CHAPTER 2 •

Bailment and Pledge

CHAPTER CONTENTS .
• Bailment • Termination of Bailment
• Classification of Bailments • Pledge
• Duties and Rights of Bailor and Bailee 0 Difference between Pledge and Bailment
0 Duties of Bailor • Rights and Duties of Pawnee and Pawnor
0 Duties of Bailee 0 Rights of Pawnee
0 Rights of Bailor 0 Rights of Pawnor
0_ Rights of Bailee ~ Pledge by Non-owners
• Law Relating to Lien • Questions-Objective, Test, Practical
• Finder of Goods
• Liability of Hotel-Keepers, Inn-Keepers, Common
Carriers

a
Contracts of bailment and pledge are special class of contracts. These are dealt with in
Chapter IX (Secs. 148 to 181) of the Indian Contract Act, 1872. The Indian Contract Act, 1872
however, does not deal \1/ith all types of bailments. There are separate Acts, e.g., the Carriers
Act, 1865, the Railways Act, 1989, the Carriage of Goods by Sea Act, 1925, which deal with
special types of bailments. The Indian Contract Act, 1872 deals with the general principles
underlying contracts of bailment. •

BAILMENT
/ 4 e word 'bailment' is derived from the French word 'ha/lier' which means 'to deliver'.
It means any kind of 'handing over'. In legal sense, it involves change of possession of goods
from one person to another for some specific purpose.
Sec. 148 defines 'bailment' as the delivery of goods by one person to another for some
purpose, upon a contract, that they shall, when the purpose is accomplished, be returned or
otherwise disposed of according to the directions of the person ~elivering them. The person
delivering the goods is called the 'bailor' and the person to whom they are delivered is called
the 'bailee'.
 196 II Law of Contract: Special Principles (The Indian Contract Act, 1872)

Examples:
(a) A ?elivers a piece of cloth to B, a tailor, to be st~tched into a suit. There is a contract of
ba1lment between A and B. •
( b) A lends a book to B to be returned after the examination. There is a contract of bail"' ..1en1
between A and B.
(c) A sells certain goods to B who leaves them in the possession of A. The relationship between
Band A is that ofbailor and bailee.
(d) An insurance company places a damaged insured car of A_ in possessio_n of R, a repairer. A
is the bailor, the insurance company is the bailee, and R is the sub-bailee [N.R. Srinivasa'
Iyer v. New India Ass. Co. Ltd., A.I.R. (1983) S.C. 899].
Sometimes there .may be bailment even without a contract. For example, when a person finds
goods belonging to another, a relationship of bailee and bailor is automatically created between
the finder and the owner.
Example: E's ornaments having been stolen and recovered by t_he police disappeared from
police custody. Held, the State was liable, the contract of bailment having been implied
[Basavva K.D. Patil v. State ofMysore, (1977) 4 S.C.C. 358].

J Requisites of Bailment .
1. Contract. A bailment is usually created by agreement between the bailor and the bailee.
The agreement may be express or imp,ied. In certain exceptional cases, bailment is implied
by law as between a finder of goods and the owner.
2. Delivery of possession. A bailment necessarily involves delivery of possession of goods
by bailor to bailee. The basic features of possession are control and an intention to exclude
others. As such, mere custody of goods does not create relationship of bailor and bailee.
A servant who receives certain goods from his master to take to a third party has mere
custody of the goods; possession remains with the master and the servant does not become
a bailee.
Example: A lady employed a goldsmith for melting her old jewellery and making new one ✓
out of it. Every evening she received the unfinished jewellery and put it into a box kept at
the goldsmith's premises. She kept the key of that box with herself. One night the jewellery
was stolen from the box. Held, there was no bailment as the goldsmith had re-delivere~
to the lady (the bailor) the jewellery bailed with him by her [Ka/iperumal v. Visalakasm1,
A.LR. (1938) Mad. 32].
Delivery of possession may be actual or constructive. Actual delivery may be made by physically
handing over the goods bailed to the bailee. Constructive or symbolic delivery may be made
by_ doing something which ~as the effect of putting the goods in the possession of the int~nde_~
bailee or any person authonsed to hold them on his behalf (Sec. 149). This means possess10n 1
transferred to the bailee without actually handing over the goods physically. The deliver)' of a
railway receipt amounts to delivery of the goods.
3. For some purpose. The delivery of goods from bailor to bailee must be for some purpose.
If goods are delivered by mistake to a person, there is no bailment.
4. Return of specific goods. It is agreed between the bailor and the bailee that as soon a~ the
• achi eved , th e goo ds sha11 be returned or disposed
purpose 1s · • uon5
of according to the d1rec
 Bailment and Pledge 11 197
of the bailor If
• the go0 ds . • no ba1·1ment. But th ere
. . are not to be specifically returned, there 1s
is_ a bailment ~ven_ if the goods bailed are, in the meantime, altered in form, e.g., when a
piece of cloth is stitched into a suit.
Bailment is concerned only with goods. Goods, as defined in Sec. 2 (7) of the Sale Goods
Act, 1930,. mean every kind of movable property other than money and actionable claims.
Moreover, ma c~ntract ofbailmen t it is only possession that passes from the bailor to the bailee
and not ownersh~p. Thus, if the property in goods is transferred for mon.ey consideration, it is a
sale a~d not a bailment._ Similarly, where money is deposited in a banking acco~nt (not in a safe
depo s1 t vault), the relationship of debtor and creditor is created· there ·ts no bailment. The bank
is not liable to return, when asked to do so, the very same mon~y. ••
Other examples of bailment:
(a) A hire-purchase contract. It is not merely a contract ofbailment. It has two aspects: a bailment
plus an element of sale [Instalment Supply (Pvt.) Ltd. v. Union ofIndia, A.LR. ( 1962) S.C. 53].
(b) Seizure of goods by custom authorities, who after seizure are in the position of a bailee
[State of Gujarat v. M.M. Haji Hassan, A.LR. (1967) S.C. 885].
(c) Acceptanc e of goods by a transport company or railway for carriage [Shiv Nath v. Union of
India, A.LR. ( 1965) S.C. 1666].
(d) Acceptanc e of articles by Post-Office as Value Payable Parcel [Income-tax Commr. v. PM.
Rathod, A.J.R. (1959) S.C. 1394].

Consideration in a Contract of Bailment

ln a contract of bailment, the consideration is generally in the form of money payment either by the.
bailor or the bailee, as for example, when A gives his bicycle to B for repair, or when A gives his car
to B on hire. Such consideration in money form, however, is not necessary to support the promise
on the part of the bailee to return the goods. The detriment suffered by the bailor, in parting with
possession of the goods, is a sufficient consideration to support the contract of bailment.

/ C~ASSIFI~ATION OF B~ILMENTS . . .
Bailments may be classified accordmg to the benefit derived by the parlles. Thus, a bailment
maybe-
1. for the exclusive benefit of the bailor, as the delivery of some valuables to a neighbour for
safe custody, without charge.
2. for the exclusive benefit of the bailee, as the lending of a bicycle to a friend for his use,
without charge.
3. for the mutual benefit of the bailor and the bailee, as the hiring of a bicycle or giving of a
watch for repair. In these cases, consideration passes between the bailor and the bailee.
Bailments may also be classified into:
l. Gratuitous bailment. It is a bailment where no consideration passes between the bailor and
the bailee, e.g., where A lends a book to his friend B.
2. Non-gratuitous bailment or bailm~nt for reward. It is .a bailment wher~ consideration
passes between the bailor and the bailee, e.g., where certam goods are kept ma godown for
hire or where A hires a bicycle from B.
'
 198 II Law of Contract: Special Principles (The Indian Contract Act, 1872)

J DUTIE S AND RIGHTS OF BAILO R AND BAILEE

Duties of Bailor
l. To disclose known faults • It is the first and foremost duty of the bailor to discJo
k se th
known faults about the goods bailed to the bailee. Ifhe does not ma e such disclosure h _e
responsi ble for any damage caused to the bailee directly from such faults (Sec. 150, P;ra~;'.
Example: A lends a horse, which he knows to b~ vicious, to B_. ~e does ?ot disclose that
the horse is vicious. The horse runs away and B 1s thrown and mJured. A 1s responsible t0
B for damage sustained.
In case the goods are bailed for hire, the duty of the bail or is still greater. He is responsible
even for those faults which are not known to him (Sec. 150, Para 2).
Examples:
(a) A hires a carriage of B. The carriage is unsafe, though B is not aware of it, and is
injured. B is responsible to A for the injury.
(b) A hires a motor launch from B for holiday on the river Thames. The launch caught
fire and A was unable to extinguish it as the fire-fighting equipme nt was out of order.
As such he was injured and suffered loss. Held, B was liable [Read v. Dean, (1949) J
K.B. 188].
In a gratuitous bailment, however, the bailor is responsible only for those faults which are
known to him and which are not disclosed [Coughlin v. Gillison, (1899) 1 Q.B. 145].
2. To bear extraordinary expenses of bailment. The bailee is bound to bear ordinary
and reasonable expenses of the bailment but for any extraordinary expenses the bailor is
responsible.
Example: A lends his horse to B, a friend, for two days. The feeding charges are to be paid
by B. But if the horse meets with an accident, A will have to repay B medical expense,
incurred by B.
Where in case of a gratuitous bailment, the goods are to be kept or to be carried, or some
10
work is to be done upon the goods by the bailee for the bailor, the bailor must repay
the bailee all the necessary expenses incurred by him for the purpose of the bailment
(Sec. 158).
Example: A leaves his car with B, a friend, for safe custody for two months, B has to pay
tlOO per month to the night watchman for keeping a watch over the car. It is the duty of A
to pay B the necessary expenses incurred by B.
3. To indemnify bailee for loss in case of premature termination of gratuitous bailrnent.
A gratuitou s bailment can be terminated by the bailor at any time even though the bailment
• or purpose. But m • such a case, the loss accruing to the bat·1ee frorTI
1or a specifie d time
was .c.
such prematur e termination should not exceed the benefit he has derived out of the bail men;•
159 •
If the loss exceeds the benefit, the bailor shall have to indemnif y the bailee (Sec.
Example: A lends an old discarded bicycle to B gratuitou sly for three months. B incurs10
t 120 on its repairs. If A asks for the return of the bicycle after one month, he will have
compens ate B for expenses incurred by B in excess of the benefit derived by him.
-
Bailment and Pledge 11 199
4 To_ receive
back the goods. It is the duty of the bailor to receive back the
goods when the
bai~ee re~m s them after the expiry of the term of the bailment
or when the purpose for
which bailm ent ':as created has been acc9mplished. If the bailor
the goods, the bailee refuses to receive back
is entitled to receive compensation from the bailor for the neces
expenses of custody. sary

5. To_ indemni fy the bailee. Where the title of the bailor to

the goods is defective and the
ba~lee suffers as ~ consequence, the bailor is responsible to the bailee
for any loss which the
bailee may sustam by reason that the bailor was not entitled to make
bailment or to receive
back the goods, or to give directions respecting them (Sec. 164).
' •
Duties of Bailee
1. To take reasonable care of the goods bailed. In all cases ofbai
lment, the bailee is bound
to take as much care of the goods bailed to him as a man of ordina
ry prudence would, under
similar circumstances, take of his own goods of the same bulk,
quality and value as the
goods bailed (Sec. 151 ). The onus of proof is on the bailee to show
that there has been no
negligence, when he fails to return the goods or returns them in
a damaged condition, and
that the loss or damage occurred in spite of the fact that he took
reasonable care of them.
If, in spite of the bailee's reasonable care, goods are damaged or
destroyed in any way, the
bailee is not liable for the loss, destruction or deterioration of the
thing bailed (Sec. 152).
Examples:
(a) Some cattle belonging to A were agisted (given for feedin
g grass against payment)
with B. Without any negligence on B's part the cattle were stolen
. B did not inform
the owne r or the police or make any effort to recover them, becau
se he thought it
would be useless to do so. Held, B was liable for the loss [Cold
man v. Hill, (1919) 1
K.B.'443].
(b) M was admitted to a hospital where her jewellery was hande
d over to the hospital
officials for safe custo_dy. The jewellery was stolen. Held, the hospi
tal officials were
bailees for reward and were liable for the loss as they had failed
to exercise a care
which the nature and quality of the article required [Martin v. Londo
n Coun ty Council,
(1947) K.B. 628].
(c) A entered a restaurant for dining. His coat was taken by a
waiter who hung it on a
hook behind A. When A rose to leave, the coat was gone. Held,
the proprietor of the
restaurant was liable for the loss [Ultzen v. Nichols, ( 1894) 1 Q.B.
92].
(d) Certain goods of A were bailed with B. B omitted to lock up
the goods, bailed, locking
up similar goods of his own. Held, he was liable [Clarke v. Earnshaw,
( 1818) Gow. 30].
2. Not to make any unauthorised use of goods. If the bailee
uses the goods bailed in a
mann er which is inconsistent with the terms of the contract,
he shall be liable for any
loss even though he is not guilty of.negligence, and even if the
damage is the result of an
accident (Sec. 154).
Examples:
(a) A lends a horse to B for his riding only. B ~llows C, memb
er ~f ~i~ family, _to ~ide the
horse. c rides with care, but the horse accidentally falls and 1s
mJured. B is hable to
make compensation to A for the injury caused to the horse.
200 fl Law of Contract: Special Principles (The Indian Contract Act, 1872)

(b) A hires a horse in Kolkata from B expressly to march to Varanasi. A

rides with d
A~e
care but marche s to Cuttack instead. The horse accidentally falls and is iniured
cJ • IS
'
liable to compe nsate B for the injury to the horse.
mix the goods f
3. Not to mix the goods bailed with his own goods. The bailee must not
goods. If ~e
the bailor with his own goods, but must keep them separate from his own
mixes the bailor' s goods with his own goods - .
mixture thus
(a) with the bailor ~ consent, both shall have a proportionate interest in the
produc ed (Sec. 155).
, the bailee
( b) without the bailor ~ consent, and if the goods can be separated or divided
arising
is bound to bear the expenses of separation or division, as well as damage
from the mixture (Sec. 156).
Example: A bails 100,bales of cotton marked with a particular mark to B. B, without
A's consent, mixes the 100 bales with other bales of his own bearing a different mark.
A is entitled to have his 100 bales returned and B is bound to bear all the expenses
incurred in the separation of the bales, and any other incidental charges.
the bailor is
(c) without the bailor ~ consent, so that the mixture is beyond separation,
entitled to be compensateµ by the bailee for the loss of the goods (Sec. 157).
Example: A bails a bag of Farm wheat worth t850 to B. B, withou t A's consen~
mixes the wheat with imported wheat of his own, worth only t750 a bag.
B must
compensate A for the loss of his wheat.
inadvertence
If the goods of the bailor get mixed up with the like goods of the· bailee, by
third party,
of the bailee or accident or by an act of God or by the act of an unauthorised
the cost of
the mixtur e belongs to the bailor and the bailee in proportion to their shares but
separa tion will have to be borne by the bailee.
The bailee
4. Not to set up an adverse title (Sec. 117 of the Indian Evidence Act, 1872).
of the bailor
must hold the goods on behalf of and for the bailor. He cannot deny the right
person other
to bail the goods and receive them back. If he delivers the goods bailed to a
the bailor.
than the bailor, he may prove\that such person had a right to them as against
the contrary, the
5. To return any accretion to the goods. In the absence of any contrac t to
e or profit
bailee is bound to deliver to the bailor, or according to his directions, any increas
which may have accrued from the goods bailed (Sec. 163).
calf. Bis
Example: A leaves a cow in the custody of B to be taken care of. The cow has a
bound to deliver the calf as well as the cow to A.
ng to the
6. To return the goods. It is the duty of the bailee to return or deliver' accordi
which they
bailor' s directions, the goods bailed, ':Vithout demand, as soon as the time for
lished
were bailed has expired, or the purpose for which they were bailed has been accomp
(Sec. I6l)
(Sec._ 160). I~ he fails to _do so, he is responsible to the bailor for any loss
notw1thstandmg the exercise of reasonable care on his part.
but
Example: A delivered some books to B to be bound. He pressed for their return,
B neglected to return them although more than a reasonable time had elapsed . A fire
lia~Ie_fo;
accidentally broke out on B's pre~is es, and the books were burnt. Held, B was
w1thtn
the loss, although he was not negligent, because of his failure to deliver the books
•
reason able time [Shaw & Co. v. Symmons & Sons, (1917) I K.B. 799)].
 Bailment and Pledge II ZOl

Rights of Bailor
1. Enforcement of rights. The bailor can enforce by suit all the liabilities or duties of the
bailee, as his rights. _
2. Avoidance of contract. The bailor can terminate the bailment if the bailee does, with
regard to the goods bailed, any act which is inconsistent with the terms· of the bailment
(Sec. 153).
Example: A lets a horse to B for his own riding only. B uses the horse with a carriage.
A can terminate the bailment.
3. Return of goods lent gratuitously. When the goods are lent gratuitously, the bailor can
demand their return whenever he pleases even though he lent them for a specified time or
purpose. But if the bailee suffers any loss exceeding the benefit actually derived by him
from the use of such goods because of premature return of goods, the bailor shall have to
indemnify the bailee (Sec. 159).
4 Compensation from a wrong-doer. If a third person wrongfully deprives the bailee of the
use or possession of the goods bailed, or does them any injury, the bailor or the bailee may
bring a suit against the third person for such deprivation or injury (Sec. 180).

Rights of Bailee
The duties of the bailor are the rights of the bailee. As such, the bailee can, by suit, enforce the
duties of the bailor. The other rights of the bailee are as follows:
1. Delivery of goods to one of several joint bailors of goods. If several joint owners of
goods bail them, the bailee may deliver them back to, or according to the directions of,
one joint owner without the consent of all, in the absence of any agreement to the contrary
(Sec. 165).
2. Delivery of goods to bailor without title. If the bail or has no title to the goods, and the
bailee, in good faith, delivers them back to, or according to the directions of, the bailor, the
bailee is not responsible to the owner in respect of such delivery (Sec. 166).
3. Right to apply to Court to stop delivery. If a person, other than the bailor, claims goods
bailed; the bailee may apply to the Court to stop the delivery of the goods to the bail or, and
to decide the title to the goods (Sec. 167).
4. Right of action against trespassers. If a third person wrongfully deprives the bailee of the
use or possession of the goods bailed to him, he has the right to bring an action against that
party. The bail or can also bring a suit in respect of the goods bailed (Sec. 180).
5. Bailee's lien. Where the lawful charges of the bailee in respect of the goods bailed are
not paid, he may retain the goods. This right of the bailee to retain the goods is known as
'particular lien' .

.✓ LAW RE_LATIN~ TO LIEN . .

'Lien' means the right of a person to retam possession of some goods belongmg to another until
• some debt or claim of the person in possession is satisfied. It appertains to the person who has
possession of the goods which belong to another, entitling him to retain them until the debt due
to him has been paid.
202 II Law of Contract: Special Principles (The Indian Contract Act, 1872)

Possession is es~ential for exercising the right of lien, and in order to create a lien the Possess1.
m~~: ~
(a) rightful,
(b) not for a particular purpose, and
(c) continuous.·
Example: A company agreed to garage the motor-~ar of H for three years, for ~n annual char e
H was entitled to take the car out of the company s garage as and when she hked. The anng_
• · h d 1• d • l!al
payment being in arrear the company detained the car at t e garage an c aime a hen. Heid
H was entitled to take the car away as and when she pleased, the company had no lien [Hat;o~
v. Car Maintenance Co. Ltd., (1915) I Ch. 621].
Right oflien may arise (a) by Statute, or (b) by express or implied contract, or (c) by a genera!
course of dealing between the parties in a particular trade.
Alien be:
( 1) a particular lien, or
(2) a general lien.
1. Particular lien. A particular lien is one which is available to the bailee against only those
goods in respect of which he has rendered some service involving the exercise oflabouror
skill. In other words, the bailee has a right to retain the particular goods until all claims in
respect of those goods are satisfied.
'
Examples:
(a) A delivers a rough diamond to B, a jeweller, to be cut and polished. This is accordin~y
done. B is entitled to retain the finished diamond till he is paid for services he has
rendered.
(b) A gives a piece of cloth to B, a tailor, to make into a coat. B promises A to deliver ilie
coat as soon as it is finishe~, B is entitled to retain the coat till he is paid for.
Sec. 170 explains 'particular lien' as follows: "Where the bailee has in accordance wiih
the purpose of the bailment, rendered any service involving the exerdise of labour or ~kill
in respect of the goods bailed, he has, in the absence of a contract to the contrary, an~I
to retain such goods until he receives due remuneration for the services, he has rendered in
respect of thein."
Si~ply stated, particular lien is available to a bailee only against those goods on whic~ th1
some skill and labour have been expended by him. But if the bailee does not complete
~ork within t~e agree~ time, or~ reasonable time, he cannot exercise his right oflien.A:s;f
1f he voluntarily permits the ba1lor to regain possession of the goods without payrne~ 10
the charges, he cannot exercise the right of lien. Same is the case when he allows credit
the bailor.
· to sew it into a coat. B promises
• of cloth to B, a tailor,
• a piece . Ato deli"er
Exampl e.· A gives . ot
. . fi . Bis o
the coat as soon as 1t 1s mshed, and to give A three months' credit for the price.
entitled to retain the coat.
If, ~ough no f~ult of the bailee, the goods are destroyed or stolen, the bailee is en~t1edto
be paid for services performed upon the goods before they were destroyed or stole • B
• · , Before
Example.· A, a watch-repauer, reparred B s watch for a total charge of t20. h,val
took delivery_ of th_e watch, the _shop caught fire through no fault of A, and B~s w~t~re·
destroyed. A ts entitled to get his repair charges for the work he performed pnor t
 Bailment and Pledge II 203
2. General lien A gener 11· • • .
. • a ien is a nght to retam all the goods or any property (wh.ICh IS• •
m
th
po~s~ssion of _ e holder) of another until all the claims of the holder are satisfi
ed. This is
a ng t to ~~tam the property of another for a general balance of account. For examp
le, if
:o:e:nt les are g~ven to a banker but a loan is taken only against one of the
securities,
e a er may retam both the securities until his claim is satisfied. ,
General lien, according to Sec. 171, is available to bankers, factors, wharfingers
(those who
have the care of, or o~, a structure built especially along the shore, for loadin
g or unloading
vessels), attorneys of High Court and policy brokers. These persons are entitled,
in the absence
of~ c_on~ract to the contrary, to retain possession of the goods bailed to them as
their claims are fully satisfied. security until

Distinction between Particular Lien and General Lien

Particular lien
General Lien
1. This is a right available to a bailee against
1. This is a right to retain any property
only those goods in respect of which skill belonging to the other party in respect
and labou r have been expended by him. of any payment lawfully due, provided
the property is in the possession of the
person exercising the right.
2. This is a right to retain.the goods only for 2. This is a right to retain any property
a charge for labou r employed or expenses belonging to the other party for a general
incurr ed upon the goods. balance of account.
Extinguishments of lien. A lien is extinguished or lost by:
c (a) abandonment;
(b) payment or tender of the amount due; or
(c) loss or surrender of possession of the goods.

Rights of Bailor and Bailee against Wrong-doer

1. Suit against wrong-doer. Sometimes a third person may wrongfully deprive
the bailee of
the use or possession of the goods bailed or may cause injury to the goods. In such
a case,
the bailee may use such remedies as the owner might have used and either the bailor
or the
bailee may bring a suit against the third person for such deprivation or injury (Sec.
180).
2. Apportionment of relief. Whatever is obtained by way of relief or compe
nsation in
any such suit in the above case shall, as between the bailor and the bailee, be
dealt with
according !O their respective interests (Sec. 18 l ).
 -
Bailment and Pledge 11 205

/. . . TERMINATION OF BAILMENT
A contract of ba1lment 1s terminated -n th c: . cases:
1 e 1011owmg •
1. On the expiry of the period Wh th b . .
. f • c: • •
en e a1 1ment 1s 1or a specrfic penod 1t termma
• •
tes on
the expiry o that period. '
2. On the achievement of th b.
. e o Ject. When the ba1lme. . for
nt 1s . purpos
a specific e, it
termmates as soon as the purpose is achieved.
3. Inconsistent use of goods · When th b ·1
e a1 ee uses the goo ds m
• a manner mcons1
· •stent wit• h
the terms of the co~tract, the bailment terminates (Sec. 154).
4. Destr~ction of t_he subject matter. A bailment is terminated when the subject
matter of
the batlment (a) ts destroyed, or (b) by reason of a change in its nature becomes
incapable
of use for the purpose of the bailment.
5. Gratuitous bailment. A gratuitous bailment can be terminated by bailor
at any time
even thou~h the bailment was for a specified time or purpose. But in such a
case, the
loss accrumg to the bailee from such premature termination should not exceed the
benefit
derived out of bailment. If the loss exceeds the benefit, the bailor shall have to
indemnify
the bailee (Sec. 159).
6. Death of the bailor or bailee. A gratuitous bailment is terminated by the death
either of
the bailor or of the bailee (Sec. 162).

L PLEDGE
The bailme nt of goods as security for payme nt of a debt or performance ofa promis
e is called
'pledge '. The bailor is, in this case, called the 'pledger' or 'pawnor' and the bailee
is called the
'pledgee, or 'pawne e' (Sec. 172).
A pledge is a bailment for security. It is a special kind of bailment. If A borrow
s ~200 from
B and keeps his watch as security for payment of the debt, the bailment of watch
is a pledge.
Any kind of movable property, i.e., goods, documents, or valuables may be pledged
. Even a
Savings Bank Pass Book may be pledged [J. & K. Bank v. Tek Chand, A.LR. (1959)
J.&K.67].
But delivery is necessary to complete a pledge. The delivery may be actual or constru
ctive. If,
because of the bulk of the property or for some other reason, actual delivery is
impracticable,
a symbolic delivery will suffice (as for example, delivery of the keys to a safe deposit
box).
Example: The produc er of a film borrowed a sum of money from a financi
er-distributor and
agreed to deliver the final prints of the film when ready. Held, the agreement was
not a pledge, •
there being no actual transfer of possession [Revenue Authority v. Sudarshan
Pictures, A.LR.
(1968) Mad. 319].

Difference between Pledge and Bailment

1. Pledge is the bailment of goods as a security for the performance of a specific
promise, i.e.,
the payment of a debt or performance of a promise. Bailment, on the other hand,
is for a
purpose of any kind.
2. In case of default by the pawnor to repay the debt, the pawnee may, after giving
notice to
the pawnor, sell the goods pledged with him. The bailee may either retain the goods
or sue
for his charges.
3. In case of pledge, the pawnee has no right to us~ the goods pl~dged with him.
In case of
bailment, the bailee may do so if the terms ofbatlm ent so provide.
/ 6 Lawo::;;;•:;;;~~;;;~;;:;;;;~D
11

of pa wn ee an d pa wn or are alm ost sim.

PAWNOR

ila r to those of bailee and ba1.1or B

• ill
Th e rig hts an d du tie s ed a spe
.
cia l me nti on .
• h
the ng ts of the pa wn ee an d pa wn or ne

Ri gh ts of Pawnee are paid H

e pa wn ee ma y ret ain the goods ple dg ed until his dues
1. Ri gh t of retainer. Th t of the debt or the performa~
ce of the pro~i~,/
no t on ly for the pa ym en birn .'
ma y retain them an d ( b) all ne cessary expenses mcurred by
bu t for (a) the interest du e on the de bt, 173). He c ~
ssi on or for the pre ser va tio n of the go od s ple dg ed (Sec.
res pe ct of the posse ov er the go od s.
an,
cu lar lie n
however, exercise on ly a parti to the sa
for su bs eq ue nt ad va nc es. When the pa wn ee lends money
Right of retainer ainer over the plede:
2.
the da te of the ple dg e, it is presumed that the right of ret onJy b; a
pa wn or after als o. Th is presumption ca n be rebutted
ue nt ad va nc es
goods extends to subseq
174).
contract to the contrary (Sec. titled to receive from the paw
nor
en ses . Th e pa wn ee is en
3. Right to extraordinary exp him for the preservation of the goo
ds pledged
nse s inc urr ed by
extraordinary expe no rig ht to ret ain the goods; he can only sue to
s, he has
(Sec. 175). Fo r such expense
recover them. When the pawnor hai
st tru e ow ne r, wh en the pawnor's title Is defective. ., by fraud
4. Right again ed by him un de r a voidable contract (i.e
the go od s ple dg
obtained possession of co ntract has no t been rescinde
d at the time oflhe
, co erc ion , etc .) bu t the h and
undue influence e to the go od s,-provided he acts in good fait
es a go od titl
pledge, the pa wn ee acquir
s defect of title (Sec. 178-A).
without notice of the pa wn or' to
wn or ma ke s de fau lt (Se c. 176). W he re the pawnor fails
5. Pawnee's rights where pa rights:
eem his ple dg e, the pa wn ee can exercise the following the
red
st the pa wn or up on the de bt or promise and may retain
(a) He ma y file a sui t again
security.
goods pledged as a collateral sonable notice oftbe
y sel l the go od s ple dg ed after giving the pa wn or a rea are nol
(b) He ma
hts , wh ile the rig hts to ret ain or sell the pawned goods
sale. Of these two rig nee ma~ ~u;
~g hts to ~ue an d sel l are concurrent rights, i.e., the paw
concu.n:ent, the as co nc urr en t security or sell them after nd10givtno
am the go od s 5
and at the same time ret [H ari da s Mu nd ra v. Na tio na l & Gri J
the pa wn or
reasonable notice of the sale to
Ca l. 13 2].
Ba nk Ltd., A.LR. (1963) goods by
m the pa wn or an y de fic ien cy arising on the sale of the 0fthe
(c) He can recover fro the surplus, if any, realised on
the sale
B h
him. ut e sha ll ha ve to ha nd ov er
goods to the pawnor.

Ri gh ts of Pa wnor • rere54
d 111
nt ofl oa n an
t to getback goods. o n the performance of pro mi se or
rep ay me
I• . gh
Ri
dg ed .
to ge t back the goods ple
1f any, the pawnor is entitled ym en t of the de~~=
2• eem de bt. 9u ite oft en a time is stipulated for the pa the pa iflle,
Right to red the ple dg e is made. In su ch a case if
mi se, for wh ich
performance of the pro or pe rformance of the pro mi se at
the stipulated t
to pa ym en t of the de bt
makes default
 Bailment and Pledge 11 207

he may still redeem the goods pledged at any subsequent time before the actual sale ~f
them, but he must, in that case, pay, in addition, any expenses which have arisen from his
default (Sec. 177).
3. Preservation and maintenance of the goods. The pawnor has a right to see that the
pawnee, like bailee, preserves the goods pledged and properly maintains them.
4. Rights of an ordinary debtor. The pawnor has, in addition to the above rights, the rights of
an ordinary debtor which are conferred on him by various statutes meant for the protection
of debtors.