Section 173 - Pawnee's Right of Retainer
Section 173 explains the extent to which a pawnee may retain goods delivered as security under a pledge. It should be read with Section 172, which defines a pledge, pawnor and pawnee, and with Sections 174 to 177 governing related rights and remedies.
Meaning of pledge, pawnor and pawnee
Under Section 172, a pledge is the bailment of goods as security for payment of a debt or performance of a promise. The person who gives the goods as security is the pawnor, and the person who receives them as security is the pawnee.
Text and scope of Section 173
The pawnee may retain the goods pledged, not only for payment of the debt or performance of the promise, but also for interest on the debt and all necessary expenses incurred in respect of possession or preservation of the pledged goods.
What does Section 173 permit?
The provision gives the pawnee a possessory right to keep the pledged goods until the secured obligations covered by the section are satisfied. The right is connected with possession of the pledged goods and does not, by Section 173 alone, amount to an unrestricted right to retain them for every independent liability of the pawnor.
- Debt or promise: the goods may be retained for payment of the secured debt or performance of the promise for which they were pledged.
- Interest: the right of retention extends to interest on the secured debt.
- Necessary expenses: the pawnee may also retain the goods for necessary expenses connected with possession or preservation of the pledged goods.
Difference between Sections 173, 174 and 175
Section 174 deals with retention for a debt or promise other than the one for which the goods were pledged and contains a rule concerning subsequent advances. Section 175 separately addresses extraordinary expenses incurred by the pawnee for preservation of the pledged goods.
Default and redemption
If the pawnor defaults, Section 176 governs the pawnee's remedies, including the statutory conditions relating to sale of the pledged goods. Section 177 deals with the defaulting pawnor's right to redeem before the actual sale, subject to the statutory requirements.
Practical example
If goods are pledged to secure repayment of a loan, the pawnee may ordinarily keep possession of those goods until the secured debt, applicable interest and necessary expenses of possession or preservation covered by Section 173 are paid. Questions involving another debt, later advances, extraordinary expenses, sale after default or redemption require the connected provisions to be considered as well.
Related provisions
For a fuller understanding of pledge law, read Section 172, Section 174, Section 175, Section 176 and Section 177.