CAIIB · BRBL

LAW RELATING TO SECURITIES AND MODES OF CHARGE II PART 2 AND PLEDGE

Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Banking Regulations and Business Laws — CAIIB.

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What is a pledge in the context of banking law?

A pledge is a bailment of goods as security for payment of a debt or performance of a promise, governed by Sections 172–179 of the Indian Contract Act, 1872.

What is the legal provision governing pledge under Indian law?

Pledge is governed by Sections 172-179 of the Indian Contract Act, 1872.

Who is called the 'ppledgor' and who is called the 'pledgee' in a pledge transaction?

The person who delivers goods as security is called the pledgor (borrower), and the person to whom the goods are delivered is called the pledgee (lender/bank).

What is the pledgee's right to retain goods called?

The pledgee's right to retain goods is called the right of retainer.

What are the essential conditions for a valid pledge?

For a valid pledge, there must be actual or constructive delivery of goods, the goods must be capable of being delivered, and there must be a contract between pledgor and pledgee for repayment of debt or performance of a promise.

Can a mercantile agent validly pledge goods on behalf of the owner?

Yes, a mercantile agent can pledge goods if acting within the scope of authority.

Can a pledge be created without physical delivery of goods to the pledgee?

Yes, constructive delivery is sufficient; symbolic delivery such as delivery of keys to a godown or a document of title (warehouse receipt) constitutes valid delivery for a pledge.

What is symbolic delivery in the context of pledge?

Symbolic delivery means handing over keys or documents representing the pledged goods.

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