Priority of State dues over secured creditors fails where no valid statutory first charge exists.

State recovery of sales tax and workmen's dues as arrears of land revenue depended on whether section 137 of the Bombay Land Revenue Code, 1879 could validly be invoked to claim priority over secured creditors. The text states that, although section 47A of the Gujarat Sales Tax Act, 1969 and section 33C of the Industrial Disputes Act, 1947 permit recovery as arrears of land revenue, State dues do not ordinarily override secured debts unless a statute expressly creates a first charge. As section 137 had earlier been declared void, it could not be used to defeat secured creditors' rights or support the claimed precedence.

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Issues: Whether the State could recover tax dues and workmen's dues as arrears of land revenue under section 137 of the Bombay Land Revenue Code, 1879, and claim priority over secured creditors.

Analysis: Section 47A of the Gujarat Sales Tax Act, 1969 and section 33C of the Industrial Disputes Act, 1947 permit recovery of the respective dues as arrears of land revenue, but the governing question was whether section 137 of the Bombay Land Revenue Code, 1879 could validly be invoked for that purpose. The Court reviewed the settled principle that State dues may have priority over unsecured debts, but that such priority does not normally override secured debts unless a statute expressly creates a first charge. It noted the earlier declaration that section 137 was void and held that the State could not rely on that provision to defeat the rights of secured creditors or to recover the dues in the manner claimed.

Conclusion: The State could not recover the dues under section 137 of the Bombay Land Revenue Code, 1879, and the challenge by the appellants-petitioners succeeded.

Ratio Decidendi: A State claim for recovery does not override a secured creditor's rights unless the statute clearly creates a valid first charge or priority; a void recovery provision cannot be used to confer such precedence.

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