Hypothecation does not outrank government tax dues where attached movables remain available for revenue recovery.

A hypothecation over movables in favour of a private bank did not, by itself, create a first charge overriding the State's right to recover sales tax arrears through revenue recovery. Where the attached goods remained available for recovery, the Government dues prevailed and the proposed sale could not be restrained. The writ petition therefore failed, and the State was entitled to proceed with recovery and sale of the movables for the arrears.

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Issues: Whether the bank's prior hypothecation over the movables created a superior claim preventing the State from proceeding with sale for recovery of sales tax arrears.

Analysis: The movables had been hypothecated to the bank, but the tax arrears were recoverable by the State through revenue recovery proceedings. A hypothecation in favour of the bank was held not to amount to a secured debt having priority over Government dues where the attached goods were available for recovery of tax arrears.

Conclusion: The bank did not have a first charge over the attached goods as against the State's claim for sales tax arrears, and the proposed sale could not be restrained.

Final Conclusion: The writ petition failed and the State was entitled to proceed with recovery and sale of the attached movables for the tax arrears.

Ratio Decidendi: A hypothecation in favour of a private creditor does not, by itself, override the State's right to recover tax arrears from the attached goods when those goods remain available for revenue recovery.

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