Lallan Prasad v. Rahmat Ali (AIR 1967 SC 1322)

Money was lent. Goods (aero scraps) were to be pledged. The fight was: were the goods delivered so a pledge arose? The Court said the facts show the creditor had control and custody. So, a pledge existed. But a creditor who denies the pledge cannot both keep the goods and still get a decree on the note, unless he can re-deliver the goods on payment.

• Was there delivery and possession with the creditor so that the agreement became a pledge?
• Could the creditor sue on the promissory note while saying no pledge occurred?

1. Pledge proved: Delivery and control were with the creditor; conduct (watchmen, permissions, notices) showed custody.
2. Suing while denying pledge: A pawnee cannot both retain goods and also get a decree on the note if he is not ready and able to re-deliver on payment.
3. Section 176 applied: Remedies exist, but they depend on the pawnee’s lawful handling—sue/retain or sell after notice; redemption remains till sale.

Where the facts prove delivery and custody, a valid pledge exists. A pawnee who sues on the debt must be able to re-deliver the pledged goods on payment; otherwise, he cannot obtain a decree. Section 176 rights operate within this framework.

• Clarifies that conduct and control can prove delivery for a pledge.
• Shows the conditions for a pawnee’s suit and sale.
• Guides drafting: record possession, notice, and redemption steps clearly.

Mnemonic: “Hold–Right–Return”

1. Hold: Delivery gives the pawnee possession.
2. Right: Section 176 gives sue/retain or sell after notice.
3. Return: To sue, be ready to return goods on payment.

Pledge

Bailment of goods as security for a debt or promise.

Pawnee

Creditor who holds goods as security.

Pawnor

Debtor who gives goods in pledge.