The judgment of the court was delivered by

GAJENDRAGADKAR C.J.---The short question of law which arises in this appeal is whether respondent No. 1, the Union of India, is entitled to claim that the tax due to it from respondent No. 2, M/s. R. K. Das and Co., on account of the assessment years 1946-47 and 1947-48 has priority and precedence over the decretal amount due to the appellant, M/s. Builders Supply Corporation, from respondent No. 2. This question has been answered against the appellant by the Calcutta High Court, and by its present appeal brought to this court with a certificate issued by the said High Court, the appellant contends that the decision of the Calcutta High Court is erroneous in law.

It appears the respondent No. 2 secured a building contract from the Government in connection with the construction of the Mint and in that behalf it had to make a deposit of Rs. 50,000 as security for the due execution of the contract. In connection with the execution of the said contract, respondent No. 2 obtained a supply of building materials from the appellant. The appellant was unable to secure payment for the goods thus supplied by it, and so, it had to sue respondent No. 2 for recovery of the dues. In that suit, on the 18th April, 1949, the appellant obtained an order for attachment before judgment of Rs. 5,000 out of the aforesaid security deposit of Rs. 50,000. This deposit was lying with the Superintending Engineer, Calcutta, Central Circle No. 1. Subsequently, on the 16th June, 1950, the appellant's suit was decreed by the 5th Additional Subordinate Judge, 24 Parganas, for a sum of Rs. 12,275-9-0. This decree was put in execution by the appellant on the 14th February, 1952, in the court of the 7th Sub-Judge and in consequence, Money Execution Case No. 9 of 1952 was started. Four days thereafter, the Subordinate Judge issued an order for the attachment of a further sum of Rs. 7,275-9-0 out of the aforesaid security amount deposited by respondent No. 2. Whilst writing to the Superintending Engineer in that behalf, the Subordinate Judge asked him to remit to the court the sum of Rs. 5,000 which had already been attached before judgment. On receiving this communication, the Superintending Engineer placed a further sum of Rs. 7,275-9-0 under attachment, but did not comply with the requisition of the court to remit Rs. 5,000 to it. On the 30th April, 1952, the Executing Court wrote to the Superintending Engineer and asked him to transmit the whole of the amount of Rs. 12,275-9-0 which was under attachment as a result of the two previous orders passed in that behalf, but this requisition also was not complied with till March 9, 1953.

Meanwhile, the Certificate Officer of 24 Parganas had addressed a letter to the Subordinate Judge on the 23rd July, 952, and requested him that if the Superintending Engineer had transmitted any money to his court, its payment to the appellant should be withheld in order to enable a claim under Order 21, rule 52 of the Civil Procedure Code to be preferred or behalf of the Government. Along with the letter, the Certificate Officer sent a copy of another letter which had been addressed by him to the Superintending Engineer asking him not to make any payment out of the amount deposited by respondent No. 2, but to retain it after deducting the departmental dues. The Superintending Engineer was informed by this letter that arrears of income-tax due from respondent No. 2 exceeded Rs. 50,000 with the result that the whole of the security deposit, less departmental dues, was liable to be applied to the satisfaction of the tax debt in respect of which Government had priority over all unsecured creditors.

In spite of this letter, however, the Superintending Engineer sent the whole of the amount attached at the instance of the appellant to the Executing Court and it was received in the Executing Court on March 9, 1953. On March 21, 1953, the Executing Court addressed a letter to the Certificate Officer in reply to the communication received by it from him, requiring him to state why the amount in question should not be paid to the appellant and adding that in case no effective step was taken on or before April 10, 1953, the said amount would be paid to the appellant. At this stage, the Commissioner of Income-tax, representing respondent No. 1, intervened and moved the Executing Court for adjournment on several occasions. On every such occasion, the Commissioner intimated to the Executing Court that respondent No. 1 would show cause why the amount in question should not be paid to the appellant. During the course of these proceedings, on June 17, 1953, the Certificate Officer addressed a letter to the Executing Court under rule 32 of Schedule II to the Public Demands Recovery Act (hereinafter called the " Recovery Act ") and asked the court to hold the amount subject to further intimation from him. This letter was received by the Executing Court on June 24, 953, and, in consequence, the Executing Court passed an order withholding payment to the appellant until further orders. Finally, on July 15, 1953, respondent No. 1 made an application to the Executing Court in which it claimed that the tax amount due to it from respondent No. 2 had a priority over the judgment debt due to the appellant from the same debtor, and so, the whole of the amount under attachment ought to be paid to it towards partial satisfaction of the said income-tax dues. A similar application was made on the 11th September, 1953, and this application gave material details in respect of the income-tax demand against respondent No. 2. In both these applications, it was alleged that a certificate under section 46(2) of the Indian Income-tax Act, 1922 (No. 11 of 1922), had been duly forwarded to the Collector, 24 Parganas, and thus proceedings under the Recovery Act had already been commenced in that behalf.

The Executing Court set down these applications for hearing and elaborate arguments were urged before it by the appellant and respondent No. 1 in support of their respective contentions. In the result, the Executing Court upheld respondent No. 1's plea that the tax amount due to it from respondent No. 2 had a priority over the decretal amount due to the appellant from the same debtor and, in consequence, it issued a direction that the amount of Rs. 12,275-9-0 lying in its custody under attachment should be paid to respondent No. 1.

This order was challenged by the appellant before the Calcutta High Court by a revision application under section 115 of the Code. The proceedings taken before the Executing Court were initiated by the two applications made by respondent No. 1 under section 151 of the Code. Apparently, the Executing Court passed its order in favour of respondent No. 1, purporting to exercise its jurisdiction under the said section. It was urged before the High Court as a preliminary point that the Executing Court was in error in allowing its jurisdiction under section 151 of the Code to be invoked in the present proceedings. The High Court has held that it was unnecessary to consider whether section 151 was properly invoked or not, because, in its opinion, the claim made by respondent No. 1 could be sustained under rule 22 of the Statutory Rules framed under the Recovery Act. This rule corresponds to Order 21, rule 52 of the Code and the High Court thought that the Executing Court had jurisdiction to deal with the claim of respondent No. 1 under rule 22 read with Order 21, rule 52 Of the Code. It is unnecessary to deal with this part of the controversy between the parties, because the finding of the High Court on this point has not been challenged before us.

The High Court then examined the merits of the dispute. It held that it had been accepted by all the High Courts in India that the tax amount due from an assessee to respondent No. 1 has priority " vis-a-vis and over claims of other creditors, though only unsecured creditors ". The High Court rejected the appellant's contention that the relevant provisions of the Recovery Act prevented a claim for priority made by respondent No. 1 in the present case. The appellant had also urged before the High Court that the claim for priority made by respondent No. 1 could no longer be sustained, having regard to the fact that it was inconsistent with the provisions of the Constitution of India. This claim, it was urged, was based on the common law doctrine of the Crown prerogative and it could not be claimed by respondent No. 1, inasmuch as it did not fall within the scope of article 372(1) of the Constitution. This contention has been rejected by the High Court, and the High Court has also held that the said claim cannot be said to be covered by any of the provisions of the Recovery Act and as such can be legitimately enforced by respondent No. 1. As a result of these findings, the High Court has discharged the rule which was issued at the instance of the appellant in the revision application preferred by it before the High Court under section 115 of the Code. The appellant then applied for and obtained a certificate from the High Court and it is with this certificate that the matter has been brought before us in appeal.

The first point which falls for our decision in the present appeal is whether the High Court was right in holding that the common law doctrine about the priority of Crown debts on which the claim of respondent No. 1 was based, applied in the present case. This common law doctrine has no doubt been evolved by the special attributes associated with the Crown in England in early days. It is the part of the Crown prerogative. As Halsbury has observed " the royal prerogative may be defined as being that pre-eminence which the Sovereign enjoys over and above all other persons by virtue of the common law, but out of its ordinary course, in right of her regal dignity, and comprehends all the special dignities, liberties, privileges, powers and royalties allowed by the common law to the Crown of England This doctrine, as originally evolved by common law in England, had a very wide sweep and it purported to take within its scope many privileges and powers. Considered in the light of its wide sweep, some of these privileges may sound archaic and feudal, but it is not necessary for our purpose to examine the said doctrine in all its width ; in the present appeal we are concerned with the narrow question as to whether respondent No. 1 is entitled to claim that the recovery of the amount of tax due to it from a citizen must take precedence and priority over unsecured debts due from the said citizen to his other private creditors. The competition in the present case is between respondent No.1's claim to recover its tax dues and the appellant's claim to recover its decretal dues from the same debtor, respondent No. 2. The appellant is an unsecured creditor, though undoubtedly at its instance, the amount in question has been attached partly before judgment and partly in execution proceedings after the judgment was pronounced.

The question about the applicability of this part of the Crown prerogative in India was considered by the Bombay High Court as early as 1868. In Secretary of State in Council for India v. Bombay Landing & Shipping Co. Limited, Westropp J. has elaborately examined this problem. The learned judge held that a judgment debt due to the Crown was in Bombay entitled to the same precedence in execution as a like judgment debt in England, if there be no special legislative provision affecting that right in the particular case. Similarly, it was held that a judgment debt due to the Secretary of State in Council for India was in Bombay entitled to the like precedence for the reason that such debt is vested in the Crown, and when realised, fall into the State Treasury. Tracing the origin of this doctrine, the learned judge referred to the Commentary of Lord Coke on Littleton, where Lord Coke has put the matter in these words : " The King, by his prerogative, regularly is to be preferred, in payment of his duty or debt, before any subject although the King's debt or duty be the latter ". The learned judge then referred to some English decisions bearing on this point and concluded that " in England the right of the Crown to precedence does not arise out of any peculiar quality in the writ of extent. The reasoning of Lord Coke an Chief Baron Parker rests on a broader foundation, namely, that the destination of the debt, when recovered, is the State Treasury ".

It is significant that Westropp J. considered the question from a larger juristic point of view and observed that the common law doctrine was " no novelty in India " and he referred to the rule enunciated by Yajnavalkya in that behalf. Says Yajnavalkya, " A debtor shall be forced to pay his creditors in the order in which the debts were contracted, after first discharging those of a priest or the King ". On this topic, Katyayana says, if there be many debts at once, that which was first contracted shall be first paid, after those of a King or of a priest learned in the Veda ". The reference to the priority of a debt due to priests learned in Vedas is obviously obsolete and can have no relevance at the present time. But the point that Westropp J. has made is that the common law doctrine cannot be said to be a novelty to Hindu Jurisprudence. He has also added that " Mohammadan sovereigns were not prone to waive or abandon such royal prerogative as they found existing in India ". We have referred to this aspect of the matter, because if the larger question about the validity of the Crown prerogative in respect of claims other than tax claims falls to be considered in future, it may become necessary to enquire whether a similar doctrine was, recognised by Hindu Jurisprudence or not. That enquiry is, however, foreign to the scope of the controversy in the present appeal. So far as respondent No. 1's claim in the present appeal is concerned, there is no doubt that this claim has been consistently recognised by all the Indian High Courts.

Before referring to these decisions, however, it will be convenient to read the relevant provisions of the Indian Income-tax Act as it stood at the relevant time (Act No. 11 of 1922). Section 46(2) of this Act provides that the income-tax Officer may forward to the Collector a certificate under his signature specifying the amount of arrears due from an assessee, and the Collector, on receipt of such a certificate, shall proceed to recover from such an assessee the amount specified therein as if it were an arrear of land revenue. There is a proviso to this sub-section which lays down that without prejudice to any other powers of the Collector in this behalf, he shall, for the purposes of recovering the said amount, have the powers which under the Code of Civil Procedure, 1908, a civil court has for the purpose of the recovery of an amount due under a decree. Section 46(3) lays down that in any area with respect to which the Commissioner has directed that any arrears may be recovered by any process enforceable for the recovery of an arrear of any municipal tax or local rate imposed under any enactment for the time being in force in any part of the State, the Income-tax Officer may proceed to recover the amount due by such process. This provision prescribes an alternative procedure for the recovery of the debts in regard to cases falling under it. Section 46(5) provides yet another alternative remedy ; it lays down that if any arrear is in respect of any income chargeable under the head " salaries " the Income-tax Officer may require any person paying the same to deduct from any payment subsequent to the date of such requisition any arrears due from such an assessee ; and it requires that such requisition shall be complied with. The Explanation to section 46 provides that it shall be lawful for the Income-tax Officer, if for any special reasons to be recorded he so thinks fit, to have recourse to any such mode of recovery notwithstanding that the tax due is being recovered from an assessee by any other mode. These provisions indicate the several remedies open to the Income-tax Officer to adopt in order to recover arrears of income-tax due from any assessee.

In construing the relevant provisions of section 46, the High Courts in India have had frequent occasions to consider whether the Government of India is entiled to claim priority for arrears of income-tax due to it from assessees over the private debts due from them to their creditors, and this claim has been consistently upheld. In Manickam Chettiar v. Income-tax Officer, Madura, a Full Bench of the Madras High Court has held that the income-tax debt has priority over private debts and that the court had inherent power to make an order on the application for payment of moneys due to the Crown. In that connection, the court held that section 46 of the Income-tax Act is not exhaustive of the remedies of the Crown to cover arrears of income-tax and does not preclude an application of this nature. The court further held that it was also not necessary for the Crown to obtain a decree against the assessee or to effect an attachment before making such an application. The application in question had been made under section 151 of the Code. Leach C. J., who delivered the principal judgment of the Full Bench referred to the fact that the argument which had been urged before the court was that there was nothing in the Code which placed the Crown in a different position from that of a private person, and so no application could be made by the Crown to recover its tax dues unless a decree had been obtained in that behalf ; and observed that the argument ignored the special position of the Crown, the special circurmstances and the court's inherent powers. The learned Chief Justice stated that it could not be denied that the Crown had the right of a priority in payment of debts due to it ; it is a right which has always existed and his been repeatedly recognised in India. In the case before the court, the debt represented money due to the Crown under the Indian Income-tax Act and the demand of the Income-tax Officer was not open to question. We ought to add that Varadachariar J., who had referred this matter to the Full Bench, apparently entertained some doubt about the correctness of the procedure adopted by the income-tax department in seeking to recover the arrears in question. With that aspect of the matter we are not concerned in the present appeal. It is, however, noteworthy that Varadachariar J. recognised the fact that there was overwhelming weight of authority in favour of the recognition of the priority of the Crown debts over the private debts due from the same debtor. His attention was drawn to a note of dissent on this point which had been struck by an earlier decision of the Madras High Court in Ramachandra v. Pitchaikanni, but he did not attach any importance to the opinion there expressed, because, in his opinion, " the weight of authority in favour of the recognition of the priority in question even in this country is so strong that this expression of doubt cannot help the petitioner to any material degree."

In Bank of India v. John Bowman, the Bombay High Court had occasion to consider the same point. In dealing with the question, Chagla C. J. observed that the priority given to the Crown is not on the basis of its debt being a judgment-debt or a debt arising out of statute, but the principle is that if the debts are of equal degree and the Crown and the subject are equal, the Crown's right will prevail over that of the subject. It was urged before the High Court that the democratic set-up which had been ushered in this country by the Constitution was inconsistent with the doctrine of Crown priority, but the learned Chief Justice rejected this argument and observed that whatever may have been the historical origin of the principle which gives priority to the debts due to the Crown, when the English courts came to consider this question, the principle had become a part of the common law of England. It is not so much because the Crown has any special privileges in England that this principle has been upheld, but it is because the State in England has taken the place of the Crown and the English courts have continued the privilege which was once the privilege of the King and have afforded the same privilege to the State because they have realised that the State has certain rights and privileges which cannot be overlooked.

In Kaka Mohamed Ghouse Sahib & Co. v. United Commercial Syndicate, the Madras High Court has held that it is a settled principle of constitutional law that as between creditors of the same rank the Government is entitled to priority, and the Republican character of the Constitution of India has not abrogated this general doctrine of priority of State debts. In dealing with this question, Ramamurthi J. has referred to the relevant decisions in relation to the arrears of income-tax due to the Government and has pointed out that there is a consensus of judicial opinion on the question that the arrears of tax due to the State can claim priority over private debts. This position has not been seriously disputed before us, and so, it is unnecessary to refer to other decisions which deal with this problem.

As we have already indicated, there is one decision in which a note of dissent was struck by the Madras High Court, and that is the decision in the case of Ramachandra. In that case, certain land had been sold under the provisions of section 10 of the Madras Abkari Act, 1864, for arrears due by an abkari renter. It was held that the purchaser at the sale did not take the land free of all encumbrances as in the case of a sale for arrears of land revenue under the provisions of the Revenue Recovery Act (Madras Act II of 1864). With the actual decision in the case, we are not concerned in the present appeal ; but it appears that the learned judges in that case made a reference to the question as to whether Crown debts have priority, and they expressed the opinion that the said doctrine would not be universally applicable and three reasons were cited in support of this view. The first reason was that the East India Company was only a corporation with limited powers of sovereignty delegated to it, and in the courts it was treated as a subject ; the second reason was that the right of Government to priority to a mortgage was not recognised in the mufassil which was evident by the express language of the Act which declared the land revenue to be a first charge on the land ; and, according to the court, such a provision would have been unnecessary, if by common law every debt due to the Crown was a first charge on the land. The third reason given by the court was that the court hesitated to import into places outside the Presidency towns the doctrine of the common law of England which would cause inconveniences to purchasers. Having set out these reasons, the court, however, took the precaution of adding that it was not necessary for the purpose of the appeal before it whether debts due to Government in this country have the same preference over private debts as Crown debts in England. This observation was made, because in the case with which the court was concerned, the hypothecation was in 1874, and the abkari revenue fell into arrear in a subsequent year, and it was held that even in England the lien of the Crown attached only from the time when the owner of the land became a debtor to the Crown, and since 1839 the common law has been greatly modified in England by statute for the protection of purchasers. It would thus be seen that the observations in question are obiter observations and it does not appear that the matter was elaborately argued before the court ; and considerations relevant for the purpose of deciding the point as to priority of tax dues have not been fully examined. Besides, this view has been dissented from by Bhashyam Ayyangar J. of the Madras High Court in Bell v. Municipal Commissioners for the City of Madras ; and as we have already indicated, in the words of Varadachariar J. in Manickam Chettiar, the weight of authority in support of the applicability of the common law doctrine in regard to tax dues in this country is so strong that no significance can be attached to these obiter observations.

That takes us to the second argument urged before us by Mr. Das Gupta for the appellant. He contends that though this doctrine of the priority of tax dues might have been recognised by judicial decisions in India prior to 1950, there is no scope for continuing its operation after the Constitution came into force. This argument naturally proceeds on the assumption that the judicial recognition of the relevant common law doctrine cannot claim the protection of article 372(1). It will be recalled that article 372(1) provides, inter alia, for the continuance in force of existing laws. It lays down that notwithstanding the repeal by this Constitution of the enactments referred to in article 395, but subject to the other provisions of this Constitution, all the law in force in the territory of India immediately before the commencement of this Constitution shall continue in force therein until altered or repealed or amended by a competent legislature or other competent authority. The question which arises is whether this doctrine of priority which is based on common law and which was recognised by our High Courts prior to 950, can be said to constitute " law in force " in the territory of India at the relevant time. In other words, is this doctrine of common law which was introduced in this country and followed, law in force within the meaning of article 372(1) ? If it is, then by virtue of article 372(1) itself, the same law would continue to be in force until it is validly altered, repealed or amended.

This question can no longer be in doubt because of the decision of this court in Director of Rationing and Distribution v. Corporation of Calcutta. In that case, this court was called upon to consider the question as to whether the decision of the Privy Council in Province of Bombay v. Municipal Corporation of the City of Bombay, which had laid down a certain rule of interpretation, could be said to be " l