A pledge is a special kind of bailment; Bailment of goods as a security for payment of debts

or performance of promise is called pledge (Section 172, Indian Contract Act 1872). The
bailor or the one giving the goods is referred to as the ‘pawnor’ and the individual receiving
the goods is known as the ‘pawnee’. A bailment, on the other hand is a special contract
Wider term-Purpose of Pledge
Special Property in goods
S. 172: ‘Pledge’, ‘pawnor’ and ‘pawnee’ defined.—The bailment of goods as security for
payment of a debt or performance of a promise is called ‘pledge’. The bailor is in this case
called the ‘pawnor’. The bailee is called ‘pawnee’. —The bailment of goods as security for
payment of a debt or performance of a promise is called ‘pledge’. The bailor is in this case
called the ‘pawnor’. The bailee is called ‘pawnee’.
Difference between Pledge and Bailment
Basis of Comparison
Bailment
Pledge
Meaning & Definition
Transfer of possession for general service or tasks
Transfer of possession for obtaining a debt or performance of contract.
Defined Under
Section 148, Indian Contract Act
Section 172, Indian Contract Act
Purpose
for service, repair, task, promise
for getting loans, performance of contract
Example
Mr X delivers his car to Mr Y for repairing.
Mr A pledge Gold to ICICI Bank to obtain a Gold Loan.
Parties
Bailee and Bailor
Pledgee/Pawnee and Pledgor/Pawnor
Rights to use the Property
YES (With permission of Bailor)
NO
Lien on the property
Can exercise a lien on property only for service and labour charges
Can exercise a lien on property even for nonpayment of interest.
Rights of Bailee/pledgee
Cannot sell the goods
Can sell the goods if the borrower defaults.

Essentials:
Delivery of Possession Pledge is like a bailment and it also involves the delivery of goods
from the pawnor to Pawnee. Delivery of goods also results in delivery of possession. For
example, Delivery includes transferring of a document to the bank for taking a loan. This
transaction will involve the delivery of goods. According to Section 157, if mixed without the
consent of the bailor, and if the mixture is beyond separation, the bailee is required to
compensate the bailor for the loss of the goods.

By way of Security The purpose for which goods are bailed is that bailed goods should serve
as security for the payment of debt or performance of a price. When goods are pledged, the
Pawnee becomes a secured creditor.

Upon a contract