Pledged goods and winding up: a bank's special property and lien override liquidator claims to sale proceeds.

Goods pledged with a bank remain subject to the pawnee's special property and lien under the Contract Act, so they do not become part of the company's estate merely because the pawnor enters winding up. The Court held that section 529A of the Companies Act, 1956 cannot enlarge the Official Liquidator's claim over pledged goods or their sale proceeds where the bank retains its pledge rights. Because the goods were not available for distribution as assets of the company in liquidation, competing claims of creditors could not defeat the bank's right to retain or sell the pledged goods in enforcement of the pledge.

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Issues: Whether goods pledged with a bank remain the property of the bank and fall outside the estate of a company in winding up, so that section 529A of the Companies Act, 1956 does not permit the Official Liquidator to claim the sale proceeds of such pledged goods.

Analysis: A pledge under the Contract Act creates bailment of goods as security, with the pawnee retaining a special property and lien in the goods and a right, on default, to retain or sell them. The Court applied the principle that pledged goods do not become the property of the pawnor merely because the pawnor is later wound up. Relying on the Supreme Court's formulation that a pawnee's rights cannot be defeated by a subsequent seizure or competing claims of other creditors, the Court held that the pledged goods continued to belong to the bank for the purpose of enforcing the pledge. Since the goods were not assets of the company available for distribution, the non obstante clause in section 529A could not enlarge the liquidator's claim over the pledged goods or their sale proceeds.

Conclusion: The pledged goods never became the property of the company in liquidation, section 529A did not apply to the bank's pledged goods, and the Official Liquidator had no claim over the sale proceeds received by the bank.

Ratio Decidendi: Pledged goods remain subject to the pawnee's special property and lien, and do not form part of the assets of the pawnor for distribution in winding up; therefore, competing claims under section 529A cannot defeat the bank's rights as pledgee.

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