JUDGMENT S.K. Dubey, J. 1. Appellant/Bank has filed this first appeal under Section 96 of the Civil Procedure Code against the judgment and decree dt. 1-12 1987 whereby Civil Suit No. l-B/1987 filed by the appellant/plaintiff was dismissed by the IInd Additional Judge to the Court of District Judge, Balaghat. 2. The facts which giving rise to this appeal are thus : The appellant/Bank advanced a loan of Rs. 1,90,000/- to the respondent No. 1 on 6-11-1980 for the purchase of new ford truck registered No. CPK-8497 for Rs. 2,55,000/-, on execution of necessary documents, i.e. demand prenote (Ex.P/1), agreement of loan (Ex.P/2), declaration of property (Ex.P/3). The respondents Nos. 2 and 3 as guarantors executed the deed of guarantee (Ex.P/4). The respondent No. 1, the borrower after depositing Rs. 65,000/- in the account, purchased the truck which was hypothecated with the Bank. On the terms and conditions mentioned in the loan of agreement, the loan amount carried interest at the rate of 12 l/2% per annum with quarterly rest payable in 41 monthly equal instalments of Rs. 4,000/- each. On failure of the defendant-respondent No. 1 to pay the monthly instalments, the plaintiff/Bank took possession of the truck on 20-4-1982 in terms of the agreement of loan, which then was parked in the compound of one Bhoopat Bhai. According to clause 15 of the agreement, it is alleged that the plaintiff/Bank made efforts to sell the truck by auction or otherwise by advertising the same, but, as there was no response from the public the truck could not be sold. Hence, the plaintiff served a notice of demand (Ex.P/7) on 12-5-1982 making the notice to repay the loan amount with due interest within a period of 15 days, in default it was noticed that the truck will be sold and after adjustment of the sale proceeds for the balance suit shall be instituted. As the truck could not be sold, the plaintiff instituted a suit for recovery of Rs. 2,74,081.65/-. of which the statement of account is Ex.P/6. 3. The defendants denied their liability. The defendant No. 1 made a counter claim and claimed an amount of Rs. 4,62,200/- as loss suffered by defendant No. 1 at the rate of Rs. 300/- per day from the date of taking possession of the truck and further claimed an amount of Rs. 50,000/- for its repairs. 3. The defendants denied their liability. The defendant No. 1 made a counter claim and claimed an amount of Rs. 4,62,200/- as loss suffered by defendant No. 1 at the rate of Rs. 300/- per day from the date of taking possession of the truck and further claimed an amount of Rs. 50,000/- for its repairs. In the counter claim it was averred that the truck was giving trouble from the date of its purchase because of its manufacturing defects, the said defects were rectified by the dealer just few days prior to taking of the possession by the Bank. In reply to the demand notice the defendant No. 1 gave an offer to release the truck on the condition of repayment of the loan amount due in the monthly instalments of Rs. 5,000/-, which the defendant No. 1 increased to Rs. 7,000/- as is evident from Ex. D/10, Ex.D/12 and Ex.D/15. The Senior Technical Officer of the plaintiff bank vide Ex.D/13 replied that the local Branch is seeking instructions from the Regional Office at Bhopal to look into the matter and instructed the local branch to write directly to Regional Office and to defendant No. 1 regarding the release of the truck. In spite of repeated approach by the defendant No. 1, no decision was taken nor the truck was released. On the other hand, because of the negligence on the part of the plaintiff/Bank and its officers, as the truck was lying in open place of which no safety and security measures, were made the truck lost its value as it deteriorated and damaged and had become junk, therefore, it was contended that the plaintiff is not entitled to any decree for the amount claimed. On the other hand the plaintiff is bound to pay the loss suffered by the defendant No. 1 because of the illegal seizure and allowing the truck to be deteriorated and damaged. 4. The trial Court after appreciation of the pleadings and on the evidence adduced, recorded a finding that hypothecated truck was taken in possession by the plaintiff Bank on 20-4-1982 which was kept in an open ground of which no arrangements for security and safety were made nor the plaintiff/Bank took any steps to sell the truck by auction or otherwise. The trial Court after appreciation of the pleadings and on the evidence adduced, recorded a finding that hypothecated truck was taken in possession by the plaintiff Bank on 20-4-1982 which was kept in an open ground of which no arrangements for security and safety were made nor the plaintiff/Bank took any steps to sell the truck by auction or otherwise. The trial Court also recorded a finding that the defendant No. 1 made approaches to return the possession of the truck, which was also not released to him, therefore directed the Bank to sell the truck and realize and adjust the sale proceeds as the truck was of value of Rs. 2,55,000/- while the suit instituted was of Rs. 2,37,338.30/-. 5. Shri H. C. Kohli, learned counsel for the appellant contended that as per clause 19 of the loan agreement notwithstanding of Section 152 of the Contract Act, the plaintiff/Bank was not responsible for the loss, destruction or deterioration of the truck and without sale of the same was entitled to sue defendant to recover the amount, therefore, the trial Court committed an illegality in not decreeing the suit, at the most a direction could have been issued to sell the truck and to adjust the sale proceeds in the decretal amount. Reliance was placed on a decision of Delhi High Court in case of Bank of Mah. v. Racmann Auto (P) Ltd., AIR 1991 Delhi 278 and of Punjab and Haryana High Court in case of Prestolite of India Limited, Faridabad v. Union Bank of India and Ors., AIR 1986 P. & H. 64. 6. Shri Kishore Shrivastava, learned counsel for the respondents contended that the hypothecation is an extended form of pledge. The only difference between the two is that in case of pledge the goods so pledged remains in the possession of the pawner i.e. the pledger, in view of Section 172 of the Contract Act, the status of pawner becomes that of bailer and pawnee becomes bailee. The only difference between the two is that in case of pledge the goods so pledged remains in the possession of the pawner i.e. the pledger, in view of Section 172 of the Contract Act, the status of pawner becomes that of bailer and pawnee becomes bailee. Hence, the plaintiff Bank's position was that of bailee who has not taken care for the security and safety of the truck like a prudent man, therefore, the trial Court on the evidence adduced has recorded a categorical finding that the truck deteriorated and was damaged because of the negligence of the plaintiff/Bank and its officers which has lost its value by passage of time, therefore, the plaintiff would not be entitled to any decree against the defendants and rightly directed to sell the truck and to realize the same from its value by adjusting its sale proceeds in the loan account. To support the contention reliance was placed on Lallan Prasad v. Rahmat Ali and Anr., AIR 1967 SC 1322 , Central Bank of India, Raigarh v. Grains and Gunny Agencies, 1988 MPLJ 453 , Bhabani Sankar Patra v. State Bank of India and Anr., AIR 1986 Ori. 247 and Bank of Baroda, Ahmedabad v. Rabari Bachubhai Hirabhai and Ors., AIR 1987 Guj. 1 . 7. The point for consideration in this appeal is whether after taking possession of the hypothecated truck because of the plaintiff/Bank and its officers negligence in not taking care like a prudent man for the security and safety of the truck resulting in total destruction of the truck, the plaintiff/Bank would be entitled to a decree. To consider the question it would be proper to refer to clauses 15, 16 and 19 of the Loan Agreement-Ex.P/2 which reads thus : "15. To consider the question it would be proper to refer to clauses 15, 16 and 19 of the Loan Agreement-Ex.P/2 which reads thus : "15. The Bank and any of its officers and other employees shall be entitled in default of payment of the monies hereby secured or in case of any contingency or emergency arising which in the option of the Bank would make it necessary or expedient for the Bank to take possession of the said vehicle to enter upon any premise where the said vehicle shall be lying and to take possession of the said vehicle or any part thereof and for the purpose of taking possession to break open any outer or other doors of any premises where the said vehicle may be lying and to sell either by public auction or private contract or otherwise to dispose off or deal with all or any part of the said vehicle within liberty to buy in at any sale by auction and to rescind or vary any contract for sale without being answerable for any loss or diminution in price and without being bound to exercise any of the powers hereby conferred or being liable for any loss occasioned by the exercise of any such power and to give effectual receipts and discharges for the purchase money and to do all such acts and things for completing the sale as the Bank shall think proper. The Borrower/s shall not raise any objection as to the regularity of any sale or other disposition made by the Bank nor shall hold the Bank responsible for any loss that may without the Bank's negligence arise from any act or default on the part of any broker or auctioneer employed by the Bank for the purpose of the sale or other disposition." "16. The net proceeds of any sale or other disposition by the Bank of the said vehicle or any part thereof shall be applied in or towards the satisfaction of the monies secured by the said hypothecation and if such net proceeds shall be insufficient to satisfy the said monies in full the Bank shall be at liberty but not be bound to apply any other monies in the hands of the Bank standing to the credit of or belonging to the Borrower/s or any of them in or towards payment of the balance remaining due to the Bank and in the event of there not being any such other monies as aforesaid in the hands of the Bank or in the event of such other monies not being applied by the Bank as aforesaid or being insufficient for satisfaction in full of the said balance the borrower/s shall forthwith pay the balance remaining due of the monies secured by the said hypothecation PROVIDED ALWAYS that nothing herein contained shall be deemed to negative qualify or otherwise prejudicially affect the right of the Bank (which it is hereby expressly agreed the Bank shall have) to recover from the Borrower/s the monies secured by the said hypothecation notwithstanding that the said vehicle may not have been sold or disposed off." "19. If the Bank shall take possession of the said vehicle or any part thereof, whether under clause 15 hereof or otherwise howsoever the Bank shall be at liberty either to keep the said vehicle so taken possession of in the premises wherein or in any open space or road where it may be lying at the time possession thereof is taken by the Bank and to affix the Bank's locks to such premises if any or to remove the said vehicle to any other premises. Notwithstanding anything to the contrary in Section 152 of the Indian Contract Act, the Bank shall not be responsible for any loss or deterioration of, or damage to the said vehicle taken possession of by the Bank whether by theft, fire, flood, earthquake, lightning or any other cause whatever." 8. Notwithstanding anything to the contrary in Section 152 of the Indian Contract Act, the Bank shall not be responsible for any loss or deterioration of, or damage to the said vehicle taken possession of by the Bank whether by theft, fire, flood, earthquake, lightning or any other cause whatever." 8. In exercise of the powers given in the clause 15 the Bank can sell the truck and for that the borrower/s shall not raise any objection as to the regularity of any sale or other disposition made by the Bank nor shall hold the Bank responsible for any loss that may without the Bank's negligence arise from any act or default on the part of any broker or auctioneer employed by the Bank for the purpose of the sale or other disposition. 9. Clause 16 gives power to adjust part of the net sale proceeds and if such sale proceeds are insufficient to satisfy the said monies in full the Bank to recover the Bank dues from the borrower notwithstanding that the hypothecated vehicle may not have been sold or disposed off to recover the dues outstanding. 10. Clause 19 gives right to the Bank to take possession of the vehicle so hypothecated or any part thereof whether under clause 15 thereof or otherwise howsoever the Bank shall be at liberty either to keep the said vehicle so taken possession of in the premises, wherein or in any open space or road where it may be lying at the time possession thereof is taken by the Bank and to affix the Bank's locks to such premises, if any or to remove the said vehicle to any other premises. It further says that notwithstanding anything to the contrary to Section 152 of the Indian Contract Act, the Bank shall not be responsible for any loss or deterioration of, or damage to the said vehicle taken possession of by the Bank whether by theft, fire, flood, earthquake, lightning or any other cause whatever. 11. Hypothecation is an extended form of pledge which has not been expressly dealt with in the law of contract. The distinction between hypothecation of goods and pledge of goods is well known. In case of pledged goods, the goods are stored in the godown under the lock and key of the Bank under the Bank's supervision. 11. Hypothecation is an extended form of pledge which has not been expressly dealt with in the law of contract. The distinction between hypothecation of goods and pledge of goods is well known. In case of pledged goods, the goods are stored in the godown under the lock and key of the Bank under the Bank's supervision. Thus, the pledged goods remain under the physical possession of the Bank and no withdrawals or additions of the stocks in the godown are permissible without the Bank's permission. The position with regard to the hypothecated goods is, however, different because these goods are, strictly speaking, not under the lock and key of the Bank but allowed to be kept at the premises of the borrower without any lock and key of the Bank as such but are supposed to be under the constructive possession of the Bank by virtue of deed of hypothecation under which the borrower is obliged to submit regular returns to the Bank indicating the increase and decrease of the value of the said goods to enable the Bank from time to time to determine the drawing of the borrower with regard to it. In law, however, there is no difference with regard to the legal possession of the Bank. In both the cases, the goods are under the constructive possession of the Bank, while in the case of pledge they are also in the actual physical possession of the Bank, but in the case of hypothecated goods they are in actual possession of the borrower subject to the restrictions mentioned above. It is, therefore, said that hypothecation is only an extended idea of a pledge, the creditor permitting the debtor to retain possession either on behalf of or in trust for himself. See the decision of Orissa High Court in case of B. S. Patra (supra). 12. In Black's Law Dictionary, Sixth Edn., at page 742 the word 'Hypothecate' has been given meaning as under : "To pledge property as security or collateral for a debt. Generally, there is no physical transfer of the pledged property to the lender, nor is the lender given title to the property; though he has the right to sell the pledged property upon default." 13. Generally, there is no physical transfer of the pledged property to the lender, nor is the lender given title to the property; though he has the right to sell the pledged property upon default." 13. In Webster's Encyclopedic Unabridged Dictionary of the English Language, 1989 Edn., at page 702, the meaning of the word 'hypothecate' is given that "to pledge to a creditor as security without delivering over." 14. In Corpus Juris Secundum, Vol. XLII, page 370 the word 'hypothecation' as defined, thus : "A term borrowed from the civil law, and in so far as it is naturalised in English and American law, it means a contract of mortgage or pledge in which the subject matter is not delivered into the possession of the pledge or pawnee; or, conversely, a right which a creditor has over a thing belonging to another, and which consists in a power to cause it to be sold in order to be paid as claim out of the proceeds." 15. From that, it is clear that truck being hypothecated therefore, in terms of the three clauses of loan agreement, the plaintiff Bank after taking possession of the truck on 20-4-1982 could have disposed of the truck in the manner prescribed in clause 15 and would have adjusted the sale proceeds, but, that was not done as found proved. In such a situation the Bank ought to have taken care by exercising the due standard of diligence like a prudent man like a bailee to see and to keep the truck in a safe place so that it may not lose its value. But, admittedly, the truck was kept in open area without taking any care for its safety, as a consequence of that it was damaged and destructed and lost in its value with the passage of time. 16. The defendant No. 1 made several requests to deliver the possession of the truck, but, on that too also no decision was taken nor the truck was sold as noticed to the defendant. In such circumstances, Section 151 and Section 152 of the Contract Act are attracted as the hypothecation is an extended form of the pledge. Section 172 of the Contract Act defines pledge, pawner and pawnee. In such circumstances, Section 151 and Section 152 of the Contract Act are attracted as the hypothecation is an extended form of the pledge. Section 172 of the Contract Act defines pledge, pawner and pawnee. The possession of the truck by plaintiff/Bank was in the nature of bailee, the Bank has failed to establish that it exercised its due care and was not negligent but in spite of that loss occurred. Hence, the plaintiff/Bank cannot be absolved from its responsibility, as the Bank has failed to take care of the truck as a prudent man and was not in a position to return the truck to the defendant/borrower in the same condition because of its negligence and of its officers. The contention that in view of clause 15 the Bank cannot be made responsible has no substance, though there is a non obstante clause which speaks that notwithstanding anything to the contrary in Section 152 of the Indian Contract Act, the Bank shall not be responsible for any loss or deterioration of or damage to the said vehicle taken possession of by the Bank whether by theft, fire, flood, earthquake, lightning or any other cause whatever. This clause enumerates the causes which are natural causes without human intervention which cannot be prevented by any man of foresight or care. Hence, it does not exonerate the Bank from the liability occasioned by negligence of its servant. Therefore, in view of Section 152 of the Contract Act, the Bank cannot save itself from the loss suffered because of the negligence of the plaintiff/Bank and its officers since it failed to mitigate the loss. See the Division Bench decision of this Court in case of Central Bank of India (supra). 17. Coming to the cross-objections the trial Court having negatived the counter claim and no serious infirmity is pointed out in the judgment and decree of the trial Court, we are of the view that the cross-objections have no force and are to be dismissed. 18. In the result, the appeal and cross-objections are dismissed with no order as to costs.