THE KARNATAKA PAWNBROKERS ACT, 1961

 
 

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 THE KARNATAKA PAWNBROKERS ACT, 1961  

ARRANGEMENT OF SECTIONS  

Statement of Object and Reasons  

Sections :  

1. Short title, extent and commencement.  

2. Definitions.  

3. Pawn-broker to obtain licence.  

4. Grant and renewal of licences.  

4A. Conditions of licence.  

4B. Forfeiture of security.  

5. Pawnbrokers to exhibit their names over shops, etc.  

6. Interest and charges allowed to pawnbrokers.  

7. Pawn-ticket to be given to pawner.  

8. Person producing pawn-ticket presumed to be entitled to redeem the pledge.  

9. Protection of owners and of pawners not having pawn-tickets.  

10. Pawnbrokers to keep books, give receipts, etc.  

11. Redemption of pledge.  

12. Sale of pledge and inspection of sale book.  

13. Liability of pawnbroker in case of fire.  

14. Compensation for depreciation of pledge.  

15. Pawn-broker advancing smaller amount or receiving higher interest than that 

specified in accounts to be punishable.  

16. Certain other acts of pawn-brokers to be punishable.  

16A. Pawnbroker to redeem pledges.  

17. Certain acts of pawners to be punishable.  



 
 

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18. General penalty for contravention of Act, etc.  

18A. Settlement of disputes by Ombudsperson 

18B. Grievances redressal forum 

18C. Authorized Officer 

19. Jurisdiction to try offences.  

19A. Offences by Hindu undivided Family, Companies etc.  

20. Certain offence to be cognizable.  

21. Contract of pawn to be void in certain cases and not to be void in certain other 

cases.  

22. Power to make rules.  

23. Savings.  

24. Repeal.  

 

STATEMENT OF OBJECTS AND REASONS 

I  

Act 13 of 1962.—The Madras Pawnbrokers Act, 1943 is in force in the Madras 

Area, Pawnbrokers in other areas are regulated by the existing Money-Lenders Acts 

in force in the respective areas. After a careful consideration, it was, however, 

noticed that provisions to be made for pawnbrokers are not the same as those for 

money-lenders and hence, it has been considered desirable to enact a separate 

legislation for regulation and control of pawnbrokers in this State.  

Hence this Bill.  

(Obtained from L.C. No. 3221 dated 21st March, 1959. Published in PART IV-2-A 

at page 141.)  

II  

Amending Act 29 of 1979.—The Karnataka Pawnbrokers Act 1961, which was 

brought into force from 29th day of March, 1962 has revealed in the course of 



 
 

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working that certain Pawnbrokers are in the habit of pledging with Commercial Banks 

the articles pledged with them for securing monetary accommodation and that the 

money so taken is being utilised by them in their money lending transactions for 

which high rate of interest are being charged. It has become, therefore necessary to 

amend the relevant provision of the Act, so that the said practice adopted by the 

Pawnbrokers could be brought within the purview of the provisions of the Act.  

Hence the Bill.  

(Published in the Karnataka Gazette (Extraordinary) Part IV-2A, dated 3rd 

February 1979 at page. 5.)  

III  

Amending Act 40 of 1985.—Persons who obtain credit from the licensed Pawn 

Brokers, pledge costly gold ornaments and other articles. It is considered necessary 

to insist security deposit from such licensed Pawn Brokers to safeguard the interests 

of the Pawners.  

In order to meet the increasing cost of administration of the Act, it is also proposed 

to increase the license fee.  

As the matter was very urgent, the Karnataka Pawn Brokers (Amendment 

Ordinance, 1985 (Karnataka Ordinance No. 12 of 1985) was issued.  

This Bill seeks to replace the said Ordinance.  

(Published in the Karnataka Gazette (Extraordinary) Part IV-2A, dated 25th July 

1985 as No. 398 at page 6.)  

IV  

Amending Act 9 of 1998.—It is considered necessary to amend the Karnataka 

pawn Brokers Act, 1961 (Karnataka Act 13 of 1962), for the following reasons, 

namely:—  

(i) To enhance the duration of licence from one year to five years;  

(ii) To provide for calculating the amount of security deposit on the amounts invested 

and not on the amounts lent.  



 
 

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(iii) Since, the Karnataka High Court in writ petition No. 8912/85 and other connected 

matters directed the Government to pay interest on security deposit, as there is 

no specific provision prohibiting payment of interest, appropriate provisions are 

made to remove the lacuna retrospectively from 31st May 1985 and to validate 

the section.  

Hence the Bill.  

(Published in the Karnataka Gazette (Extraordinary) Part IV-2A, dated 2nd 

September 1997 as No. 990 at page. 4.)  

V 

Amending Act 11 of 2016.- It is considered necessary to amend the 

Karnataka Pawn Brokers Act, 1961  (Karnataka Act No 13 of 1962) to,- 

(i)   simplify the licensing process for Pawn Broking and to avoid dual license.  

(ii)  revise the minimum value for auction of pledged pawn or articles 

according to present money value. 

 Hence, the Bill. 

  [L.A. Bill No.06 of 2016, File No. Samvyashae 10 Shasana 2016] 

[entry 30 of List II of the Seventh Schedule to the Constitution of India.] 

VI 

Amendment Act 18 of 2025:- It is considered necessary to amend the 

Karnataka Pawn Brokers Act, 1961 (Karnataka Act No 13 of 1962) to protect 

economically vulnerable groups and individuals from the undue hardship usurious 

interests rates and coercive means of recovery by licensed money lender and 

unlicensed money lender. 

 Hence, the Bill 

[L.A. Bill No. 02 of 2025, File No. SAMVYASHAE 07 SHASANA 2025]  

[Entry 30 of List II of the Seventh Schedule to the Constitution of India.]   

[Published in Karnataka Gazette Extra-ordinary No.190 in part-IVA  

dated: 25.03.2025] 

 



 
 

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1[KARNATAKA ACT]1 No. 13 OF 1962  

(First published in the 1[Karnataka Gazette]1 on the Twenty-ninth day of March, 

1962.)  

THE 1[KARNATAKA]1 PAWNBROKERS ACT, 1961.  

(Received the assent of the President on the Eighth day of March, 1962)  

(As amended by Karnataka Acts 29 of 1979, 40 of 1985, 9 of 1998, 11 of 2016 and 

18 of 2025)  

An Act to regulate and control the business of Pawnbrokers in the 1[State of 

Karnataka]1.  

WHEREAS it is expedient to make provision for the regulation and control of the 

business of pawnbrokers in the 1[State of Karnataka]1;  

BE it enacted by the 1[Karnataka State]1 Legislature in the Twelfth Year of the 

Republic of India as follows:—  

1. Adapted by the Karnataka Adaptations of Laws Order 1973 w.e.f. 1.11.1973  

1. Short title, extent and commencement.—(1) This Act may be called the 

1[Karnataka]1 Pawnbrokers Act, 1961.  

(2) It extends to the whole of the 1[State of Karnataka]1.  

(3) It shall come into force,-  

(a) at once in the 1[Mangalore and Kollegal Area]1; and  

(b) in such other area of the State on such 2[date]2 as the State Government may by 

notification specify.  

1. Adapted by the Karnataka Adaptations of Laws Order 1973 w.e.f. 1.11.1973  

2. Act came into force w.e.f 1.10.1966 Vide notification No. DPC 271 CCC 66 dt. 26.8.1966  

2. Definitions.—In this Act, unless the context otherwise requires,—  

(1) “company” means a company as defined in the Companies Act, 1956 (Central 

Act 1 of 1956);  



 
 

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(2) “co-operative society” means a society registered or deemed to be registered 

under the 1[Karnataka]1 Co-operative Societies Act, 1959 1[Karnataka]1 Act 11 of 

1959)  

1. Adapted by the Karnataka Adaptations of Laws Order 1973 w.e.f. 1.11.1973  

(3) “interest” includes any amount, by whatsoever name called, in excess of the 

principal, paid or payable to a pawnbroker in consideration of or otherwise in respect 

of a loan; but does not include any sum lawfully charged in accordance with the 

provisions of this Act by a pawnbroker for or on account of charges;  

(4) “licence” means a licence granted under this Act;  

(5) “loan” means an advance at interest whether of money or in kind and includes 

any transaction which the Court finds in substance to amount to such an advance 

but does not include,-  

(i) a deposit of money or other property in a Government Post Office Savings Bank 

or Government Savings Bank or banking company or in a company or with a co-

operative society;  

1[(ii) an advance made by,—  

(a) a banking company as defined in the Banking Regulation Act, 1949 

(Central Act 10 of 1949); or  

(b) the State Bank of India constituted under the State Bank of India Act, 1955 

(Central Act 23 of 1955); or  

(c) a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) 

Act, 1959 (Central Act 38 of 1959); or  

(d) a corresponding new bank constituted under the Banking Companies 

(Acquisition and Transfer of Undertakings) Act, 1970 (Central Act 5 of 1970); or  

(e) a corresponding new bank constituted under the Banking Companies 

(Acquisition and Transfer of Undertakings) Act, 1980 (Central Act 40 of 1980); or  

(f) a regional rural bank constituted under the Regional Rural Banks Act, 1976 

(Central Act 21 of 1976); or  



 
 

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(g) the National Bank for Agriculture and Rural Development established 

under the National Bank for Agriculture and Rural Development Act, 1981 (Central 

Act 61 of 1981); or  

(h) the Agricultural Finance Corporation Limited, a company incorporated 

under the Indian Companies Act 1956m (Central Act 11 of 1956)  

(i) a Co-operative society registered under the Karnataka Co-operative 

Societies Act, 1959 (Karnataka Act 11 of 1959;]
1 

 

1. Substituted by Act 40 of 1985 w.e.f. 31.5.1985  

(iii) an advance made by Government or by any person authorised by 

Government to make advances on their behalf, or by any local authority;  

(iv) an advance made by any person bona fide carrying on any business not 

having for its primary object the lending of money, if such loan is advanced in the 

regular course of such business; and  

(v) an advance made by a landlord to his tenant, for the purpose of carrying 

on agriculture;  

(6) “notification” means a notification published in the Official Gazette;  

(7) “pawn-broker” means a person who carries on the business of taking goods 

and chattels in pawn for a loan;  

Explanation.—Every person who keeps a shop for the purchase or sale of goods 

or chattels and who purchases goods or chattels and pays or advances thereon any 

sum of money, with or under an agreement or understanding expressed or implied 

that the goods or chattels may be afterwards re-purchased on any terms, is a 

pawnbroker within the meaning of this clause;  

(8) “pawner” means a person delivering an article for pawn to a pawnbroker;  

(9) “pledge” means an article pawned with a pawnbroker;  

(10) “prescribed” means prescribed by rules made under this Act;  

(11) “principal” means in relation to a loan the amount actually lent to the pawner;   

1[(12)“ Year” means the year commencing on the first day of April.]1 
 



 
 

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1. Substituted by Act 9 of 1998 w.e.f. 21.4.1998  

3. Pawn-broker to obtain licence.—No person shall, after the expiry of six 

months from the date on which the provisions of this Act come into force in any area, 

carry on or continue to carry on business as a pawnbroker at any place in such area, 

unless he has obtained a pawn-broker’s licence under this Act 1[and after the 

commencement of the Karnataka Pawn Brokers (Amendment) Act, 1985, except on 

payment of security deposit as provided in section 4A.]1  

1. Inserted by Act 40 of 1985 w.e.f. 31.5.1985  

Explanation 1.—Where a pawnbroker has more than one shop or place of 

business, whether in the same town or village or in different towns and villages he 

shall obtain a separate pawnbroker’s licence in respect of each such shop or place 

of business.  

Explanation 2.—Every pawn-broker’s licence granted under this Act shall be valid 

1[for a term of 2[three years]2, but may be renewed from term to term]1.  

1. Substituted by Act 9 of 1998 w.e.f. 21.4.1998  

2.  Substituted by Act 18 of 2025 w.e.f. 25.03.2025 

 

1[Explanation 3.—Where a licence has been granted in the middle of a year, for 

the purpose of computing the term of licence, the remaining part of the year shall be 

deemed to be a year.]1  

1. Inserted by Act 9 of 1998 w.e.f. 21.4.1998  

4. Grant and renewal of licences.—(1) Every application for the grant or renewal 

of a pawnbroker’s licence shall be in writing and shall be made to the prescribed 

licensing authority.  

(2) The grant or renewal of a licence shall not be refused except on any of the 

following grounds, namely:—  

(a) that the applicant is of bad character;  

Explanation.—If any evidence of bad character is adduced against the applicant, 

he shall be given an opportunity of rebutting such evidence;  



 
 

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(b) that the shop or place at which he intends to carry on the business of a 

pawnbroker or any adjacent house or shop or place, owned or occupied by him, is 

frequented by persons of bad character, or  

(c) 
1[XXX]1 

1.  Omitted by the Act 11 of 2016 w.e.f 26.04.2016 

(3) Any person aggrieved by an order refusing the grant or renewal of a licence 

may, within the prescribed time, appeal to the prescribed authority.  

(4) Every licence shall be granted or renewed in such form and 1[subject to the 

conditions specified in section 4A and such other conditions]1 as may be prescribed.  

1. Substituted by Act 40 of 1985 w.e.f. 31.5.1985  

1[(5) Every application for the grant or renewal of a licence, shall be accompanied 

by a fee at the following rates:—  

(a) if the place at which the business  is to be 

carried on is not more than one. 

2[Rupees five thousand]2 

(b) if the business is to be carried on at more 

than one place.  

2[Rupees five thousand]2 for the principal 

place of business and 2[Rupees two 

thousand five hundred]2 for each of the other 

places.]1 

 

Provided that where an application is made after the expiry of the period 

prescribed by rules in respect of such application, it shall be accompanied 2[by an 

additional license fee at fifty percent of the rate specified above.  However, application 

submitted after expiry of the Licence shall not be entertained]2.  

1. Substituted by Act 9 of 1998 w.e.f. 21.4.1998  

2. Substituted by Act 11 of 2016 w.e.f 26.04.2016. 

 



 
 

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(6) The fee payable under this section shall be paid in the manner prescribed and 

shall not be refunded, notwithstanding the fact that the grant or renewal of the 

licence is refused or the application is withdrawn.  

1[4A. Conditions of licence.—2[(1) Every person making an application for grant 

of a licence under section 4 shall, at the time of making such application, pay 

security deposit as provided under sub-section (2) and in the case of an application 

for renewal of such licence the security deposit shall be paid two months before the 

expiry of such licence.]2 
 

(2) Every licensee specified in column (1) of the Table below shall in the 

prescribed manner deposit in the Government Treasury the amount specified in the 

corresponding entry in column (2) of the said Table by way of security for the due 

observance of the conditions of the licence.  

TABLE  

1 2 

1. A licensee who 2[invests]2 less than one lakh 

rupees in a year. 

Five thousand rupees. 

2. A licensee who 2[invests]2 one lakh rupees and 

above but less than five lakh rupees in a year. 

Ten thousand rupees 

3. A licensee who 2[invests]2 five lakh rupees and 

above but less than ten lakh rupees in a year. 

Twenty five thousand rupees. 

4. A licensee who 2[invests]2 ten lakh rupees and 

above in a year. 

Fifty thousand rupees 

 

 (3) For the purposes of sub-section (2), the amount of security payable by a 

licensee in a year shall be determined on the basis of 2[the amount invested by him 

in the business during the previous year]2 3[and such security deposit shall not carry 

any interest]3  

Provided 5[xxx]5  



 
 

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4[Provided further that in the case of a new licensee or a person who has a licence 

only for a portion of the preceeding year the amount of security shall be determined 

on the basis of a declaration in the prescribed form as to the amount which he is 

likely to invest during the year.]
3

]
1 

 

1. Inserted by Act 40 of 1985 w.e.f. 31.5.1985  

2. Substituted  by Act 9 of 1998 w.e.f. 21.4.1998 

3. Inserted by Act 9 of 1998 w.e.f. 31.5.1985 

4. Inserted by Act 9 of 1998 w.e.f. 21.4.1998  

5. Omitted  by Act 11 of 2016  w.e.f. 26.4.2016  

1

[4B. Forfeiture of security.—(1) The licensing authority may, at any time, by 

order in writing, forfeit to the Government the whole or any portion of the security 

deposit paid or deemed to have been paid under sub-section (2) of section 4A, if the 

licensee,—  

(a) carries on the business of money lending in contravention of any of the 

provisions of this Act or the rules made thereunder or the conditions of licence; or  

(b) is convicted of an offence under sub-section (3) of section 9, section 15, 

section 16 or section 16A or section 18; or  

(c) maintains false accounts.  

(2) Before forfeiting to the Government the whole or any portion of the security 

deposit under sub-section (1), the licensing authority shall give the licensee a notice 

in writing stating the grounds for which it is proposed to take action and requiring him 

to show cause against it within such time as may be specified in the notice.  

(3) Every order of the licensing authority under this section shall be communicated 

to the licensee in such manner as may be prescribed.  

(4) Every person aggrieved by an order under sub-section (1) may, within a period 

of one month from the date on which the order was communicated to him, prefer an 

appeal to the prescribed authority whose decision shall be final.  

(5) The licensing authority may, out of the amount forfeited, direct payment of 

such amount and at such rates as may be prescribed to the borrowers affected by 

the acts of the licensee.]1  



 
 

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1. Inserted by Act 9 of 1998 w.e.f. 31.5.1998  

5. Pawn-brokers to exhibit their names over shops, etc.—Every pawn-broker 

shall,-  

(a) always keep exhibited in large characters over the outer door of his shop or 

place of business his name with the word pawnbroker in English and its equivalent in 

Kannada, and  

(b) always keep placed in a conspicuous part of his shop or place of business so 

as to be clearly visible to all persons resorting thereto the information required to be 

printed on pawn-tickets by rules made under this Act, in the Kannada language.  

6. Interest and charges allowed to pawn-brokers.—(1) No pawn-broker shall 

charge interest in respect of a loan on a pledge at a rate exceeding nine per cent per 

annum simple interest or at such other rate as the State Government may by 

notification fix from time to time.  

(2) A pawnbroker may demand and take from the pawner such charges and in 

such cases as may be prescribed.   

(3) A pawnbroker shall not demand or take from the pawner any profit, interest, 

charge or sum whatsoever, other than the interest due to him and the charges, if 

any, referred to in sub-section (2).  

7. Pawn-ticket to be given to pawner.—Every pawnbroker shall on taking a 

pledge in pawn give to the pawner a pawn-ticket in the prescribed form signed by the 

pawner and the pawnbroker, and shall not take a pledge in pawn unless the pawner 

takes the pawn-ticket.  

8. Person producing pawn-ticket presumed to be entitled to redeem the 

pledge.—(1) The holder for the time being of a pawn-ticket shall be presumed to be 

the person entitled to redeem the pledge, and subject to the provisions of this Act, 

every pawnbroker shall on payment of the principal and interest, deliver the pledge 

to the person producing the pawn-ticket, and he is hereby indemnified for so doing.  

(2) Except as otherwise expressly provided in this Act, a pawnbroker shall not be 

bound to deliver back a pledge unless the pawn-ticket for it is delivered to him.  



 
 

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9. Protection of owners and of pawners not having pawn tickets.—(1) The 

following provisions shall have effect for the protection of owners of articles pawned, 

and of pawners not having their pawn-tickets to produce:—  

(a) Any person claiming to be the owner of a pledge but not holding the pawn-

ticket or any person claiming to be entitled to hold a pawn-ticket, but alleging that the 

same has been lost, mislaid, destroyed or stolen, or fraudulently obtained from him, 

may apply to the pawnbroker for a printed form of declaration (which shall be in the 

prescribed form), which the pawnbroker shall deliver to him:  

Provided that an application shall not be made under this clause where the loan 

exceeds two hundred and fifty rupees unless the applicant has caused a public 

notice of his claim, containing such particulars as may be prescribed, to be published 

in the prescribed manner not less than the prescribed number of days before the 

date of the application.  

(b) If the applicant delivers back to the pawn-broker the declaration duly made 

before any Magistrate or Judge by the applicant and by a person identifying him, the 

applicant shall have, as between himself and the pawn-broker, all the same rights 

and remedies as if he had produced the pawn-ticket:  

Provided that such a declaration shall not be effectual for that purpose,-  

(i) in cases where the loan exceeds two hundred and fifty rupees, unless the 

applicant executes a bond with two sureties, to the satisfaction of the pawn-broker or 

of such authority or person as may be prescribed in this behalf, agreeing to 

indemnify the pawnbroker in respect of any liability which may be incurred by him by 

reason of delivering the pledge or otherwise acting in conformity with the declaration; 

and  

(ii) in all cases, unless the declaration is duly made and delivered back to the 

pawnbroker within such period after the delivery of the form to the applicant, as may 

be prescribed;  

(c) The pawnbroker is hereby indemnified for not delivering the pledge to any 

person until the expiration of the period aforesaid.  



 
 

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(d) The pawnbroker is hereby further indemnified for delivering the pledge or 

otherwise acting in conformity with the declaration unless, he has had notice within 

the meaning of the Transfer of Property Act, 1882 (Central Act IV of 1882), that the 

declaration was fraudulent or was false in any material particulars.  

(2) Notwithstanding anything contained in sub-section (1), but without prejudice to 

his liability to account for the pledge to the owner of the pledge or the person entitled 

to hold the pawn ticket, the pawnbroker may deliver the pledge to any person 

claiming to be the owner of the pledge but not holding the pawn-ticket, if the 

pawnbroker is satisfied that such person is the owner of the pledge and is entitled to 

the delivery of the pledge, either after obtaining a bond from the claimant or 

otherwise.  

(3) Any person making a declaration under sub-section (1), either as an applicant 

or as identifying an applicant knowing the same to be false in any material particular, 

shall, on conviction be punished with imprisonment for a term which may extend to 

six months or with fine which may extend to one thousand rupees or with both.  

10. Pawnbrokers to keep books, give receipts, etc.—(1) Every pawnbroker 

shall,-  

(a) regularly record and maintain or cause to be recorded and maintained in a 

pledge book in the prescribed form an account showing for each pawner separately,-  

(i) the date of the loan, the amount of the principal of the loan and the rate of 

interest charged on the loan per cent per annum or per rupee per mensem or per 

rupee per annum;  

(ii) the amount of every payment received by the pawnbroker in respect of the 

loan, and the date of such payment;  

(iii) a full and detailed description of the article or of each of the articles taken 

in pawn;  

(iv) the time agreed upon for the redemption of the pawn; and  



 
 

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(v) the name and address of the pawner, and where the pawner is not the owner 

of the article or of any of the articles pawned, the name and address of the owner 

thereof;  

(b) keep and use in his business the following documents and books (which shall 

be in the prescribed form) and enter therein from time to time, as occasion requires, 

in a fair and legible manner such particulars and in accordance with such directions 

as may be prescribed:—  

(i) pawn-ticket;  

(ii) sale book of pledges;  

(iii) declaration where pledge is claimed by owner;  

(iv) declaration of pawn-ticket lost; and  

(v) receipt on redemption of pledge;  

(c) give to the pawner or his agent a receipt for every sum paid by him, duly 

signed and, if necessary, stamped at the time of such payment; and  

(d) on requisition in writing made by the pawner furnish to the pawner or, if he so 

requires to any person mentioned by him in that behalf in his requisition, a statement 

of account signed by himself or his agent, showing the particulars referred to in 

clause (a) and also the amount, which remains outstanding on account of the 

principal and of interest, and charge such sum as the State Government may 

prescribe as fee therefor.  

(2) All records or entries made in the books, accounts and documents referred to 

in sub-section (1) shall be either in English or in Kannada as may be prescribed:  

Provided that the State Government may by notification permit the use of any 

other language in any area for such period, not exceeding three years, as may be 

specified in the notification.  

(3) All books, accounts and documents referred to in sub-section (1), and all 

pledges taken by the pawnbroker shall be open to inspection at any time by the 

licensing authority or an officer subordinate to the licensing authority authorised by 

that authority.  



 
 

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(4) Notwithstanding anything contained in the Indian Evidence Act, 1872 (Central 

Act I of 1872), a copy of the account referred to in clause (a) of sub-section (1), 

certified in such manner as may be prescribed, shall be admissible in evidence in the 

same manner and to the same extent as the original account.  

(5) A pawner to whom a statement of account has been furnished under clause 

(d) of sub-section (1) and who fails to object to the correctness of the account shall 

not, by such failure alone, be deemed to have admitted the correctness of such 

account.  

(6) In the pawn-ticket furnished to the pawner, in the receipt given under clause 

(c) of sub-section (1) and in the statement of account furnished under clause (d) of 

that sub-section, the figures shall be entered only in Arabic numerals.  

11. Redemption of pledge.—(1) Every pledge shall be redeemable within one 

year from the day of pawning exclusive of that day; and there shall be added to that 

year of redemption fifteen days of grace within which every pledge (if not redeemed 

within the period of redemption) shall continue to be redeemable.  

(2) A pledge pawned for a sum not exceeding 1[two thousand rupees]1, if not 

redeemed within the period of redemption and days of grace, shall at the end of the 

days of grace become the pawnbroker’s absolute property.  

(3) A pledge pawned for a sum exceeding 1[two thousand rupees]1 shall further 

continue to be redeemable until it is disposed of as provided in this Act, although the 

period of redemption and days of grace have expired.  

1. Substituted by Act 11 of 2016 w.e.f 26.04.2016. 

Explanation.—Where the contract between the parties provides a longer period 

for redemption than one year, the provisions of sub-sections (1), (2) and (3) shall be 

read and construed as if references to such longer period had been substituted for 

the references to the period of one year therein.  

12. Sale of pledge and inspection of sale book.—(1) A pledge pawned for a 

sum exceeding 1[two thousand rupees]1 shall, when disposed of by the pawnbroker, be 

disposed of by sale by auction and not otherwise, and the sale shall be conducted in 

accordance with such rules as may be prescribed.  



 
 

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1. Substituted by Act 11 of 2016 w.e.f 26.04.2016. 

(2) A pawnbroker may bid for and purchase at a sale by public auction conducted 

under sub-section (1), a pledge pawned with him; and on such purchase he shall 

become the absolute owner of the pledge.  

(3) At any time within three years after the public auction, the holder of the pawn-

ticket may inspect the entry relating to the sale either in the pawnbroker’s book or in 

such catalogue of the auction as may be prescribed.  

(4) (a) Where on such inspection or otherwise the pledge appears to have been 

sold for more than the amount of the loan and the interest and charges due at the 

time of the sale, the pawnbroker shall pay to the holder of the pawn-ticket, on 

demand made within three years after the sale, the surplus after deducting therefrom 

the necessary costs and charges of the sale.  

(b) If on such demand it appears that the sale of the pledge has resulted in a 

surplus but that within twelve months before or after such sale, the sale of another 

pledge or pledges of the same person has resulted in a deficit, the pawnbroker may 

set off the deficit against the surplus and shall be liable to pay only the balance, if 

any, after such set off.  

13. Liability of pawnbroker in case of fire.—(1) Where a pledge is destroyed or 

damaged by or in consequence of fire, the pawnbroker shall nevertheless be liable 

on application made within the period during which the pledge would have been 

redeemable, to pay the value of the pledge, after deducting the amount of the 

principal and interest.  

Explanation.—For the purpose of this sub-section, the value of the pledge shall 

be its estimated value (if any) entered in the pledge book at the time of the pawn 

together with interest on the amount of the principal and shall in no case be less than 

the aggregate of the amount of the principal and interest and twenty-five per cent on 

the amount of the principal.  

(2) A pawnbroker shall be entitled to insure to the extent of the value so 

estimated.  



 
 

18 
 

14. Compensation for depreciation of pledge.—If a person entitled and offering 

to redeem a pledge shows to the satisfaction of a Civil Court having jurisdiction to 

entertain a suit for such redemption that the pledge has become or has been 

rendered of less value than it was at the time of pawning thereof by or through the 

default, neglect or wrongful act of the pawnbroker, the Court may, if it thinks fit, 

award reasonable compensation to the owner of the pledge in respect of the 

damage, and the amount awarded shall be deducted from the amount payable to the 

pawnbroker, or shall be paid by the pawnbroker (as the case requires) in such 

manner as the Court directs.  

15. Pawnbroker advancing smaller amount or receiving higher interest than 

that specified in accounts to be punishable.—(1) Any pawnbroker who actually 

advances an amount less than that shown in the pawn-ticket or in his accounts or 

registers or who takes or receives interest or any other charge at a rate higher than 

that shown in the pawn-ticket or in his accounts or registers shall, on conviction be 

punished with fine which may extend to 1[five lakh rupees]1.  

(2) If a pawnbroker is convicted of an offence under sub-section (1) after having 

been previously convicted of a similar offence, the Court convicting him may order 

his licence as a pawnbroker to be cancelled.  

1.  Substituted by Act 18 of 2025 w.e.f. 25.03.2025 

16. Certain other acts of pawnbrokers to be punishable.—A pawnbroker who,-  

(1) takes an article in pawn from any person appearing to be under the age of 

fourteen years or to be intoxicated; or  

(2) purchases or takes in pawn or exchange a pawn-ticket issued by another 

pawnbroker; or  

(3) employs any person under the age of sixteen years to take pledges in pawn; 

or  

(4) under any pretence purchases, except at a public auction, any pledge while in 

pawn with him; or  

(5) suffers any pledge while in pawn with him to be redeemed with a view to his 

purchasing it; or  



 
 

19 
 

(6) makes any contract or agreement with any person pawning or offering to 

pawn any article, or with the owner thereof, for the purchase, sale, or disposition 

thereof within the time of redemption; or  

(7) sells 1 [hypothecates, pawns]1 or otherwise disposes of any pledge pawned 

with him except at such time and in such manner as is authorised by or under the 

Act;  

 2[(8) shall not use any coercive action either by himself or by his agents or 

family member for recovery of money from the pawner and any form of coercive 

recovery shall be liable for punishment under the provisions of this Act and empower 

the Registering Authority to suspend or cancel the Registration of such pawn broker 

as provided under the provisions  of this Act. 

Explanation: For the purposes of this section, "coercive Action" by a pawn 

broker against the pawner include the following, namely:- 

(i) exerting pressure or obstructing or using violence to or insulting or 

intimidating the pawner or his/her family members, or 

(ii) persistently following the pawner, his/her family member from place to 

place or interfering with any property owned or used by him/her or 

depriving him/her of, or hindering him/her in the use of any such 

property, or 

(iii) frequenting the house or other place where the pawner resides  or 

works, or carries on business, or happens to be,  with an intension of 

taking coercive action, or 

(iv) using the service of private or outsource or external agencies, criminal 

background to negotiate/urging the pawner to make payment using 

coercive and undue influence, or 

(v) Seeking to take forcibly any document from the pawner which entitles 

the pawner to a benefit under any Government programme.]2 

-shall on conviction be punished with imprisonment for a term which may extend to 

3[ten years]3 or with fine which may extend to 3[five lakh rupees]3 or with both.  

     1[4[XXX]4]1 
 



 
 

20 
 

1. Inserted by Act 29 of 1979 w.e.f 1.8.1979 

2.  Inserted by Act 18 of 2025 w.e.f. 25.03.2025 

3.  Substituted by Act 18 of 2025 w.e.f. 25.03.2025 

4.  Omitted by Act 18 of 2025 w.e.f. 25.03.2025 

 1[16A. Pawnbroker to redeem pledges.— (1) Where before the commencement 

of the Karnataka Pawnbrokers (Amendment) Act, 1979 any pawnbroker has pawned 

or hypothecated any pledge with any person, such pawnbroker shall, redeem the 

pledge within thirty days from the date of such commencement.  

(2) Any pawnbroker who fails to so redeem shall, on conviction, be punished with 

imprisonment for a term which may extend to 2[ten years]2  and with fine which may 

extend to 2[rupees five lakh]2:  

     Provided that the term of imprisonment shall not be less than 2[three years]2 

and the fine shall not be less than 2[rupees two lakh]2.]1 

1. Inserted by Act 29 of 1979 w.e.f

 

1.8.1979.  

2. Substituted by Act 18 of 2025 w.e.f. 25.03.2025 

17. Certain acts of pawners to be punishable.—(1) Any person who,-  

(a) offers to a pawnbroker an article by way of pawn, being unable or refusing to give 

a satisfactory account of the means by which he became possessed of the 

article; or  

(b) wilfully gives false information to a pawnbroker as to whether an article offered by 

him in pawn to the pawnbroker is his own property or not, or as to his name and 

address, or as to the name and address of the owner of the article; or  

(c) not being entitled to redeem and not having any colour of title by law to redeem, a 

pledge, attempts or endeavours to redeem the same;  

-shall, on conviction be punished with imprisonment for a term which may extend to 

six months or with fine which may extend to one thousand rupees or with both.  

(2) In every case falling under sub-section (1), and also in any case, where on an 

article being offered in pawn, for sale, or otherwise, to a pawnbroker he reasonably 

suspects that it has been stolen or otherwise illegally or clandestinely obtained, the 



 
 

21 
 

pawnbroker shall, in the absence of reasonable excuse, inquire into the name and 

address of the person concerned, and seize and detain such person and the article, 

or either of them, and forthwith communicate to the nearest police station the facts of 

the case and shall deliver the person and the article, or either of them (as soon as 

may be) to the custody of the police.  

(3) A list of properties believed to have been stolen may be delivered by the police 

to any pawnbroker licensed under this Act and thereupon it shall be the duty of such 

pawnbroker—  

(a) if any article answering the description of any of the properties set forth in any 

such list is offered to him in pawn, for sale, or otherwise, to proceed in accordance 

with the provisions of sub-section (2); and  

(b) if any such article is already in his possession, forthwith to communicate to the 

nearest police station the facts of the case (including full particulars as to the name 

and address of the person concerned in the delivery of the article to the pawnbroker) 

and also, if so required by the police, to deliver the article to them.  

    18. General penalty for contravention of Act, etc.— (1) Whoever 

contravenes any of the provisions of this Act or of any rule or of any terms or 

conditions of a licence made or granted thereunder shall, if no other penalty is 

elsewhere provided in this Act for such contravention, on conviction be punished with 

fine which may extend to 1[three lakh rupees]1 and, if such person has been 

previously convicted whether under this section or any other provision contained in 

this Act, with fine which may extend to 1[five lakh rupees]1.  

(2) Any person who after having been convicted of the offence of carrying on, or 

continuing to carry on the business of pawnbroker in contravention of the provisions 

of section 3, continues to commit the same offence in the same year, shall in 

addition to the fine to which he is liable under sub-section (1), be punished with a 

further fine which may extend to 1[two lakh rupees]1 for each day after the previous 

date of conviction during which he continues so to offend.  

(3) Any Court convicting a pawnbroker of contravention of the provisions of clause 

(d) of sub-section (1) of section 10, may direct him to furnish a statement of account 



 
 

22 
 

in accordance with the provisions of that clause, and if the pawnbroker fails to 

comply with the direction, the Court may order his licence as a pawnbroker to be 

cancelled.  

1. Substituted by Act 18 of 2025 w.e.f. 25.03.2025 

1[18-A. Settlement of disputes by Ombudsperson.- The Government shall by 

notification appoint an Ombudsperson who can act as mediator between the pawner 

or pawn-broker, for settling the disputes. The procedure and guidelines for the 

settlement and mediation shall be in the manner as may be prescribed. 

18-B. Grievances redressal forum.- The Government shall establish suitable 

grievance mechanism. The procedure and guidelines for grievance mechanism shall 

be in the manner as may be prescribed. 

18-C. Authorized Officer.- (1) The Group-B Officer of Revenue Department or  

Rural Development and Panchayath Raj Department or  Urban Development 

Department or Town Planning Department or  Woman and Child Development 

Department or Social Welfare Department or Minority Welfare Department or Tribal 

Welfare Department or Backward Classes Welfare Department shall report if any 

person is in contravention of the provisions of this Act and the Karnataka Prohibition 

of Charging Exorbitant Interest Act 2004 (Karnataka Act No 14 of 2004) to the 

concerned Registrar, Assistant Registrar or any Officer authorized by the State 

Government in this behalf. 

(2) The Registrar, the Assistant Registrar or any Officer authorized may on his 

own motion or on the report submitted by the Officers referred in sub-section (1), 

shall take action under the provisions of this Act.]1 

1.  Inserted by Act 18 of 2025 w.e.f. 25.03.2025 

19. Jurisdiction to try offences.—No Court inferior to that of a Magistrate of the 

second class shall try any offence against this Act.  

1[19A. Offences by Hindu undivided Family, Companies etc.—(1) If any of the 

provisions of this Act is contravened by a Hindu undivided Family, the person 

responsible for the management of the business of such Family shall be deemed to 

have contravened such provision.  



 
 

23 
 

(2) (a) Where an offence under this Act has been committed by a company, every 

person who at the time the offence was committed, was in charge of, and was 

responsible to, the company for the conduct of the business of the company, as well 

as the company, shall be deemed to be guilty of the offence and shall be liable to be 

proceeded against and punished accordingly:  

Provided that nothing contained in this clause shall render any such person liable 

to any punishment provided in this Act if he proves that the offence was committed 

without his knowledge or that he exercised all due diligence to prevent the 

commission of such offence.  

(b) Notwithstanding anything contained in clause (a), where an offence under this 

Act has been committed by a company and it is proved that the offence has been 

committed with the consent or connivance of, or is attributable to, any neglect on the 

part of, any director, manager, secretary, or other officer of the company, such 

director, manager, secretary or other officer shall also be deemed to be guilty of that 

offence and shall be liable to be proceeded against and punished accordingly.  

Explanation.—For the purposes of this section,-  

(a) “company” means, a body corporate and includes a firm or other association of 

individuals, and  

(b) “director” in relation to a firm means, a partner in the firm;]1  

 

1. Inserted by Act 29 of 1979 w.e.f

 

1.8.1979  

1[20. Certain offence to be cognizable.—Offences punishable,-  

(a) under section 16 for an act referred to in clause (7) thereof;  

(b) under section 16A; and  

(c) under section 18 for contravening the provision of section 3,  

-shall be cognizable.]1  

1. Substituted by Act 29 of 1979 w.e.f

 

1.8.1979  

21. Contract of pawn to be void in certain cases and not to be void in certain 

other cases.—(1) If any pawnbroker not licensed under this Act, takes any article in 



 
 

24 
 

pawn for a loan, the contract of pawn so far as it confers any right on the pawnbroker 

in respect of the article pawned shall be void and the retention of the article by such 

pawnbroker shall be wrongful.  

(2) Where a pawnbroker is guilty of an offence against this Act (not being an 

offence against any provision of this Act relating to licences), any contract of pawn or 

other contract made by him, in relation to his business of pawnbroker, shall 

nevertheless not be void by reason only of that offence, nor shall he by reason only 

of that offence, loose his lien on or right to the pledge or to the loan and the interest 

and other charges, if any, payable in respect thereof:  

Provided that if a pawnbroker fails to deliver to the pawner a pawn-ticket as 

required by section 7 or fails to give to the pawner or his agent a receipt as required 

by clause (c) of sub-section (1) of section 10 or to furnish on a requisition made 

under clause (d) of that sub-section, a statement of account as required therein 

within one month after such requisition has been made, the pawnbroker shall not be 

entitled to any interest for the period of his default:  

Provided further that if in any suit or proceeding relating to a loan the Court finds 

that a pawnbroker has not maintained accounts as required by clause (a) or clause 

(b) of sub-section (1) of section 10, he shall not be allowed his costs.  

22. Power to make rules.—(1) The State Government may after previous 

publication, by notification, make rules to carry out the purposes of this Act.  

(2) In particular and without prejudice to the generality of the foregoing power, 

such rules may provide for—  

(a) all matters expressly required or allowed by this Act to be prescribed;  

(b) the form of, and the particulars to be contained in, an application for a 

pawnbroker’s licence under this Act; and  

(c) the form in which books, accounts and documents specified in this Act shall be 

recorded, maintained, kept or used.  

(3) Every rule made under this Act, shall be laid, as soon as may be after it is 

made before each House of the State Legislature while it is in session for a total 



 
 

25 
 

period of thirty days which may be comprised in one session or in two successive 

sessions, and if before the expiry of the session in which it is so laid or the session 

immediately following, both Houses agree in making any modification in the rule or 

both Houses agree that the rule should not be made, the rule shall thereafter have 

effect only in such modified form or be of no effect, as the case may be; so however 

that any such modification or annulment shall be without prejudice to the validity of 

anything previously done under that rule.  

23. Savings.—(1) Nothing contained in this Act shall apply to any loan advanced 

on a pledge in any area in which this Act is brought into force by a notification under 

sub-section (3) of section 1 before the expiry of six months from the date appointed 

in such notification.  

(2) The provisions of this Act shall be in addition to the provisions of the 

1[Karnataka]1 Money-lenders Act, 1961.  

1. Adapted by the Karnataka Adaptations of Law s Order 1973 w .e.f. 1.11.1973  

24. Repeal.—The Madras Pawnbrokers Act, 1943 (Madras Act XXIII of 1943) as 

in force in the 1[Mangalore and Kollegal Area]1 is hereby repealed:  

Provided that section 6 of the 1[Karnataka]1 General Clauses Act, 1899 

1[Karnataka]1 Act III of 1899) shall be applicable in respect of the repeal of the said 

enactment and sections 8 and 24 of the said Act shall be applicable as if the 

repealed enactment had been repealed and re-enacted by this Act.  

1. Adapted by the Karnataka Adaptations of Law s Order 1973 w .e.f. 1.11.1973  

* * *   

 

  



 
 

26 
 

NOTIFICATION  

 

Bangalore, dated 26th August 1966 [No. DPC 271 CCC 66.]  

 

In exercise of the powers conferred by Clause (b) of sub-section (3) of Section 1 

of the Mysore Pawn-Brokers Act, 1961 (Mysore Act No. 13 of 1962), and in 

supersession of Notification No. AF/43/CCS/62, dated 19th July 1966, published as 

S.O. 4958 in Part IV Section 2-C (ii) of Mysore Gazette dated 28th July 1966, the 

Government of Mysore, hereby appoints the first day of October, 1966, as the date 

on which the said Act, shall come into force in Bombay Area, Hyderabad Area, 

Coorg District and Mysore Area of the State of Mysore.  

 

 

By Order and in the name of the Governor of Mysore,  

(R. BHARANIAH)  

Secretary. 

  



 
 

27 
 

KARNATAKA ACT NO. 11 OF 2016 

 (First Published in the Karnataka Gazette Extra-ordinary on the Twenty sixth day of April, 

2016) 

 

THE KARNATAKA PAWN BROKERS (AMENDMENT) ACT, 2016  

(Received the assent of the Governor on the Twenty fifth day of April, 2016) 

 

An Act further to amend the Karnataka Pawn Brokers Act, 1961.   

Whereas it is expedient further to amend the Karnataka Pawn Brokers Act, 1961. 

(Karnataka Act No 13 of 1962) for the purposes hereinafter appearing;  

Be it enacted by the Karnataka State Legislature in the sixty seventh year of the 

Republic of India as follows:- 

By Order and in the name of the Governor of 

Karnataka, 

 

 

K. DWARAKANATH BABU 

Special Secretary to Government 

Department of Parliamentary Affairs 

 
KARNATAKA ACT NO. 18 OF 2025 

 

(First Published in the Karnataka Gazette Extra-ordinary on the  25
th

 day of March, 2025) 
  

THE KARNATAKA PAWN BROKERS (AMENDMENT) ACT, 2025 

 (Received the assent of the Governor on the 24
th

 day of March, 2025) 

 
 

An Act further to amend the Karnataka Pawn Brokers Act, 1961.  

Whereas it is expedient further to amend the Karnataka Pawn Brokers Act, 

1961. (Karnataka Act No 13 of 1962) for the purposes hereinafter appearing; 

Be it enacted by the Karnataka State Legislature in the seventy sixth year of 

the Republic of India as follows:- 

1. Short title and commencement.- (1) This Act may be called the 

Karnataka Pawn Brokers (Amendment) Act, 2025. 

(2) It shall come into force at once. 



 
 

28 
 

2. Amendment of section 3.- In the Karnataka Pawn Brokers Act,1961 

(Karnataka Act No 13 of 1962) (hereinafter referred to as the principal Act), in 

section 3, in the explanation-2 for the words “five years” the words “three years” 

shall be substituted. 

3. Amendment of section 15.- In the Principal Act , in section 15, in sub-

section (1) for the words "five hundred rupees", the words "five lakh rupees” shall 

be substituted. 

4. Amendment of section 16.- In section 16 of the principal Act, 

(a) after clause (7) the following shall be inserted, namely,- 

“(8) shall not use any coercive action either by himself or by his agents or 

family member for recovery of money from the pawner and any form of coercive 

recovery shall be liable for punishment under the provisions of this Act and 

empower the Registering Authority to suspend or cancel the Registration of such 

pawn broker as provided under the provisions  of this Act. 

Explanation: For the purposes of this section, "coercive Action" by a pawn 

broker against the pawner include the following, namely:- 

(vi) exerting pressure or obstructing or using violence to or insulting or 

intimidating the pawner or his/her family members, or 

(vii) persistently following the pawner, his/her family member from place 

to place or interfering with any property owned or used by him/her or 

depriving him/her of, or hindering him/her in the use of any such 

property, or 

(viii) frequenting the house or other place where the pawner resides  or 

works, or carries on business, or happens to be,  with an intension of 

taking coercive action, or 

(ix) using the service of private or outsource or external agencies, criminal 

background to negotiate/urging the pawner to make payment using 

coercive and undue influence, or 

(x) Seeking to take forcibly any document from the pawner which entitles 

the pawner to a benefit under any Government programme.” 

(b) for the words "six months", the words "ten years", shall be substituted; 

(c) for the words "one thousand rupees", the words "five lakh rupees", shall 

be substituted; and  



 
 

29 
 

(d) the proviso shall be omitted. 

5. Amendment of section 16A.- In section 16A of the principal Act, in sub-

section (2),- 

(a) for the words "six months", the words "ten years", shall be 

substituted;  

(b) for the words "rupees one thousand", the words "rupees five lakh", 

shall be substituted; and  

(c) in the proviso,- 

(i) for the words "one month", the words "three years", shall be 

substituted; and 

(ii) for the words "rupees five hundred", the words "rupees two lakh", 

shall be substituted. 
 

6. Amendment of section 18.- In section 18 of the principal Act,- 

(a) in sub-section (1),- 

(i)  for the words "fifty rupees", the words "three lakh rupees", shall be 

substituted; and 

 

(ii) for the words "one hundred rupees", the words "five lakh rupees", 

shall be substituted. 

(b) in sub-section (2), for the words "ten rupees", the words "two lakh 

rupees", shall be substituted. 

7. Insertion of new sections 18A, 18B and 18C.- After section 18 of the 

principal Act, the following new sections shall be inserted, namely,- 

“18-A. Settlement of disputes by Ombudsperson.- The Government shall 

by notification appoint an Ombudsperson who can act as mediator between the 

pawner or pawn-broker, for settling the disputes. The procedure and guidelines for 

the settlement and mediation shall be in the manner as may be prescribed. 

18-B. Grievances redressal forum.-The Government shall establish suitable 

grievance mechanism. The procedure and guidelines for grievance mechanism shall 

be in the manner as may be prescribed. 

18-C. Authorized Officer.- (1) The Group-B Officer of Revenue Department 

or  Rural Development and Panchayath Raj Department or  Urban Development 



 
 

30 
 

Department or Town Planning Department or  Woman and Child Development 

Department or Social Welfare Department or Minority Welfare Department or Tribal 

Welfare Department or Backward Classes Welfare Department shall report if any 

person is in contravention of the provisions of this Act and the Karnataka 

Prohibition of Charging Exorbitant Interest Act 2004 (Karnataka Act No 14 of 2004) 

to the concerned Registrar, Assistant Registrar or any Officer authorized by the 

State Government in this behalf. 

(2) The Registrar, the Assistant Registrar or any Officer authorized may on 

his own motion or on the report submitted by the Officers referred in sub-section 

(1), shall take action under the provisions of this Act.” 

 

 

By Order and in the name of 

the Governor of Karnataka, 

 

 

G. SRIDHAR 

Secretary to Government 

Department of Parliamentary 

                                                                                Affairs and Legislation