Crown priority in tax recovery upheld against unsecured creditors, with payment allowed from court funds without prior attachment.

The common-law prerogative priority of the Crown for income-tax dues was recognised in India against unsecured creditors unless displaced by specific statutory provision, and the provisions cited did not abrogate that priority. Recovery procedure was treated as directory as to mode, not exclusive, so the Crown was not confined to attachment proceedings. Where funds were already in Court and affected parties had notice, payment could be ordered on simple application without prior attachment. The Revenue's claim was therefore given priority and satisfied from the funds in Court.

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Issues: Whether the Crown was entitled to priority in payment of income-tax dues over unsecured creditors, and whether the Court could direct payment out of funds in Court on a simple application without prior attachment.

Analysis: The judgment applied the common-law prerogative of the Crown to priority in payment and held that, in India, that priority was recognised at least against unsecured creditors unless displaced by a special statutory provision. The statutory provisions referred to, including Section 131 of the Government of India Act and the provisions corresponding to Order XXXII, Rule 10 of the Civil Procedure Code, did not take away that prerogative. The Court further accepted that the procedural provisions governing recovery did not confine the Crown to attachment proceedings and merely indicated one permissible mode of realization. Where funds were already in Court and interested parties had notice, there was no legal necessity for prior attachment before payment could be ordered.

Conclusion: The Crown's claim to the income-tax amount was held to have priority, and the Court could order payment on application without prior attachment. The application was granted in favour of the Revenue.

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