(1) Nothing in section 3 shall,-
(a) affect any interest of the State Government, the Corporation, a Government Company or any banking company, in any property, created by any mortgage, charge, pledge or other encumbrance; or
(b) affect any right or remedy against any person other than a person referred to in that section, in respect of a contract or indemnity or guarantee entered into in relation to an agreement referred to in that section or in respect of any interest referred to in clause (a).
(2) Where the property of any person referred to in section 3 is subject to any mortgage, charge, pledge or other encumbrance in favour of the State Government, the Corporation, a Government Company or a Banking Company, then,-
(a) in every case of a pledge or hypothecation of goods, proceedings shall first be taken for sale of the goods pledged or hypothecated and if the proceeds of such sale are less than the sum due, then proceedings shall be taken for recovery of the balance as if it were an arrear of land revenue:
Provided that where the State Government is of the opinion that it is necessary so to do for safeguarding the recovery of the sum due to it or to the Corporation, a Government Company or a Banking Company, as the case may be, it may for reasons to be recorded direct proceedings to be taken for recovery of the sum due, as if it were an arrear of land revenue before or at the same time the proceedings are taken for sale of the goods pledged;
(b) in every case of a mortgage, charge or other encumbrance on immovable property, such property or, as the case may be, the interest of the defaulter therein, shall first be sold in proceedings for recovery of the sum due from that person as if it were an arrear of land revenue, and any other proceedings may be taken thereafter only if the Deputy Commissioner certifies that there is no prospect of realisation of the entire sum due through the first mentioned process within a reasonable time.