Duties of Pawnee (Indian Contract Act - Concept of Pledge)

1. BHARATI VIDYAPEETH'S
YASHWANTRAO CHAVAN LAW COLLEGE,
KARAD
Name :- Swaraj Jitendra Kadam
Class :- NLC III (Semester 6)
Roll No. :- 5321
Subject :- Special Contract
Subject Teacher :- Prof. P. A. Jadhav & Prof. S. S. Sathe

2. DUTIES OF PAWNEE
Topic

3. CONTENTS
Who is Pawnee
Duties of Pawnee
Explanation to
Duties of Pawnee

4. Who is the Pawnee
The pawnee , also known as the lender or pawnbroker, is
the person or institution that accepts the pledged item and
provides the loan. The pawnee holds the item as security
until the borrower repays the loan in full , including any
accrued interest. If the borrower defaults on the loan , the
pawnee has the right to sell the pledged item to recover
the loan amount and any outstanding interest. The Bailee
in the case of pledge is called 'Pawnee.

5. Duties of
Pawnee
Duties of Pawnee
Duty to Not Make Unauthorised
Use of the Pledged Goods.
Duty to Return the
Pledged Goods.
Duty to Return any
Accretion to the Goods.
Duty to Take Charge of
the Pledged Goods.
Duty to Not Mix the
Pledged Goods.
Duty of not doing anything
inconsistent with terms of
Contract of pledge.

6. The pawnee is required to take possession and control of the pledged goods.
The pawnee must exercise the same care and prudence in safeguarding the
goods as they would with their belongings.
• Case Law Example :-
In the State Bank of Saurashtra v. Chitranjan Rangnath Raja and Anr., the
bank acted as the pawnee, and the borrower was the pawnor. The pawnor
pledged 5000 tins of peanut oil as security for a loan of Rs. 75000.
Unfortunately, the pledged goods were lost while in the bank’s possession.
The bank filed a case against the pawnor to seek reimbursement of the loan
amount. However, the court dismissed the petition because the bank, as the
pawnee, lost the borrower’s goods, making it unable to recover its payment.
1. Duty to Take Charge of the Pledged Goods :-

7. 2. Duty to Not Make Unauthorised Use of
the Pledged Goods :-
The pawnee is prohibited from using the pledged goods for
any purpose other than what is specified in the pledge contract.
The pawnee has no right to utilise the goods unless authorised
by the pawnor.
• Illustration :-
If A pledges their car to B as security for a loan of Rs. 90000
and B uses the car as a taxi without A’s consent, B would be
held responsible for the unauthorised use of the car.

8. 3. Duty to Return the Pledged Goods :-
The pawnee has a duty to return the pledged goods once
the purpose of the pledge has been fulfilled. The pawnee
has no right to use the goods unless authorised by the
pawnor.
• Illustration :-
If A pledges their watch to B as security for a loan of Rs.
2000, B has to return the watch to A once A repays the
loan amount.

9. 4. Duty to Return any Accretion to the Goods :-
The pawnee must return any additional value that accrues
to the pledged goods. The pawnee must give back to the
pawnor any value increase or additions that occur while
the goods are in their possession.
• Illustration :-
If A pledges their cow to B as security for a loan of Rs.
80000 and the cow gives birth to a calf while in B’s
possession, it is B’s duty to return both the calf and the
cow to A when the loan amount is repaid.

10. 5. Duty to Not Mix the Pledged Goods :-
The pawnee must avoid blending or mixing the pledged
goods with their own goods. The pawnee should keep
the pledged goods separate and distinct from their
personal belongings.
• Illustration :-
If A pledges 100 litres of gasoline to B for a loan of Rs.
13000, it is B’s duty to avoid mixing the gasoline with
their supply.

11. 6. Duty of not doing anything inconsistent
with terms of Contract of pledge :-
Pawnee Should not do anything inconsistent with the
terms of the contract of pledge.

12. CONCLUSION
The pawnee has a duty to take charge of the pledged
goods, not make unauthorised use of them and
return the goods to the pawnor once the purpose of
the pledge is fulfilled. They must also return any
accretion or increase in value to the goods and
refrain from mixing the pledged goods with their
own.

13. Thank you ..!!
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