Chapter IX - Of Bailment
Section 172
Section 172: Pledge and its parties
A pledge is bailment of goods as security for a debt or performance of a promise.
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This article is for general information. Refer to the Indian Contract Act, 1872 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
The bailment of goods as security for payment of a debt or performance of a promise is called “pledge”. The bailor is in this case called the “pawnor”. The bailee is called the “pawnee”.
Rule and business relevance
The bailor is called the pawnor and the bailee the pawnee. The security purpose distinguishes a pledge from ordinary custody for repair or storage.
Limits and related provisions
A pledge is not automatically an outright transfer of ownership. Identify possession, the secured obligation and the applicable enforcement rules.
Hypothetical business example
Hypothetical example: A trader delivers goods to secure repayment of a business debt. The parties should identify what debt the pledge secures and how release or enforcement works.
Practical decision flow
Identify the goods and bailment.
Record the secured debt or promise.
Identify the pawnor and pawnee and their agreed terms.
Check the applicable legal framework
This guide explains the central provision. Applicable State amendments, the agreement, transaction date and other governing laws can affect its application. Check the current legal framework before relying on it for a commercial decision.
Practical checklist
Do
- Identify the goods and bailment.
- Record the secured debt or promise.
- Identify the pawnor and pawnee and their agreed terms.
Avoid
- A pledge is not automatically an outright transfer of ownership. Identify possession, the secured obligation and the applicable enforcement rules.
Glossary
- Pawnor
- The bailor giving goods as pledge.
- Pawnee
- The bailee holding the pledged goods as security.
Frequently asked questions
Can a pledge secure a promise as well as a debt?
Yes. Both are stated in the definition.
Is every storage arrangement a pledge?
No. The bailment must have the specified security purpose.
Does default automatically transfer ownership?
The definition does not say that; remedies and redemption are addressed separately.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026