Chapter IX - Of Bailment
Section 173
Section 173: Retention for debt, interest and expenses
A pawnee may retain pledged goods for the secured obligation, interest and necessary possession or preservation expenses.
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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 pawnee may retain the goods pledged, not only for payment of the debt or the performance of the promise, but for the interest of the debt, and all necessary expenses incurred by him in respect of the possession or for the preservation of the goods pledged.
Rule and business relevance
The right extends beyond the principal debt to the specified interest and necessary expenses concerning the pledged goods.
Limits and related provisions
Distinguish these necessary expenses from extraordinary preservation expenses under section 175 and unrelated debts under section 174. Do not inflate retention amounts without records.
Hypothetical business example
Hypothetical example: A lender incurs necessary storage costs for pledged stock. It separates those documented costs and interest from unrelated account charges.
Practical decision flow
Identify the secured debt or promise.
Calculate interest and necessary possession or preservation expenses.
Keep records supporting each retained amount.
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 secured debt or promise.
- Calculate interest and necessary possession or preservation expenses.
- Keep records supporting each retained amount.
Avoid
- Distinguish these necessary expenses from extraordinary preservation expenses under section 175 and unrelated debts under section 174. Do not inflate retention amounts without records.
Glossary
- Retainer
- The right to hold the pledged goods for the stated amounts.
- Necessary preservation expense
- A necessary cost concerning preservation of the pledged goods.
Frequently asked questions
Is retention limited to principal alone?
No. Interest and the specified necessary expenses are included.
Are all unrelated charges automatically included?
No. The statutory categories and other provisions must be checked.
Where are extraordinary expenses addressed?
Section 175.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026