JUDGMENT T.C. Raghavan, J. 1. Defendants 1 and 3 in O. S. No. 19 of 1951 of the District Court of Parur re-numbered as O. S. No. 21 of 1956 on the file of the court of the Subordinate Judge there are the appellants in the appeal. The 1st respondent is the plaintiff-Bank and the 2nd respondent the 2nd defendant. 2. It is necessary to state the facts of the case a little elaborately to understand the contentions of the parties. The 1st defendant is the father-in-law of the 2nd defendant, the 3rd defendant being the wife of the 2nd defendant and the daughter of the 1st defendant. The 2nd defendant and his brothers were conducting a partnership business in hill produce under the name 'K. E. S. Sons'. The partnership had a godown at a place called Kuruppampady for stocking goods; and the goods stocked therein were pledged with the plantiff-Bank on key-loan and the partnership borrowed moneys for their business on the security of the goods. In December 1947 one of the brothers died and the partnership thus got dissolved. On 11th May 1948 a sum of Rs. 42,813/- was found due to the plaintiff-Bank from K. E. S. Sons under the key-loan account; and on that date the hypothecation bond Ext. A was executed for the said amount in favour of the Bank by defendants 1 to 3 with a stipulation to pay 9 per cent interest with quarterly rests. 3. After giving credit to subsequent payments made towards the debt the suit was brought under the hypothecation bond for the recovery of Rs. 39,704-3-9 with future interest etc. At first the 1st defendant alone contested the suit, the other two defendants remaining ex parte. The 1st defendant admitted the execution of Ext. A ; but he contended that the document was only additional security for the key-loan transaction of the 2nd defendant. The 1st defendant further contended that the suit as brought was not maintainable and the plaintiff had to file a suit for settlement of accounts. He also prayed that the plaintiff be directed to furnish details regarding the produce loan account in the name of K. E. S. Sons. The plaintiff filed a replication. The 1st defendant further contended that the suit as brought was not maintainable and the plaintiff had to file a suit for settlement of accounts. He also prayed that the plaintiff be directed to furnish details regarding the produce loan account in the name of K. E. S. Sons. The plaintiff filed a replication. Therein they alleged that the 2nd defendant, for the sake of convenience, was allowed at times to sell the goods in the godown in the absence of the Agent of the Bank. The plaintiff further alleged that a little prior to the execution of Ext. A their Agent checked the godown, when it was discovered that there was considerable deficit in the quantity of goods stocked therein and consequently the 2nd defendant agreed to execute a hypothecation bond along with the 1st and 3rd defendants. Thereafter Ext. A came to be executed by the three defendants and the goods under the key-loan were handed over to the 2nd defendant after the execution of the hypothecation bond. Five payments were made towards the debt on the dates specified and the suit was for the balance remaining after such payments. According to the plaintiff, the defendants were liable to the Bank under the hypothecation bond as principals and not as guarantors or sureties, nor was Ext. A additional security for the key-loan. 4. The 3rd defendant got set aside the order declaring her ex parte and she also filed a written statement. Her contentions were similar to the contentions raised by the 1st defendant; and she, in addition, pleaded that Ext. A was not supported by consideration and it was not enforceable. The 2nd defendant remained ex parte. 5. The suit went to trial; and finally the learned District Judge decreed the suit as prayed for. The matter was taken up in appeal before the High Court of Travancore - Cochin as A. S. No. 157 of 1953. At the concluding stages of the arguments in the appeal before the High Court the plaintiff filed C. M. P. No. 1329 of 1954 seeking to amend the plaint and that prayer was allowed by the High Court. Consequently the High Court set aside the decree and judgment of the lower court and remanded the case for fresh trial. On remand paragraph 1A was added to the plaint; and that read that Ext. Consequently the High Court set aside the decree and judgment of the lower court and remanded the case for fresh trial. On remand paragraph 1A was added to the plaint; and that read that Ext. A was in renewal of the debt due by the 2nd defendant under the goods loan account and the defendants undertook to pay the amount of Rs. 42,813/- as principal debtors, Additional evidence was recorded, both oral and documentary ; the two main documents filed after remand being Exts. W and AF, which we will have to refer to hereafter. 6. The learned Subordinate Judge who tried the case after remand decreed the suit as prayed for; but he did not allow costs to the plaintiff. Consequently defendants 1 and 3 have filed the appeal questioning the correctness of the decree granted by the lower court; and the plaintiff Bank has filed a memorandum of cross objections claiming that they should have been granted costs as well by the lower court. 7. Mr. K. P. Abraham, the learned advocate of the appellants, contends that the hypothecation bond Ext. A was connected with the key-loan of K. E. S. Sons; that it was only as additional security for the key-loan, in addition to the goods already pledged, that Ext. A was executed; and that if Ext. A was in renewal of the key-loan liability, as contended by the plaintiff, then it was only a novation of the original key-loan agreement, and if so, it should have put an end to the key-loan account. According to him the evidence in the case showed that the key-loan transaction was not terminated, but was continued even after the execution of Ext. A, so that it could not have been a novation or a renewal of the liability under the key-loan. He develops his contention further and urges that if Ext. A were to be treated as a renewal, since the key-loan account was continued even after the execution of Ext. A, the renewed agreement had no consideration, as the consideration for the new contract was the discharge of the old contract, and therefore it cannot be enforced. 8. On the other hand, Mr. C. A. Ouseph, the learned advocate of the plaintiff-Bank, contends that Ext. A was in renewal of the key-loan transaction of K. E. S. Sons, and under Ext. 8. On the other hand, Mr. C. A. Ouseph, the learned advocate of the plaintiff-Bank, contends that Ext. A was in renewal of the key-loan transaction of K. E. S. Sons, and under Ext. A the defendants undertook to pay the debt as principal debtors, and therefore even if the Bank thereafter exercised some control over the goods pledged under the key-loan, even then the defendants were liable under Ext. A. He contends further that if any payments were made by the 2nd defendant by selling the goods pledged under the key-loan, those payments only went in reduction of the mortgage liability and were only to the advantage of the appellants. According to Mr. Ouseph, the only restriction is that the plaintiff-Bank is not entitled to recover any amount in excess of the amount mentioned in Ext A. These are the contentions which we have to consider in this appeal. 9. Mr. Ouseph contends that in interpreting Ext. A the recitals therein should alone be considered and the subsequent conduct of the parties or the circumstances that led to the execution of the hypothecation bond should not be taken into consideration. According to him Ext. A recites an unconditional undertaking to pay the liability as principal debtors and there is no indication whatsoever in Ext. A that it was executed as additional security; and it was only a renewal of the key-loan liability. The operative portion of Ext. A reads that the defendants undertake to repay the amount of Rs. 42,813/- found to be due from K. E. S. Sons under the goods loan account with interest at 9 per cent with quarterly rests. 10. It cannot be disputed that the object of interpretation of a document is to ascertain the intention of the parties to the instrument as expressed by the words they have used. Since the words are the sole guide to such intention, extrinsic evidence of that intention is not admissible, save in the case of a latent ambiguity which cannot otherwise be resolved. Since the words are the sole guide to such intention, extrinsic evidence of that intention is not admissible, save in the case of a latent ambiguity which cannot otherwise be resolved. But the court, which has to construe the document, ought to know the surrounding circumstances at the time when the document was executed, so as to place itself, as nearly as possible in the position of the parties; and the intention of the parties has to be gathered from the words used by them with regard to the particular circumstances: (vide Halsbury's Laws of England, 3rd Edn., Vol. if, paragraph 658: see also the observation of Kay J. in Hart v. Hart ((1881) 18 Ch. D. 670 at 692): "I agree that here the court must not shut its eyes or blindfold itself, but must try to put itself, in order to understand this agreement, in the position as near as it can of the parties making the agreement. That is the rule, as I understand, on the construction of every deed or document, whether it be an agreement, a deed or a will; the Court has a right to know, and is bound to know, all the material facts which were known to the parties at the time when the agreement, deed, will or whatever it may be was entered into or made. That is legitimate in all cases for the purpose of construing a written instrument". Thus we are entitled to look into, and are bound to look into, all the material facts and circumstances surrounding the execution of Ext. A in construing its provisions. 11. It is not disputed by either party that Ext. A was executed for the balance found due by K. E. S. Sons under the key-loan. The only question is whether it was executed as additional security as contended by the appellants or in renewal of the key-loan liability as principal debtors as contended by the plaintiff. If it is the latter, namely renewal, then it puts an end to the earlier liability, so that the earlier liability becomes the consideration for the renewed agreement. Therefore the crucial question is whether the key-loan account was closed on the execution of Ext. If it is the latter, namely renewal, then it puts an end to the earlier liability, so that the earlier liability becomes the consideration for the renewed agreement. Therefore the crucial question is whether the key-loan account was closed on the execution of Ext. A. There is of course a further case for the appellants that there was a contemporaneous agreement between the plaintiff and the appellants, that the appellants would be held liable under Ext. A only if the goods pledged under the key-loan were found to be insufficient to meet the liability. This case has been found against by the lower court; and considering the evidence in the case, we are not satisfied that there was such an oral contemporaneous agreement, apart from Ext. A. This, of course, does not mean that if the facts and circumstances surrounding the execution of Ext. A reveal only the creation of additional security, the plaintiffs are not entitled to the benefits of such a claim. 12. Ext. A was executed on 11th May 1948. Exts. VII and VI are extracts from the key-loan ledger of K. E. S. Sons with the Bank. These extracts show that the key-loan account was not closed on 11th May, when Ext. A was executed. Ext. VI shows that the account was continued even after 11th May, a sum of Rs. 2,800/- being credited two days after Ext. A, that is on 13th May. It also shows that on 22nd November 1948 thirty dozen bottles of lemon grass oil were released and the amount realised therefrom remitted to the Head Office of the plaintiff-Bank. Exts. IX and X are similar extracts from the same account for the years 1951 and 1952; and these exhibits show that the key-loan account was continued till the suit was instituted. 13. On 11th May 1948 the 2nd defendant executed Ext. B, which acknowledges the amount due under the key-loan by K. E. S. Sons as on that date to be Rs. 42,813/-. It also recites that on that date the goods remaining were (1) 129 1/4 dozen bottles of lemon grass oil; (2) 210 bags of dried ginger; and (3) 120 bags of pepper. Ext. B further acknowledges that these goods were already in the possession of the 2nd defendant. 42,813/-. It also recites that on that date the goods remaining were (1) 129 1/4 dozen bottles of lemon grass oil; (2) 210 bags of dried ginger; and (3) 120 bags of pepper. Ext. B further acknowledges that these goods were already in the possession of the 2nd defendant. It is the case of the plaintiff-Bank that the goods pledged under the key-loan were only in the possession of the 2nd defendant on the date of Ext. A as revealed by Ext. B and the same continued to be with him thereafter. But the contention of the appellants on this point is that the 2nd defendant was in possession of the pledged goods only as a trustee of the Bank and the Bank still retained its right over the goods as the pledgee. This contention is sought to be substantiated by the appellants by a reference to the following documents. Ext. V is a confirmation letter sent by the plaintiff to K. E. S. Sons on 30th June 1958. This recites that the produce loan was balanced on that date and it showed a balance of Rs. 40,403-11-0 including interest of Rs. 377/- to the debit of K. E. S. Sons. This shows that the produce loan account was being continued even after the execution of Ext. A; and such confirmation letters as Ext. V were sent to the 2nd defendant for confirming the correctness of the account. Ext. M dated 23rd November 1948 is the office copy of a letter sent to the 2nd defendant by the Alwaye branch of the plaintiff-Bank. It refers to Ext. B as the trust receipt executed by the 2nd defendant. It also recites that 41 bags of pepper were released on 13th May 1948 and also 31 1/4 dozen bottles of lemon grass oil on 22nd November 1948. Ext. L is a letter sent by the Head Office of the plaintiff-Bank to their branch at Alwaye on 17th November 1948. This also refers to Ext. B as a trust receipt taken from the 2nd defendant. The letter directs the Alwaye Branch to take possession of the goods and keep them in the Bank building. It further directs the Alwaye Branch not to return the trust receipt to the 2nd defendant. Ext. This also refers to Ext. B as a trust receipt taken from the 2nd defendant. The letter directs the Alwaye Branch to take possession of the goods and keep them in the Bank building. It further directs the Alwaye Branch not to return the trust receipt to the 2nd defendant. Ext. AK is the office copy of another letter sent by the Alwaye branch of the plaintiff-Bank to their Head Office on 13th December 1948. This also refers to Ext. B as the trust receipt received from the 2nd defendant. These documents show that Ext. B was treated by the plaintiff-Bank as a trust receipt. 14. Where a depositor of documents of title under pledge requires their return to him in order that he may obtain and warehouse or sell the goods, the re-delivery of the documents may be said to substitute for the banker's pledge the right to have the documents and the goods they represent held in trust for the bank and the right to the proceeds of sale. By a letter of trust a banker is able to preserve his security rights, except in the case of fraud on the part of the borrower to whom the documents are returned. The common law rule that relinquishing possession of goods or the documents of title destroys the title underlying the pledge to which they were subject, does not apply where the redelivery was for a specific limited purpose. As observed by Lord Herschel L. J. in North - Western Bank v. Poynter (1895 A. C. 56 at pp. 67-68), there can be no doubt that the pledgee might hand back to the pledger, as his agent for the purpose of sale, the goods he had pledged without in the slightest degree diminishing the full force and effect of his security. Therefore a trust receipt or a letter of trust means that the pledgee hands back to the pledger as his agent for a particular purpose, for instance sale, the goods pledged. (See Paget's Law of Banking, 6th Edn., p. 492 and Tannan on Banking Law and Practice in India, 9th Edn., p. 334). Thus it clearly appears that the possession of the 2nd defendant under Ext. (See Paget's Law of Banking, 6th Edn., p. 492 and Tannan on Banking Law and Practice in India, 9th Edn., p. 334). Thus it clearly appears that the possession of the 2nd defendant under Ext. B of the goods pledged to the plain tiff-Bank under the key-loan by K. E. S. Sons was only as a trustee of the plaintiff-Bank for the purpose of sale, without diminishing the security of the Bank. 15. We therefore hold that Ext. A was executed as additional security for the key-loan, in addition to the goods already pledged, and that Ext. A was not a renewal or a novation of the original contract. We also hold that the key-loan transaction by K. E. S. Sons was not terminated by the execution of Ext. A; and that the 2nd defendant took charge, or continued to be in charge, of the goods pledged, under the trust receipt Ext. B, as a trustee of the Bank for sale. 16. This leads us to the next question as to what were the goods taken possession of by the 2nd defendant under Ext. B. Ext. B, as we have already pointed out, contains three items : (1) lemon grass oil -- 129 1/4- dozen bottles; (2) dried ginger -- 210 bags ; and (3) pepper -- 120 bags. According to the plaintiff-Bank the godown was checked some time prior to the execution of Ext. A, when it was found that there was large deficit in the quantity of the goods and it was this discovery that led to the execution of Ext. A. In support of this case the plaintiff relies on two documents, Exts. W and AF. Ext. W is the inspection report" submitted by P. W. 2 and Ext. AF is a letter sent by P. W. 1, who was the Agent of the Alwaye branch, to the Head Office. P. W. 1 also checked the godown towards the end of February 1948. Ext. AF recites that when P. W. 1 inspected the godown in February 1948 the stock of dried ginger and lemon grass oil was found to be correct. Regarding pepper, Ext. AF states that only 41 bags were found. Ext. P. W. 1 also checked the godown towards the end of February 1948. Ext. AF recites that when P. W. 1 inspected the godown in February 1948 the stock of dried ginger and lemon grass oil was found to be correct. Regarding pepper, Ext. AF states that only 41 bags were found. Ext. W, the inspection report of P. W. 2 shows that he inspected the godown on 27th April 1948, when it was found that there was a stock of only 41 bags of pepper and 129 1/4 dozen bottles of lemon grass oil. This report appears to have been prepared on 28th April and submitted before the Head Office on 4th May, 1948. One of the main issues in controversy between the parties is regarding the stock of goods available in the godown on the date of Lxt. A. According to the appellants the stock was as disclosed by Ext. B ; whereas, according to the plaintiff, the stock was only 41 bags of pepper and 129 1/4 dozen bottles of lemon grass oil as disclosed by Ext. W. Both Exts. W and AF were produced in court only after the case was remanded by the Travancore - Cochin High Court. On the basis of this circumstance the learned advocate of the appellants contends that both these documents must be subsequent forgeries; because, according to him, no reference whatsoever about deficit appears in the numerous letters that passed between the Alwaye branch and. the Head Office and also between the plaintiff-Bank and the 2nd defendant. The correspondence only reveals that the plaintiff-Bank was anxious to close the key-loan account with K. E. S. Sons; and the reason for the closing does not appear to be the discovery of any deficit in the stock in the godown. The case of the plaintiff-Bank on the other hand is that they did not want to give publicity to the misappropriation or the breach of trust committed by the 2nd defendant in selling the goods in his custody without making remittances to the Bank. It is also the case of the plaintiff that though the Bank was entitled to be in possession of the key of the godown, the key used to be handed over to the 2nd defendant to facilitate sales, the Bank reposing confidence and trust in him. 17. The case that Exts. It is also the case of the plaintiff that though the Bank was entitled to be in possession of the key of the godown, the key used to be handed over to the 2nd defendant to facilitate sales, the Bank reposing confidence and trust in him. 17. The case that Exts. W and AF are forgeries is difficult of acceptance. The case of inspection and discovery of shortage appeared even in the replication filed by the plaintiff. Both the P. Ws. 1 and 2 also speak about the inspection of the godown in their evidence given prior to the remand. Therefore, the inspection and the discovery of deficit in the stock cannot be after-thoughts, which occurred to the plaintiff after the remand. The case of the plaintiffs, that they were not interested in giving publicity to the conduct of the 2nd defendant and that they were only interested in getting their money, appears to be true and acceptable; and we have no hesitation in agreeing with the learned Subordinate Judge on this question. 18. The further question arising for consideration is whether defendants 1 and 3 knew about this when they executed Ext. A. If they were led to believe that the stock in the godown was as shown in Ext. B, then the guarantee will be void or the Bank will at least have to account for those goods before they can proceed against the properties under the hypothecation and obtain a decree. If, on the other hand, the appellants also knew that the stock was only as shown in Ext. W and they gave additional security knowing the stock position, then the bank will be liable to account to the appellants only to the extent of the goods existing at the time of Ext. A. Considering the relationship of the appellants with the 2nd defendant and also the fairly long pendency of the negotiations which culminated in the execution of Ext. A, it is impossible to believe that the appellants did not know the real position regarding the stock. There is also no evidence in the case to show that the appellants were misled regarding the real stock position. Therefore, we are inclined to agree with the learned Subordinate Judge that the appellants knew that the stock in the godown on the date of Ext. A was only as shown in Ext. There is also no evidence in the case to show that the appellants were misled regarding the real stock position. Therefore, we are inclined to agree with the learned Subordinate Judge that the appellants knew that the stock in the godown on the date of Ext. A was only as shown in Ext. W. We are also of the opinion that after the execution of Ext. A, which only gave additional security, the Bank should have exercised proper control over the goods then existing and should have also seen that the moneys realised by the sale of those goods went in discharge of the debt under the key-loan arrangement. The appellants were not persons at the spot and the Bank was dealing with the 2nd defendant only. Having taken additional security from the appellants the Bank was bound to see that the goods pledged with them were properly sold and that the moneys realised by such sales went in reduction of the debt. Therefore, in our judgment the, plaintiff-Bank is bound to account for the goods that actually existed in the godown at the time of Ext. A. We hold further that the stock available at the godown on that date was as shown in Ext. W and not as shown in Ext. B, In Ext. B the Bank might have shown the stock as disclosed by their accounts, so that they might be discharged of their liability regarding the goods. We would also observe that the Bank might retain their right, if any, against the 2nd defendant under the trust receipt. 19. The learned Subordinate Judge has valued the goods at the lime of Ext. A at Rs. 16,585/- on the basis of the prices shown in Ext. XL Regarding this figure there is no dispute and both the parties accept that as correct. In the plaint the plaintiff has given credit only to five payments aggregating to Rs. 10,410/-. The Bank has to account for Rs. 16,585/-; so that, they have now to account for the balance of Rs. 6175/-. Thus, instead of Rs. 39,704/-, the plaintiff will be entitled only to Rs. 33,529/-. The appeal has therefore to be allowed and the decree of the lower court modified. We also feel that the memorandum of cross objections has also to be allowed in part. 16,585/-; so that, they have now to account for the balance of Rs. 6175/-. Thus, instead of Rs. 39,704/-, the plaintiff will be entitled only to Rs. 33,529/-. The appeal has therefore to be allowed and the decree of the lower court modified. We also feel that the memorandum of cross objections has also to be allowed in part. In the result we modify the decree and grant instead a decree for Rs. 33, 529/- with proportionate costs in the lower court. From the date of plaint the plaintiff will get only 6 per cent interest. In the High Court the appellants will get proportionate costs on Rs. 6,175/- from the plaintiff. In other regards, no costs; and no interest on costs.