Difference Between Bailment and Pledge
Difference Between Bailment and Pledge
1. Meaning of Bailment
Bailment is a contract where the bailor delivers goods or personal property to the bailee for some purpose under the condition that the goods will be returned or otherwise disposed of according to the bailor's instructions.
The bailee has possession but not ownership of the goods.
It is generally for safekeeping, transportation, or some specific service.
Example:
Giving your car to a valet for parking.
Depositing clothes at a dry cleaner.
Legal Provision:
Defined under Sections 148 to 171 of the Indian Contract Act, 1872.
2. Meaning of Pledge
A Pledge is a special kind of bailment where goods or personal property are delivered by the pawnor (pledgor) to the pawnee (pledgee) as security for a debt or obligation.
The pawnee receives possession to ensure repayment but does not gain ownership.
If the debt is not paid, the pawnee has the right to sell the goods.
Example:
Pledging gold jewelry with a lender against a loan.
Legal Provision:
Also governed under Sections 172 to 181 of the Indian Contract Act, 1872.
3. Key Differences Between Bailment and Pledge
| Aspect | Bailment | Pledge |
|---|---|---|
| Definition | Delivery of goods for a purpose with return or disposal according to instructions | Delivery of goods as security for repayment of debt |
| Purpose | Various (safekeeping, transport, repair) | Security for a debt or obligation |
| Parties | Bailor and Bailee | Pawnor (pledgor) and Pawnee (pledgee) |
| Possession | Bailee has possession but no ownership | Pawnee has possession but no ownership |
| Right to Sell | Bailee has no right to sell goods | Pawnee can sell goods if debt is unpaid |
| Type of Contract | Contract of bailment | Contract of pledge (a specific type of bailment) |
| Obligation of Bailee/Pawnee | Return goods or dispose as per bailor's instructions | Return goods after debt repayment or sell if unpaid |
| Examples | Parking, safekeeping, repair | Pledging gold for a loan |
4. Illustrative Case Laws
Bailment:
Kamlapat v. Union of India (AIR 1961 SC 1405)
This case emphasized the duties of a bailee and the standard of care required in handling goods.
Lala Ram Ratan Dass v. Mirza Abdul Hassan (AIR 1940 Lah 521)
It clarified the rights of the bailor to demand return of goods and the bailee's liability for loss.
Pledge:
Ramchandra v. Tukaram (AIR 1969 SC 263)
This case highlighted the right of the pawnee to retain possession until the debt is repaid and their right to sell the pledged goods if the debt remains unpaid.
Juggilal Kamlapat v. Union of India (AIR 1963 SC 1405)
Discussed the difference between pledge and bailment and stressed the security interest inherent in a pledge.
5. Summary Table
| Aspect | Bailment | Pledge |
|---|---|---|
| Purpose | Safekeeping or specific purpose | Security for repayment of debt |
| Right to Sell | No | Yes, if debt is unpaid |
| Parties | Bailor and Bailee | Pawnor and Pawnee |
| Governing Sections | Sections 148-171, Indian Contract Act | Sections 172-181, Indian Contract Act |
| Possession | Temporary with bailee | Temporary with pawnee |
| Ownership | Remains with bailor | Remains with pawnor |
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