Waiver of Security bars later claim to sale proceeds where creditor obtained only a money decree; prove claim in winding-up.

A creditor who obtained only a simple money decree without claiming or enforcing an existing hypothecation is deemed to have waived the security; such waiver bars subsequent claims to sale proceeds and the creditor cannot recover proceeds from the official liquidator. The sale and distribution are governed by the winding-up process, and the creditor must prove its claim before the liquidator rather than seek payment after obtaining a bare money decree. The petition for payment of the sale proceeds is dismissed on that basis.

---

---

Issues: Whether the petitioner (Syndicate Bank) is entitled to payment of Rs. 85,500 from the official liquidator as sale proceeds of hypothecated machinery.

Analysis: The bank filed a suit seeking a simple money decree despite having alleged hypothecation; it did not seek enforcement of the security or take possession of the hypothecated goods prior to the sale. The winding-up order preceded the suit and the bank failed to invoke remedies to realise the security. Under the governing procedural law, a creditor who obtains only a simple money decree without claiming or enforcing the security is deemed to have waived the security rights and any claim on the proceeds is barred by Order 2, Rule 2 of the Civil Procedure Code, 1908. The official liquidator's sale of assets and distribution is to be dealt with in the winding-up process and the bank must prove its claim before the liquidator.

Conclusion: The petitioner is not entitled to payment of Rs. 85,500; the application is dismissed.

Ratio Decidendi: A creditor who obtains only a simple money decree without enforcing an existing hypothecation or claiming the security is deemed to have waived the security and cannot claim sale proceeds later; such claims are barred under Order 2, Rule 2 of the Civil Procedure Code, 1908 and must be pursued by proving the claim in the winding-up proceedings.

---