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Chapter IX - Of Bailment

Section 178A

Section 178A: Pledge under an unrescinded voidable contract

A pawnee can acquire good title where the pawnor possesses goods under a still-unrescinded voidable contract and the pawnee meets the good-faith conditions.

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Need advice on Section 178A?

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.

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Statutory text

Bare law

When the pawnor has obtained possession of the goods pledged by him under a contract voidable under section 19 or section 19A, but the contract has not been rescinded at the time of the pledge, the pawnee acquires a good title to the goods, provided he acts in good faith and without notice of the pawnor’s defect of title.

Rule and business relevance

The underlying contract must be voidable under section 19 or 19A and not rescinded at pledge time. The pawnee must act in good faith without notice of the pawnor’s title defect.

Limits and related provisions

Do not extend the rule automatically to every void transaction or a contract already rescinded. Identify the legal category and timeline.

Hypothetical business example

Hypothetical example: Goods obtained under a section 19 voidable contract are pledged before rescission. The pawnee’s good faith and absence of notice are separately investigated.

Practical decision flow

Identify why the possession contract is voidable under section 19 or 19A.

Check whether it had been rescinded when the pledge was made.

Document the pawnee’s good faith and notice position.

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 why the possession contract is voidable under section 19 or 19A.
  • Check whether it had been rescinded when the pledge was made.
  • Document the pawnee’s good faith and notice position.

Avoid

  • Do not extend the rule automatically to every void transaction or a contract already rescinded. Identify the legal category and timeline.

Glossary

Voidable contract
A contract falling within the specified sections and capable of rescission by the entitled party.
Defect of title
The problem with the pawnor’s title of which the pawnee must lack notice.

Frequently asked questions

Does the rule apply after rescission?

The stated condition is that the contract has not been rescinded at pledge time.

Are sections 19 and 19A specifically named?

Yes.

Is the pawnee’s good faith enough without the other conditions?

No. The underlying contract and timing conditions also apply.

Need help applying this provision to your situation?

Contact Bizeneed

Last updated 10 October 2026