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Johnson, 1925 AC 489, that if a creditor holding security sues for the debt, he is under an obligation on payment of the debt to hand over the security, and that if, having improperly made away with the security he is unable to return it to the debtor he cannot have judgment for the debt.

17. There is no difference between the common law of England and the law with regard to pledge as codified in Ss. 172 to 176 of the Contract Act. Under S. 172 a pledge is a bailment of the goods as security for payment of a debt or performance of a promise. Section 173 entitles a pawnee to retain the goods pleaded as security for payment of a debt and under Section 175 he is entitled to receive from the pawner any extraordinary expenses he incurs for the preservation of th goods pledged with him. Section 176 deals with the rights of a pawnee and provides that in case of default by the pawner the pawnee has (1) the right to sue upon the debt and to retain the goods as collateral security, and (2) to sell the goods after reasonable notice of the intended sale to the pawner. Once the pawnee by virtue of his right under S. 176 sells the goods the right of the pawner to redeem them is of course extinguished. But as aforesaid the pawnee is bound to apply the sale proceeds towards satisfaction of the debt and pay the surplus, if any, to the pawner. So long, howsoever, the sale does not take place the pawner is entitled to redeem the goods on payment of the debt. It follows, therefore, that where a pawnee files a suit for recovery of debt, though he is entitled to retain the goods he is bound to return them on payment of the debt. The right to sue on the debt assumes that he is in a position to redeliver the goods on payment of the debt and, therefore, if he has put himself in a position where he is not able to redeliver the goods he cannot obtain a decree. If it were otherwise, the result would be that he would recover the debt and also retain, the goods pledged and the pawner in such a case would be placed in a position where he incurs a greater liability than he bargained for under the contrast of pledge. The pawnee, therefore, can sue on the debt retaining the pledged goods as collateral security. If the debt is paid he has to return the goods with or without the assistance of the Court and appropriate the sale proceed towards the debt. But if he sues on the debt denting the pledge, and it is found that he was given possession of the goods pledged and had retained the same, the pawner has the right to redeem the goods so pledged by payment of the debt. If the pawnee is not in a position to, redeliver the goods he cannot have both the payment the debt and also the goods. Where the value of the pledged property is less the debt and in a suit for recovery of debt by the pledgee, the pledgee denies, the pledge or is otherwise not in a position return the pledged goods he has to give credit for the value of the goods and would be entitled then to recover only the balance." Judgment of the Hon'ble Apex Court in the case of Lallan (supra) was further relied upon by two different Hon'ble Three Judges' Benches of the Hon'ble Supreme Court in the case of The State Bank of Saurashtra Vs. Chitranjan Rangnath Raja ad another, AIR 1980 Supreme Court 1528 and in the case of Maharashtra State Co- operative Bank Ltd. Vs. The Assistant Provident Fund Commissioner and others, 2009(10) SCC 123.

Learned Single Judge of the Kerala High Court in the case of The Dhanalakshmi Bank Ltd Vs. K.K. Jose alias Jose Mohan and others, AIR 1991 Kerala 388, while placing reliance on the judgment of the Hon'ble Apex Court in the case of Lallan Prasad (supra), has held as under: -

"15. The next aspect that falls for consideration is whether the principle enunciated above can be applied to the facts of the present case where the goods pledged are available, but not in the condition in which they were at the time of pledge. Pledge is a bailment of goods as security for payment of a debt or performance of a promise. Bailment as defined in S. 148 of the Contract Act is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The purpose in this case is the security for payment of the debt due from defendant. When the purpose is accomplished, viz. the discharge of the debt the bailee is bound to return the goods pledged to the bailor. Section 150 of the Act stipulates that the bailor is bound to disclose to the bailee faults in the goods bailed, of which the bailor is aware, and which materially interfere with the use of them, or expose the bailee to extraordinary risks; and if he does not make such disclosure, he is responsible for damage arising to the bailee directly from such faults. Section 151 enjoins a duty on the bailee to take as much care of the goods bailed to him as a man of ordinary prudence would under similar circumstances, take of his own goods of the same build, quality and the value as the goods bailed. The loss or damage of goods entrusted to the bailee is prima facie proof of evidence of his negligence. The burden to prove absence of negligence is on the bailee. Section 152 of the Act stipulates that in the absence of any special contract, the bailee is not responsible for the loss, destruction or deterioration of the thing bailed, if he has taken the amount of care it is described in S. 151. The bailee is therefore bound to take care of the goods as an ordinary prudent man would take care of his own goods. The standard of diligence required is that of an ordinary prudent man. A bailee can escape from liability for lost goods if it is shown that he has taken as much care an ordinary man would take of his own goods. In case the goods are not returned, delivered or tendered at the proper time on account of the default of the bailee he will be responsible to the bailor for any such loss, destruction or deterioration of the goods from that time. Vide S. 161 of the Act.