Section 183 The Indian Contract Act, 1872
Section 183 – The Indian Contract Act, 1872
📜 Title: "Pledgee's right to sell"
Text of Section 183:
"Where goods are pledged, the pledgee may retain them so long as he may lawfully retain them, and, on default by the pledgor, may sell the goods, if such a power of sale is given to him by law or by the contract."
🔍 Explanation of Section 183:
Section 183 deals with the rights of a pledgee (the person holding goods as security in a pledge contract).
🧠 Key Points:
Right to Retain:
The pledgee can keep the pledged goods as long as the law or contract allows.
Right to Sell:
If the pledgor (the person who gave the pledge) defaults (usually by not paying or fulfilling the obligation), the pledgee may sell the goods.
But this right to sell depends on whether the power of sale is granted by law or by the contract.
Power of Sale:
Must be explicitly or implicitly given.
Without this power, the pledgee cannot sell the goods.
⚖️ Illustration:
A pledges his watch to B as security for a loan.
A fails to repay the loan by the due date.
If the contract or law grants power of sale, B can sell the watch to recover the loan amount.
🧑⚖️ Practical Notes:
The pledgee’s right to sell helps protect their interest when the pledgor defaults.
The sale must be reasonable and in good faith.
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