Rights and Duties of Pawnor and Pawnee
Rights and Duties of Pawnor and Pawnee under Indian Law
1. Introduction to Pawnor and Pawnee
A pawnor (also spelled pawner) is a person who delivers goods or personal property as security for a loan or debt.
A pawnee is the person who accepts the goods as security and holds them until the loan is repaid.
The relationship between pawnor and pawnee is governed primarily by the Transfer of Property Act, 1882, under the law of pledge (Sections 172 to 181).
2. Definition of Pledge (Pawning)
Section 172, Transfer of Property Act defines pledge as the delivery of goods as security for repayment of a debt or performance of a promise.
The pawnor delivers possession (not ownership) of goods to the pawnee.
3. Rights and Duties of Pawnor
Rights of Pawnor
Right to Redeem the Goods
The pawnor has the right to redeem the goods by repaying the debt or fulfilling the promise within the agreed time.
Right to Claim Return of Goods
Upon repayment, the pawnor is entitled to recover the goods from the pawnee.
Right to Expect Reasonable Care
Pawnor can expect the pawnee to take reasonable care of the goods.
Duties of Pawnor
Duty to Repay or Perform the Promise
The pawnor must repay the loan or fulfill the promise as per the contract.
Duty to Disclose Encumbrances
The pawnor must disclose any prior charges or encumbrances on the goods to the pawnee.
Duty to Deliver Possession
The pawnor must deliver possession (not ownership) of the goods to the pawnee.
4. Rights and Duties of Pawnee
Rights of Pawnee
Right to Retain Possession Until Debt is Repaid
The pawnee can retain possession of goods until the debt is repaid or promise performed.
Right of Sale on Default
If the pawnor defaults, the pawnee may sell the goods to recover the debt, subject to legal conditions (usually after notice).
Right to Sue for Debt
The pawnee can sue the pawnor for the debt if the pledge is not redeemed.
Right to Compensation for Expenses
The pawnee may recover reasonable expenses incurred in taking care of the goods.
Duties of Pawnee
Duty to Take Reasonable Care of Goods
The pawnee must take reasonable care and custody of the pledged goods.
Duty to Return Goods on Repayment
Once the debt is repaid or promise performed, the pawnee must return the goods to the pawnor.
Duty to Give Notice Before Sale
Before selling the goods, the pawnee must give reasonable notice to the pawnor (if the contract requires).
5. Relevant Case Law
a) Maharaja Singh v. Raja Bajrang Bahadur (1937)
Held: The pawnee has the right to retain possession until the debt is repaid, but cannot sell the goods without due notice to the pawnor.
Established the principle of reasonable notice before sale.
b) Kanhaya Lal v. Lala Hiralal (1923)
Held: Pawnee must take reasonable care of the pledged goods.
If goods are lost or damaged due to negligence, the pawnee is liable.
c) Amar Nath v. Union of India (1964)
Held: Pawnor is liable to repay the debt and disclose encumbrances on goods.
Non-disclosure can make the pledge voidable.
d) K.S. Verma v. Union of India (1971)
The Court emphasized the right of the pawnee to sue for the debt and recover it from the pawnor.
6. Summary Table: Rights and Duties
| Party | Rights | Duties |
|---|---|---|
| Pawnor | Redeem goods; claim return; expect reasonable care | Repay debt; disclose encumbrances; deliver possession |
| Pawnee | Retain possession until repayment; sell on default; sue for debt; claim expenses | Take reasonable care of goods; return goods on repayment; give notice before sale |
7. Conclusion
The law of pledge balances the interests of both pawnor and pawnee.
Pawnor’s right to redeem protects their ownership interest.
Pawnee’s right to retain and sell ensures security for the loan.
Both parties have reciprocal duties to maintain fairness and protect goods.
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