Under what circumstances a non-owner can make a valid pledge | Pledge where pawner has a limited interest | Default in payment of the debt by Pawner | ICA 1872

(A) Under what circumstances and to what extent can a person who is not a true owner make a valid pledge to goods?

(B) Is a pledge made by a person who has only a limited interest in the goods valid?

(C) Under what circumstance can defaulting Pawner redeem the goods pledged?

Ans-

(A)- Normally, the pledge is made by the true owner. A person who owns the property of others cannot make a valid promise of it, except in the following cases:

(1) By Commercial/Mercantile Agent (Sec 178)- 

When the pledge is made by the commercial agent who is in possession of the goods or title document with the consent of the owner and the pledge is made by the commercial agent while acting in the ordinary course of business of the commercial agent, and the pawnee acts in good faith and without prior notice that the pawner has no authority to promise. The authorities of Section 178 do not have commercial agents and, therefore, a promise or pledge made by a simple servant of the wife is not valid even in possession of property with the consent of the owner.

(2)By a person in possession under voidable contract (Section 178A)- 

A pledge or promise made by a person who has obtained property by fraud, misrepresentation, influence and coercion would be binding on the true owner, if the promise is made before the contract is terminated and the beneficiary acts in good faith without prior notice of the owner's title defects. But in the case of the goods obtained by theft, there is no consent at all and, therefore, a thief does not have any title, even voidable, that he can give to a purchase or a beneficiary in good faith and without prior notice from the Stole.

(B) Pledge where pawner has a limited interest (Section 179) 

Pursuant to section 179 of the Contract Law, a pledge made by a person who has a limited interest in property is valid to the extent of that interest.

(C) Default in payment of the debt by Pawner

If the pawner fails to pay the debt or fulfill the promise at the stipulated time and the time is set for the payment of the debt or for the fulfillment of the promise, he may exchange the promised goods at any later time before of their actual sale; but it must, in that case, also pay any expenses that may have arisen from its non-compliance.

If the proceeds from such a sale are less than the amount owed with respect to the debt or promise, the lender must still pay the balance. If the proceeds from the sale are greater than the amount owed, the beneficiary must pay the surplus to the lender.