Mortgage priority over tax recovery upheld, with inherent powers used to protect a bank's security interest.

A prior mortgage created in favour of a bank gave it a subsisting security interest that could not be displaced by tax recovery proceedings against the mortgagor. The court held that the State's recovery claim was treated as that of an unsecured creditor in this context, so the bank's secured rights prevailed over the mortgaged property. It also held that the court could invoke its inherent powers under section 151 of the Code of Civil Procedure to protect the security, including by granting injunction relief against income-tax authorities even where they were not formally impleaded.

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Issues: Whether a secured creditor could invoke section 151 of the Code of Civil Procedure to obtain an injunction against the Income-tax authorities, and whether the State's tax recovery claim could override the rights arising from an already created mortgage over the property.

Analysis: The property had been mortgaged to secure the bank's advance, so the bank held a subsisting security interest in the property. The tax recovery claim of the State was treated as a claim by an unsecured creditor and could not displace the rights of a prior secured creditor. The court also held that the inherent powers under section 151 of the Code of Civil Procedure could be invoked to protect the mortgaged property even against a person not formally impleaded in the suit, where the security would otherwise be placed in jeopardy.

Conclusion: The injunction against the Income-tax authorities was maintainable, the bank's secured interest prevailed over tax recovery action against the mortgaged property, and the appeal failed.

Ratio Decidendi: A prior secured creditor's mortgage rights cannot be defeated by tax recovery proceedings against the mortgagor, and the court may use its inherent powers under section 151 of the Code of Civil Procedure to protect that security even against a third party not impleaded in the suit.

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