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1. The question which falls for determination in this case is as to what will be the effect of a legal seizure and confiscation under Section 6A of the Essential Commodities Act, 1955, over the rights of a bank to whom the goods seized and confiscated are pledged under a cash credit agreement.

2. The short facts giving rise to this petition under Articles 226 and 227 of the Constitution of India are these :

The petitioners are a banking company in the public sector, governed by the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (Act No. 5 of 1970), having their principal office at Mandvi, Baroda, and a branch office at Indore. In the ordinary course of their business of banking, the petitioners advanced a cash credit loan to respondent No. 5, Indore Produce Company, against the security of pledge of stocks of soya bean to be purchased by respondent No. 5 for the purpose of sale, as dealers of soya bean. Copies of the agreements entered into between respondent No. 5 and the petitioners on May 25, 1977, and February 8, 1979, containing terms and conditions of the pledge have been annexed as annexures "A-1" and "A-2" to the writ petition. Pursuant to the said cash credit facility, respondent No. 5 purchased huge stocks of soya bean with the help of the loans advanced by the petitioner banking company by honouring cheques drawn by respondent No. 5 in favour of the parties from whom they purchased soya bean and giving credits in the cash credit account. The petitioners obtained a first charge by way of a pledge over the stocks of soya bean so purchased by respondent No. 5. The pledged stocks of soya bean were kept in a godown under lock and key of the petitioners in their actual and exclusive physical possession, control and dominion. The stocks of soya bean were redeemed by respondent No. 5 and were released by the petitioners from pledge from time to time in a chain and series of transactions against payments by respondent No. 5. The pledges were credited by pledge letters and deliveries were effected by delivery letters in pro forma such as annexures "B" and "C" to the petition, On February 9, 1979, the petitioners held stocks of soya bean purchased by respondent No. 5 with the help of money advanced by the petitioners to respondent No. 5 in the godown under lock and key of the petitioners at Indore. This is evidenced by entries in the stock register, a photo copy whereof has been annexed as annexure "D". On that date, i.e., on February 9, 1979, respondent No. 5 owed Rs. 5,78,161.51 to the petitioners. This is evidenced by a copy of the ledger which is annexed as annexure "E" to the petition. On that very date, the Assistant Inspector, Food and Civil Supplies, District Indore, visited the office premises of respondent No. 5, inspected the records maintained by them and found that they had stocked 6,401 quintals and 70 Kgs. of soya bean which had been pledged with the petitioners and were in the possession of the petitioners stored in the petitioners' godown, Consequent upon the said inspection, the aforesaid stocks of soya bean were confiscated by respondent No. 1, the Collector, Indore, under Section 6A of the Essential Commodities Act, 1955, read with Clause 4 of the Madhya Pradesh Rules, Edible Oilseeds and Edible Oils Dealers Licensing Order, 1977 (hereinafter referred to as "the licensing order") and directed the Food Inspector to sell the same. A copy of the order of confiscation is marked as annexure "F". The petitioners came to know about the order of confiscation passed by respondent No. 1 from respondent No. 5 and filed an appeal before the learned Sessions Judge, Indore, under Section 6C of the Essential Commodities Act, 1955. The appeal was allowed by the learned Sessions Judge, in Cr. A. No. 187 of 1979, and the operative part of the order read as follows :
" The case is remanded to the Collector, Indore, with a direction that he will proceed with the stage of giving a notice in writing to the Bank of Baroda, as required under the provisions in Section 6B of the Essential Commodities Act, 1955 and will pass necessary orders about the essential commodity, namely, soya bean oil seeds, according to law. It is further directed that, as desired by all the parties and in order to safeguard the financial interests of all concerned, the seized stock of soya bean may be sold and the sale proceeds thereof may be kept in interest bearing fixed deposit so that no party would suffer any financial loss."

3. The petitioners challenged the direction regarding remand contained in the aforesaid appellate order by filing a criminal revision in this court, being Criminal Revision No. 115 of 1980. While the revision was pending, respondent No. 1 issued a show-cause notice to the petitioners as directed by the learned Sessions Judge. The petitioners thereupon approached this court for stay of hearing before respondent No. 1 and this court, by order dated July 30, 1980, stayed the proceedings till the disposal of the aforesaid criminal revision. During the pendency of the criminal revision in this court, the petitioners requested this court to permit the petitioners to sell the stocks of soya bean which had been and were still in their possession. This court permitted the sale. Pursuant to these orders, the petitioners sold the stocks of soya bean. A statement containing details of the sales has been marked as annexure "G". Finally, however, by judgment dated November 24, 1981, this court rejected the contention of the petitioners that the learned Sessions Judge possessed no power of remand. As a result, the criminal revision was dismissed by this court and respondent No. 1 became entitled to resume the confiscation proceedings as directed by the learned Sessions Judge.

4. On March 29, 1985, the Collector, respondent No. 1, passed the order of confiscation of the stocks of soya bean holding that the petitioners were also knowingly or unknowingly a party to the breach of law. A copy of the order of confiscation has been marked as annexure "I". The petitioners thereupon filed an appeal to the State Government, respondent No. 3. The petitioners' appeal was, however, rejected by the State Government by order dated February 18, 1986, a copy of which has been marked as annexure "J". The petitioners came to know for the first time through a letter dated July 2, 1986, issued by respondent No. 1 which was served on the petitioners on July. 4, 1986. A copy of the said letter has been marked as annexure "K".