Judgment

GROVER

( 1 ) THIS is an appeal by certificate from a decree of the Patna High Court in a suit instituted by the appellant against the State of Bihar which was impleaded as defendant No. 1, the other defendants being the Jagdishpur Zamindari Co. Ltd. (defdt. No. 2) and some of its directors defendants 3 to 5.

( 2 ) ACCORDING to the allegations In the plaint one of the methods of making advances followed by the plaintiff Bank was that the constituents pledged their merchandise on a cash credit system with the Bank and took anvances on the pledged goods. The Bank held the goods as security for the advances made and the constituents either provided the Bank with godown or the Bank kept the pledged goods in godowns of its own and charged rents from the constituents. The defendant No. 2 entered into a cash credit system agreement with the plaintiffs Arrah Branch, the arrangement being that the sugar would be pledged under the cash credit system. On 16/12/1946 the advance made to defendant No. 2 stood at Rs. 3. 20,486-2-0 and the Bank held 6239 bags of different varieties of sugar as security. These bags were kept in godowns provided by defendant No. 2. The key of the lock of each godown was in the custody of the Bank. It was alleged that in December, 1949 under cover of an illegal seizure order issued by defendant No. 1 the Rationing Officer and the District Magistrate. Patna, got the locks of the godown broken open and forcibly and illegally removed 1818 bags of 27-D quality of sugar. The total quantity removed weighed about 5,000 maunds. No payment was made to the plaintiff Bank which held the bags of sugar as pledgee under the cash credit agreement. It is unnecesgary to refer to the other facts stated in the plaint except to mention that according to the plaintiff it was entitled to recover the sugar which had been seized illegally or to recover the price of that sugar as per schedule 2 of the plaint which the plaintiff would have got if the quantity of sugar which had been seized had been sold in the market on the material day. The plaintiff prayed for a decree for the retum of 1818 bags of 27-D quality sugar and alternatively, for recovery of Rs. 1. 81. 700-9-3 with interest by way of damages for illegal removal and detention of sugar or price thereof. Alternatively a decree for Rs. 93,910-10-9 was claimed against defendant No. 2 and the other defendants.

( 3 ) THE sult was resisted by defendant No. 1 on the wound that the seizure had been effected pursuant to lawful orders which had been made and that the sale proceeds of about 5000 mds. of sugar were included in the sum of Rs. 1,50,039-10-9 which was deposited in the treasury but which was later on attached under the orders of Certificate Officer, Patna, under the Public Demands Recovery Act on account of arrears of sugar cess amounting to Rs. 2 lakhs due from the Bhita Sugar Factory with which defendant No. 2 had entered into an arrangement pursuant to which the entire quantity of sugar including 5000 maunds which had been seized had come into possession of defendant No. 2. The other defendant also resisted the suit on various grounds. A number of issues were framed on the pleadings of the parties. We may only mention issue No. 6 (a) which will be material for determination of the points which we have been called upon to decide :

WAS the sugar seized by the Government in possession of the Bank as a pledgee at the time of the seizure and have the rights of the Bank as such pledgee been deternined by the seizure in question?"

( 4 ) THE trial Court held that the order of seizure in respect of the stock of sugar was valid. It was further held that the plaintiffs right as a pledgee could not be extinguished by seizure of the sugar in its possession and though the attachment order of the Certificate Officer was legal and binding on defendant No. 2 it was not binding on the Bank (plaintiff) and it could be effective only in respect of that portion of the price which was not ne