Priority if can be claimed by the Bank in recovery proceedings.

S. Nainar Sundaram, J.

1. The petitioner, the Central Bank of India, hereinafter referred to as the petitioner bank, has come to this Court, stating, as follows : The fourth respondent requested for financial assistance for their working capital and long term financial requirements and the petitioner bank agreed to give such facilities and gave advances for the working capital and long term financial requirements since the year 1968. The entire fixed and movable assets of the fourth respondent consisting of land, building plant, machinery fixtures, stocks stores spares and other, movable assets have been charged or mortgaged to the petitioner bank to form security for the fourth respondent's indebtedness to the petitioner bank under various facilities. By such financial assistance from time to time, the total out standings due by the fourth respondents to the petitioner bank amounted to Rs. 1,24,52,319.83 on principal account and Rs. 95,76,466.42, towards interest from 1.1.1976 up to 30.6.1980. The petitioner bank decided in July, 1978 to suspend further financial support to the fourth respondent, thus avoiding the increase of their liability to the petitioner bank.

2. It is found that the fourth respondent did not pay the wages to its workmen for the months of July, 1978 to November, 19 78 and therefore applications were filed under Section 15(2) of the Payment of Wages Act, 1936, (Act 4 of 1936) hereinafter referred to as the Act, by the workmen against the fourth respondent claiming their wages and the Authority under the Act, by its Order, directed the fourth respondent to pay wages to the workmen' amounting to over Rs. seven lakhs. This determination is being sought to be implemented by resorting to the process under the Revenue Recovery Act, by issuing distraint proceedings. The prayer in the writ petition is for the issue of a writ of Mandamus to forbear respondents 1 to 3 from prosecuting the distraint proceedings taken in this behalf.

3. Mr. K.S. Natarajan, Learned Counsel for the petitioner bank, would submit that the rights of his client stand secured under Section 176 of the Contract Act, and apart from resorting to the ordinary right of a suit for recovery of the dues and for sale of the pledged properties, the petitioner bank is also entitled to sell them personally without reference to court as a pawnee, satisfying the procedure therefor. Learned Counsel would also advance a submission that the rights of the petitioner bank as pawnee cannot be extinguished or defeated by the distraint proceedings now taken. In support of the submission, the Learned Counsel relies on three pronouncements.

4. In Re S.Y.C.W. and S. Mills A.I.R. 1969 Mysore 280. A. Narayana Pai, J. observed as follows:

In the case of hypothecation or pledge of movable goods, there is no doubt about the creditor's right to take possession, to retain possession and to sell the goods directly without the intervention of court for the purpose of recovering his dues. The position in the case of regular pledge completed, by possession is undoubted and set out in the relevant sections of the Contract Act. Hypothecation is only extended idea of pledge, the creditor permitting the debtor to retain possession either on behalf of or in trust for himself (the creditor)

Hence, so far as the movables actually covered by the hypothecation deeds are concerned, there can be no doubt that the bank is entitled to retain possession and also to exercise the right of private sale.

5. In Bank of Bihar v. State of Bihar (1971) 2 S.C.J. 661, the goods pledged with the plaintiff bank by its debtor defendant No. 2, under cover of an illegal seizure Order issued by the Rationing Officer and the District Magistrate, Patna defendant No 1, were forcibly and illegally removed after breaking open the locks of the godown of the Bank where the goods were kept, and the bank laid the suit for recovery of the goods as seized, or in the alternative, for recovery of damages for illegal remo