What is pledge?

What is a pledge?

 Advocate Shyam did not expect this sudden and forced entry of the couple. He looked at them for a minute and asked them to take their seat. Both the faces showed various feelings mixed with anger and fear. The lady might have been crying and was in a mood to burst out.

“Tell me ...what happened?” asked, Lawyer Mony in soothing tone.

“Sir, we got a loan from the ‘Triple one Finance’. We gave our Gold Ornaments as security. This happened a year ago. Yesterday they called us and told that all the jewels were auctioned to adjust the loan. The jewels are worth nine lac rupees. That was given to me as a gift-sridhan- by my father. I want my jewels back” As you guessed this was from our lady.

 Mony further enquired “Have you got your notice from the finance?”

“No. They told me that they had issued a notice and it was in the news paper. But, I searched my name. It was not there too. I got inside information that mine was wrongly sold”. The man replied in all his suppressed anger.

Mony in a confident and assured tone explained “Don’t worry. You will get back everything. When we give something...that is physically deliver the security to the Pawnee (one who takes the article and gives money as loan), the contract is called PLEDGE. The Financier has to take care of it with utmost care as if it is his own article. If you don’t pay, he can sell or auction only after due notice with reasonable time to pay back the money due. Here, there is failure on the part of the company. We can sue (go to court) them.”

So, Remember bailment is just delivering some thing for safe keeping or any other purpose. Pledge is also a type of bailment; but, the purpose is security and getting a loan.

Both bailee and Pawnee (the takers of the goods) have to take care of the articles given to them and return them after the purpose is over.

The pawnor (who gives the gold or any goods) cannot suppress facts about damages in the goods and cheat them- for example, if he cheats them with covering gold or spurious gold, he has to face the law and then compensate the financier for cheating.