Hypothecation and deemed possession under debt adjustment law can bring debtor-held goods within the statutory restriction.

Section 17 of the Displaced Persons (Debts Adjustment) Act, 1951 was treated as extending beyond formal pledge where the creditor had not taken physical possession, because the Explanation covers cases where pledged property is held by the debtor on the creditor's behalf and cannot be transferred without consent. The text applies that reasoning to hypothecation, noting that although possession remains with the debtor, the goods are subject to the creditor's security interest and cannot be freely dealt with. On that basis, hypothecated goods in the debtor's possession fell within the deeming provision, and the bank's claim was restricted accordingly.

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Issues: Whether Section 17 of the Displaced Persons (Debts Adjustment) Act, 1951 applied to goods hypothecated by the displaced debtor when the property remained in his possession.

Analysis: Section 17 governs debts secured by pledge where the creditor has been placed in possession of the pledged movable property before the debtor became a displaced person. The Explanation extends possession to cases where the pledged property, though not physically delivered to the creditor, is held by the debtor on behalf of the creditor and cannot be transferred to a third party without the creditor's consent. A hypothecation differs from a pledge in that possession remains with the debtor, but the debtor holds the property subject to the creditor's security interest and cannot deal with it freely without the creditor's assent. On that basis, the property in question was treated as falling within the statutory deeming provision.

Conclusion: Section 17 applied, and the bank's claim was restricted by that provision. The appeal was therefore against the appellant and in favour of the respondent.

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