Q.What is Pledge ?

A pledge is the delivery of goods as security for a loan or a promise; the borrower (pledger) hands over possession of goods to the lender (pledgee) while keeping ownership, and the lender can sell the goods after notice if the borrower defaults.

In the Tamil Nadu HSC Commerce syllabus, a pledge is an important mode of giving security when a bank lends money against movable goods.

• Meaning: As per Section 172 of the Indian Contract Act, 1872, a pledge is the bailment of goods as security for payment of a debt or performance of a promise.
• Parties: The person who delivers the goods is called the pledger (pawnor), and the person to whom the goods are delivered is the pledgee (pawnee).
• Transfer of possession, not ownership: Only the physical possession of the goods is transferred to the pledgee; the ownership continues to remain with the pledger. …