This appeal is directed against the judgment and decree dated 31.12.2002 passed by the Addl. District Judge (FTC), Manipur East in Original Suit No. 25/96/21/2002. 2. The appellant is a company registered under the Company Act and it was the defendant No.1 in Original Suit No. 25/96/21/2002 filed by the present respondent as against it and the present proforma respondents. The present respondents took a loan of Rs. 2,50,000/- from the appellant for purchasing a bus under the terms and conditions , inter-alia, that the loan would bear an interest of 12 ½ % per annum and that it should be repaid in 4(four) years and 6(six) months with a moratorium period of 6(six) months. In connection with the loan, the present respondent executed a deed of agreement, a deed of hypothecation and a deed of mortgage. As required by the appellant, a sum of Rs. 77,680/- was also deposited by the present respondent with the Urban Co-operative Bank, Imphal for the purpose of construction of the body of the bus. On 01.2.1988, the present respondent bought the bus chasis from the Tata Engineering and Locomotive Company Ltd. of Jamshedpur, Bihar with the necessary documents after depositing the loan amount. The body of the bus was constructed at the cost of Rs. 1,26,000/-. Thereafter, the present respondent started running his bus and paid altogether Rs. 2,19,500/- to the appellant on installment basis. On 8.7.93, the appellant seized the bus for making default on the part of the present respondent to clear the due amount of Rs. 1, 93,636/-. Thereafter, the said bus was sold to the proforma respondent on 29.11.1993 at the price of Rs. 1,94,000/-. The present respondent could obtain relevant documents in connection with the sale through the DTO, Churachandpur on 3.1.1994. According to the present respondent, the bus could have been sold at Rs. 3 lakhs. In the said suit, the present respondent was challenging the legality of the said seizure and sale of the bus and praying mainly for a decree declaring the sale being No. MANIDCO/MD/93 dated 29.11.93 in respect of the bus bearing MNF 396 as null and void, a decree for directing the defendant Company ( the present appellant) to accept the loan deposited by him, a decree directing the defendant Company ( the appellant) to deliver the said bus to him and future mesne profit @ Rs. 500/- per day. 500/- per day. The present appellant contested the suit by filing its written statement. According to the appellant, the bus was seized and sold legally as per terms of the deed of hypothecation in order to realise the outstanding dues liable to be paid by the present respondent. Further, according to the appellant, the suit was barred by Article 69 and 80 of the Limitation Act, 1963. The proforma respondent also contested the suit by filing his written statement stating to the effect that he became the owner of the bus on purchasing it from the appellant. 3. The following issues were settled. “1. Whether the seizure of the bus bearing No. MNF 396 by the officials of the defendant corporation on 8.7.1993 is illegal? 2. Whether the auction sale deed dated 29.11.1993 is illegal and void? 3. Whether the suit is barred by Art. 69 & 80 of the Schedule to the Limitation Act, 1963? 4. Is there cause of action in the suit? 5. Whether the plaintiff is entitled to the relief claimed?” 4. In respect of Issue No.1, after consideration of the materials before the court, the learned Addl.District Judge, Manipur East held to the effect that there was no illegality in seizing the bus on 8.7.1998 by the appellant. According to the learned Addl.District Judge, Manipur East, the appellant was having a right to seize and sell the bus under the terms and conditions of the agreement and the deed of hypothecation. However, the learned Addl.District Judge, Manipur East held that the sale made on 29.11.1993 was illegal and void and that it was made on the sweet-will of the appellant and that there was want of fairness and transparency on the part of the appellant in selling the bus. The trial court was also of the view that the suit was governed by Article 58 of the Limitation Act and as such, it was filed within time. However, in the opinion of the learned Addl.District Judge, Manipur East, the suit having been filed on 31.7.1996 within 3 years of the issuance of the sale certificate on 29.11.1993, there was no delay in filing the suit. In the result, the suit was decreed in favour of the present respondent directing the present appellant to restore the possession of the bus in favour of the former. In the result, the suit was decreed in favour of the present respondent directing the present appellant to restore the possession of the bus in favour of the former. It was, further, directed that only after restoration of the possession of the bus, the present appellant was to take action according to law for realization of the outstanding dues from the present respondent, if any, after taking into consideration of the loss suffered by the present respondent from 29.11.1993 till 31.12.2002, the profit gained by the present proforma respondent from 29.11.1993 till 31.12.2002 and also the deprecated value of the bus on the date of its restoration to the present respondent. 5. The appellant is challenging the impugned judgment and decree mainly on the following grounds:- (i) Since the trial court decided that the seizure of the bus was legal, the failure of the trial court to give reason whatsoever as to how the present respondent was entitled to the delivery of the bus, its direction to restore possession of the bus to the respondent was one given illegally and arbitrarily. (ii) Since the trial court decided that the present appellant had the right to seize and sell the bus under the terms and conditions of the agreement and deed of hypothecation while deciding the Issue No.1, its decision that the sale was illegal is erroneous and arbitrary. (iii) That the findings of the trial court about the sale of the bus at the sweet-will of the present appellant and also about its want of fairness and transparency in selling the bus are erroneous and arbitrary. (iv) That the suit being a suit for declaration and for mesne profit for damage, having regard to the provisions of Articles 69, 80 and 91 of the Limitation Act, the trial court should have held that the suit was filed beyond the period of limitation by counting it from the date of seizure of the bus and as such a finding of the learned Addl.District Judge, Manipur East that the suit was covered by Article 58 of the Limitation Act is erroneous and bad in law. 6. In respect of the above said issues No.1 to 3, I have heard Mr. Ch.Nodiachand, learned senior counsel appearing on behalf of the appellant and Mr. Sachindra Singh, learned counsel appearing on behalf of the present respondent at length. 7. 6. In respect of the above said issues No.1 to 3, I have heard Mr. Ch.Nodiachand, learned senior counsel appearing on behalf of the appellant and Mr. Sachindra Singh, learned counsel appearing on behalf of the present respondent at length. 7. There is no dispute that exhibits D-1, D/2 and D/3 are the deed of agreement, a deed of mortgage, a deed of hypothecation agreement respectively executed by the present respondent in connection with the said loan. On perusal of the said hypothecation agreement, it is ascertained that in case of failure on the part of the present respondent to pay the due amount in connection with the said loan, the present appellant was having a right to seize and sell the bus. As a security for the payment of loan, the present respondent hypothecated the bus by way of first charge in favour of the present appellant. The right to seize and sell or dispose of the bus was given to the present appellant for the purpose of realization of the amount due to it. There is also no dispute that the present respondent defaulted in making payment of the required installments to the present appellant on due dates. It is ascertained that there was an outstanding due of Rs. 1, 93,636/- required to be paid by the respondents at the time of seizure of the bus. As per terms of the hypothecation agreement, it was within the power of the appellant to sell the hypothecated bus without intervention of the Courts and there was no need of giving any notice to the present respondent after seizure of the bus before disposing or otherwise dealing with it. 8. In the State Bank of India v. S.B. Shah Ali (died) & ors.; AIR 1995 Andhra Pradesh 134, it was held as follows:- “18. Hypothecation is not a statutory creation but it is usage in merchantile field since time immemorial. The hypothecation is neither governed by any statute nor there is any law governing the same directly or indirectly . Therefore, Courts have to consider hypothecated case s purely on general conditions of the contract as per the terms of the hypothecation agreement. As there is no provision in the Contract Act regarding hypothecation nor in the Sale of Goods At, we have to find out, what the meaning of hypothecation is. Therefore, Courts have to consider hypothecated case s purely on general conditions of the contract as per the terms of the hypothecation agreement. As there is no provision in the Contract Act regarding hypothecation nor in the Sale of Goods At, we have to find out, what the meaning of hypothecation is. It is also relevant to know what is the difference between 'pledge' and 'hypothecation'. 19. Hypothecation is understood in merchantile world as creation of charge on movables in favour of hypothecatee by hypothecator where possession of goods will remain with the hypothecator. Thus, the hypothecator can be in possession of goods hypothecated and enjoy the same without causing any damage to the rights of the hypothecatee. 20. Thus, to sum up, the distinction between pledge and hypothecation is, that in case of hypothecation the hypothecator can be in possession of the goods hypothecated and enjoy the same without causing any damage to the rights of the hypothecatee whereas in the case of pledge the possession of movables will be transferred to the pawnee and he will be in possession and he pawner will not be able to enjoy the same as the possession has already been parted with.” In the same case, after referring to various authorities, it was held:- 34. …………………………………. “The next point that can be deduced from the principle laid down by the aforesaid decision is that where there is a mere charge in hypothecation agreement, the hypothecatee has to approach the Court and seek intervention of the Court for obtaining money decree and for bringing the hypothecated goods for sale through the court. When there is any specific clause in the hypothecation agreement empowering the hypothecatee to take possession of the goods and sell the same, in the event of default in payment, as per the said terms the hypothecatee can proceed ahead without intervention of the Court.” The Court further held at para 46:- “46. ….. Intervention of the Court is not necessary and compulsory for enjoyment of a right , and the intervention of Court arises only when there is an infringement of right, and when there is no infringement, there is no lis and no suit. In the hypothecation agreement, the rights of the hypothecatee are governed by the terms of the agreement. ….. Intervention of the Court is not necessary and compulsory for enjoyment of a right , and the intervention of Court arises only when there is an infringement of right, and when there is no infringement, there is no lis and no suit. In the hypothecation agreement, the rights of the hypothecatee are governed by the terms of the agreement. Where the agreement provides for taking of possession of the goods hypothecated, the hypothecatee can take possession of the said goods without intervention of the Court. Where the goods are hypothecated only by creating a charge, then the hypothecatee has to take action to enforce the said charge according to law. Therefore, it cannot be said that the hypothecatee has to approach the Court even though the deed provides for taking of possession in case of default of the hypothecator. If there is any violation of the terms of the deed it will not, however, bar the hypothecator to approach the Court and seek proper relief.” 9. Section 176 of the Indian Contract Act relates to pawnee's right where pawner makes default. There is requirement of giving reasonable notice of sale by the pawnee to the pawner before exercising the power of sale. This provision of Section 176 of the Indian Contract At will not be applicable in respect of the hypothecation agreement which is quite different from a pledge. It is already seen that under the terms of the hypothecation agreement in the case, there was no need of giving any notice to the present respondent before selling or disposing of the bus seized on the default of the present respondent to make payment. Since the terms of the hypothecation agreement empowered the present appellant to sell or otherwise dispose of the bus for realization of the due amount without any notice, there was no basis for thinking on the part of the respondent that he would be getting notice from the appellant before proceeding with the sale of the bus. The present respondent ought to have known that after seizure of the bus, the appellant would be proceeded to sell it for realization of the due amount. On the basis of the pleading at para.12 of the plaint, it can be ascertained that due to his inability to clear the outstanding amount, the present respondent requested the appellant to extend time for making payment. On the basis of the pleading at para.12 of the plaint, it can be ascertained that due to his inability to clear the outstanding amount, the present respondent requested the appellant to extend time for making payment. In that situation, it was upto the appellant if time was to be extended or not. It will be unfair and unjust to say that the appellant was under any obligation to extend time for payment agreed upon at the time of taking the loan. The appellant was supposed to act in accordance with its interest. Accordingly, the appellant is not to be blamed for its failure to extend the time and to be considerate in favour of the present respondent. 10. Further, in my considered opinion, the clause in the hypothecation agreement empowering the appellant, to take possession of the hypothecated bus and sell the same for realization of the outstanding amount of loan cannot be considered as one opposed to public policy or unlawful. In the State Bank of India v. S.B. Shah Ali (died) & ors.(supra) , the same view was held in respect of the similar clause involved in the case. Learned counsel appearing on behalf of the present respondent vehemently submits to the contrary but his view is not acceptable and it is rejected. 11. There is a dispute in between the parties on the question of legality or otherwise of the sale of the buss on 29.11.1993. In this connection, the finding of the learned Addl.District Judge, Manipur East is that the sale of the bus was made on the sweet-will of the present appellant on 29.11.1993. According to the learned Addl.District Judge, Manipur East, though sale notice fixing 12.11.1993 as the date of the auction sale of the bus had been issued and published in local papers, no auction took place on the fixed date purportedly due to absence of any bidder and as such, the bus was sold to the present proforma respondent on the basis of his application dated 18.11.1993 at exhibit D/22 and the present appellant issued sale certificate in favour of the present proforma respondent on 29.11.93 showing that the bus was sold at Rs. 1,94,000/- . 1,94,000/- . According to the learned Addl.District Judge, Manipur East, the present respondent filed an application on 26.11.93 to the present appellant requesting for allowing him to take the bus on payment of the due amount within the shortest time. It is also said that one Kh.Debendra Singh also filed an application on 23.11.93 requesting for allowing him to purchase the bus. On the basis of the above said facts, one cannot conclude that the said sale of the bus on 29.11.93 is illegal. It is to be noted that the said hypothecation agreement empowered the present respondent to dispose of or otherwise deal with the bus for the purpose of realization of the due amount. Under the terms of the said hypothecated agreement, it was not necessary on the part of the present appellant to hold a public auction in respect of the said bus. The present appellant gave loan to the present respondent under certain terms and conditions and it was having the right and power under the terms of the said hypothecation agreement to dispose of or otherwise deal with the bus in the manner it thought fit for safeguarding its interest. As per records, the appellant sold the bus to the present proforma respondent at Rs. 1,94,000/- and thereby it could get little more than the due amount of Rs. 1,93,636/-. 12. When the present appellant proceeded in accordance with the agreed terms and conditions of the hypothecation agreement for realization of the due amount in respect of which the present respondent had defaulted, no illegality was committed. There was no lack of fairness or transparency on the part of the present appellant in the manner it proceeded for the said purpose. There was also no arbitrariness on the part of the appellant in acting in the manner it did. The present respondent who defaulted in making payment as per terms of the agreement cannot be allowed to blame the present appellant who only proceeded to recover its money in the manner agreed in between them. It is also to be noted that there was neither any pleading nor any evidence on the side of the present respondent to the effect that the present appellant was an instrumentality or agent of the Government in the grant of largesse, jobs, Government contract and issue of quotas and licences, etc. It is also to be noted that there was neither any pleading nor any evidence on the side of the present respondent to the effect that the present appellant was an instrumentality or agent of the Government in the grant of largesse, jobs, Government contract and issue of quotas and licences, etc. Accordingly, there was no basis for application of the rule against arbitrary action in respect of the acts purportedly done by the appellant under the terms of the hypothecation agreement. 13. In the light of the above consideration, the view of the learned Addl.District Judge, Manipur East to the effect that the sale of the bus on 29.11.1993 was illegal is not sustainable in the eye of law. There was no illegality in disposing and selling the bus in the manner proceeded by the present appellant under the terms of the hypothecation agreement. Even though the present appellant was not the owner of the bus, since it had been empowered by the present respondent himself by executing the hypothecation deed to seize and sell the bus for realization of the outstanding amount, in the facts and circumstances, it was having the power and authority under the law to sell the bus of any person for the said purpose. The submission of the learned counsel for the present respondent that the appellant could not have effected a valid sale under the law is not acceptable. 14. In the result, since there was no illegality in disposing and selling the said bus by the appellant, the impugned decree is not sustainable in the eye of law. The present respondent is not entitled to any of the relief claimed in the suit. In view of this findings, there is no need of considering the question if the suit was filed after expiry of the period of limitation prescribed by law. Accordingly, the said ground of objection of the suit having been filed beyond the period of limitation is not considered. This appeal is allowed and the impugned judgment and decree dated 31.12.2002 are hereby set aside. No order as to costs.