define Pledge? Discuss the main essentials of 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.