Section 177 of the Indian Contract Act, 1872 - Defaulting Pawnor's Right to Redeem
Section 177 protects the right of a pawnor who has defaulted to recover pledged goods by redeeming them at any time before their actual sale. The provision works with Sections 172 to 176, which regulate pledges and the rights of the pawnor and pawnee.
Section 177, Indian Contract Act, 1872
Right of a defaulting pawnor to redeem pledged goods
Text of Section 177
If a time is stipulated for the payment of the debt, or performance of the promise, for which the pledge is made, and the pawnor makes default in payment of the debt or performance of the promise at the stipulated time, he may redeem the goods pledged at any subsequent time before the actual sale of them; but he must, in that case, pay, in addition, any expenses which have arisen from his default.
Meaning of Section 177
A pawnor is the person who delivers goods as security, while the pawnee is the person to whom the goods are delivered as security. These expressions arise from the statutory definition of a pledge in Section 172 of the Indian Contract Act, 1872.
Section 177 means that expiry of the agreed payment or performance date does not, by itself, extinguish the pawnor's right to redeem the pledged goods. Even after default, redemption remains possible until the pledged goods are actually sold. To redeem after default, the pawnor must satisfy the secured obligation and also pay expenses that have arisen because of the default.
When can the pawnor redeem the pledged goods?
The statutory cut-off is the actual sale of the pledged goods. The Supreme Court has explained that the right under Section 177 can be exercised until the date of actual sale. Section 176, which deals with the pawnee's rights on default, requires reasonable notice of an intended sale and is closely connected with the opportunity to exercise the right of redemption.
Relationship between Sections 176 and 177
Section 176 permits the pawnee, on default, to sue upon the debt or promise while retaining the pledged goods as collateral security, or to sell the pledged goods after giving the pawnor reasonable notice of the sale. Section 177 preserves the corresponding right of the pawnor to redeem before the actual sale.
Accordingly, default does not automatically transfer absolute ownership of the pledged goods to the pawnee. The statutory scheme continues to recognize the pawnor's interest until a legally effective actual sale takes place, subject to payment of the amount due and applicable default-related expenses.
Essential requirements for redemption after default
For Section 177 to operate, there must be a pledge securing payment of a debt or performance of a promise, a stipulated time for that payment or performance, default by the pawnor, and an attempt to redeem before the actual sale. Where redemption is sought after default, the pawnor must also bear expenses arising from that default.
Example
A pledges goods to B as security for repayment of a debt on a fixed date. A fails to pay on that date. If B has not yet actually sold the pledged goods, A may still redeem them by paying the amount due together with expenses arising from the default. Once an actual sale has taken place, the statutory right under Section 177 is no longer exercisable against the goods in the same manner.
Official legal resources
For the current statutory text, see the India Code portal. For authoritative Supreme Court judgments, see the Supreme Court of India and its judgments search facilities.