Pawnor, Pawnee
In order to understand in detail the difference between the rights and duties of pawnor and pawnee, we need to know what a pledge is. A pledge is an exceptional sort of bailment, and the premise of qualification is the object of the agreement. At whatever point the products are being conveyed with an item to give security to credit or for satisfying a commitment, the bailment will be known as a pledge.
Pledge, Pawnor, and Pawnee
A promise called pawn has been characterised as the bailment of products as security for the instalment of an obligation or execution of a guarantee. The bailor is known as the pledger or pawnor, and the bailee is known as the pledgee. This process is called the pledge law or a pledge by non-owners. The contract of the pledge is valid for both parties.
Rights of Pawnor
Right to Retain Merchandise, Section 173
The pawnee includes a right to retain the pledged goods until the time his loan is due. He will retain them for the interest of the debt and every expense incurred in respect of such merchandise for their preservation. However, he includes a right to exercise a solely explicit lien over merchandise.
Right to Retain Ensuant Advances, Section 174
It’s perpetually likely that the correct to retain the pledged merchandise conjointly extends to the money lent by the grownup to a similar adult when the date of pledge except within the case of a contract contrary to such presumption.
Right to Unordinary Expenses, Section 175
The pawnee includes a right to induce compensation of any extraordinary expenses incurred by him to preserve products pledged. He doesn't have the right to retain the products, however solely to sue for sickness of the expenses.
Right Against the True Owner, Section 178 A
Once the pledger's title to the pledged merchandise is defective and the possession has been obtained underneath a revocable contract, the contract remains in existence. The grownup includes a right to amass sensible title to the pledged merchandise if he acts in honesty.
In case, the pawnee makes any unauthorised sale of products pledged while not giving correct notice and time to the pawnor, then the pawnor has the following rights:
The right to file a suit for redemption of goods by creating payment of a debt.
The right to assert for damages and loss on the bottom of conversion.
Rights of a Pawnee
Right to Receive Back the Products
The pawnor contains a right to receive the goods back once the promise has been performed or the loan and interest have been repaid.
Right to Retain Goods until Payment
Pawnee has a privilege to hold the merchandise vowed until instalment of obligation, intrigue, and other costs for such products. For example, Mr X promises his gold gems for some credit from a bank. In such a case the bank has all the rights to hold the gold adornments for change of credit sum and install premium gathered on such advance sum.
Right to the Redemption of Debt.
The selected time is stipulated for the performance of a promise or compensation of debt. The pawnor doesn't perform such a promise or repay the debt at such times, the pawnor contains a right to redeem the pledged merchandise before their sale; however, he shall pay any expenses arisen as a result of his fault.
Right to Maintenance and Preservation of Merchandise
The grownup contains a right to visualise that the pledgee is conserving and maintaining the pledged goods properly. Pawnee has a privilege to look for repayment of phenomenal costs caused. In any case, he can't hold products with him in such a case.
Rights of the Ordinary Debtor
The pawnor also has rights, just like that of a normal debtor conferred on him by varied laws created for the debtors’ cover.
Right to Suit
Pawnee has a privilege to document a suit for the recovery of obligation while holding the products promised as security. He has a privilege to sue for the offer of merchandise swore and cash instalments because of him.
Right to Sell
Pawnee has a privilege to sell the merchandise after giving sensible notification and time to the pawnor. Pawnee can sue pawnor for insufficiency, assuming any, after the offer of such products. Additionally, if there is any excess discount of products, the pawnee must restore it to the pawn.
FAQs on Rights of Pawnee and Pawnor: Explained
1. What is a 'pledge' in business law, and who are the 'pawnor' and 'pawnee'?
A 'pledge' is a special type of bailment where goods are delivered as security for the payment of a debt or the performance of a promise. In this arrangement, the person who delivers the goods as security is called the 'pawnor' (or pledger), and the person to whom the goods are delivered is called the 'pawnee' (or pledgee).
2. What are the primary rights of a pawnee in a contract of pledge?
A pawnee has several key rights to secure their interests. These include:
- Right of Retainer: The right to hold onto the pledged goods until the pawnor repays the entire debt, including interest and any expenses incurred for the preservation of the goods.
- Right to Extraordinary Expenses: The right to claim compensation from the pawnor for any unusual or extraordinary expenses incurred to preserve the goods.
- Right in Case of Default: If the pawnor defaults, the pawnee can either file a suit against the pawnor to recover the debt while retaining the goods as collateral, or sell the goods after giving the pawnor a reasonable notice.
3. What are the essential rights of a pawnor?
The pawnor, despite giving up possession of the goods, retains important rights. The main rights are:
- Right to Redeem: The pawnor has the right to get the goods back upon clearing the debt and any associated charges. This right exists even after the payment due date has passed, as long as the pawnee has not sold the goods.
- Right to Proper Care: The pawnor has the right to have their goods cared for reasonably by the pawnee. The pawnee is liable for any damage caused by negligence.
- Right to Receive Surplus: If the pawnee sells the goods upon default and the sale proceeds are greater than the amount due, the pawnor is entitled to receive the surplus amount.
4. How is a pledge different from a general bailment?
While a pledge is a type of bailment, they differ in their primary purpose and the rights of the parties. The key difference lies in the purpose of the contract. In a general bailment, goods are delivered for a specific purpose like repair or safekeeping. In a pledge, the goods are delivered specifically as security against a debt or for the performance of a promise. This gives the pawnee a special right to sell the goods on default, a right which is not available to a normal bailee.
5. What is the pawnee's 'right of retainer' and what does it cover?
The pawnee's 'right of retainer', as per Section 173 of the Indian Contract Act, 1872, is the right to keep possession of the pledged goods until their dues are cleared. This right is not just for the principal amount of the loan but also covers any interest accrued on the debt and all necessary ordinary and extraordinary expenses incurred by the pawnee for the preservation of the pledged goods.
6. What are the pawnee's options if the pawnor fails to repay the debt on time?
If the pawnor defaults, the pawnee has two main courses of action. First, the pawnee can file a civil suit against the pawnor for the amount of the debt and continue to retain the pledged goods as collateral security. Alternatively, the pawnee can choose to sell the goods pledged after giving the pawnor a reasonable notice of the intended sale. If the sale proceeds are less than the debt, the pawnee can sue the pawnor for the remaining balance.
7. Can a pawnee use the goods that have been pledged as security?
No, a pawnee generally does not have the right to use the goods pledged to them. The pawnee's role is to keep the goods as security. If the pawnee makes any unauthorised use of the goods, they can be held liable for any damages that occur. The only exception is if the pawnor gives explicit permission for the goods to be used, or if the use is necessary for the preservation of the goods themselves.
8. Under what circumstances can someone who is not the owner of goods make a valid pledge?
Generally, only the owner of the goods can make a valid pledge. However, the Indian Contract Act allows for some exceptions. A notable example is a pledge by a mercantile agent. If a mercantile agent is in possession of goods with the consent of the owner, they can make a valid pledge while acting in the ordinary course of business, provided the pawnee acts in good faith and has no notice that the agent lacks the authority to pledge.
