LexCOLLECTOR OF AURANGABAD & ANR versus CENTRAL BANK OF INDIA & ANR.
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A B c D • , H COLLECTOR OF AURANGABAD & ANR. v. CJ<~NIRAL BANK OF INDIA & ANR. May 2, 1967 (J. C. SHAH, S. M. SIKRI AND V. R.AMASWAMI, JJ.] Hyderubrul Land Revenue Act (8 of 1317F), ss. 104, 116 and 119- Whether s. 119 applies to movable property in the custody and posses- sion of the Court-Whether ta;fes due to Gove~nt have priority over debts to others-Doctrine of "Priority of Crown debts" applicab//ily in Hyderabad State before the Constitution came iltto force. In execution of a decree obtained by the first respondent against the second respondent, a firm in Aurangabad in the erstwhile Hyderabad State, a holllle which was furnished as security for the amount of decree which might be passed against the second respondent, Was sold and the sale proceeds were deposited in the executing Court. Subsequently, the Collector of Aurangabad made an order under s. 119 of the Hyderabad Land Revenue Act, 1317F, distraining a part of the amount on account Of arrears of sales-tax due from the second respondent. On the question of the validity of the Collector's order, the High Court held that the order was not valid because : (I} s. 119 of the Hyderabad Land Revenue Act applied only to property which was in tho custody and possession of the judgment-debtor and not in the cus- tody and possession of the court; (2) the debt due to the Government in respect of arrears of sales-tax had no priority over the dues of tlie first respondent; and (3) the first respondent as a decree-holder had a prior charge; and the debt due to the Government in respect of sales- tax .:.n account of the quality of the debt due to the first respondent, had no priority. In appeal to this Court, HELD : (I) The construction put by the High Court on s. 119 was not correct. The section in general terms empowers the distraint and sale of the defaulter's movable property and there is nothing in its language or context which prohibits tile Colldctor from making an order of distraint with regard to the movable property in the custody and posses•ion of a court. [859 C-FJ (2) But, a reading of ss. 104 and 116 of the Hyderabad Land Revenue Act, shows, that in respect of taxes other than Land revenue, only the Procedure for recovery under s. 116 applies and not the subs- tantive law of priority under s 104 of the Act; and therefore the Gov- ernment had no prionty in re~pect of arrears of sales-tax over the dues of the ft·rst respondent. [860 H-861 BJ (3) The Government could claim priority regarding payment of sales-· tax according to the doctrine of "Priority of Crown debts" quite apart from the provisions of the Hyderabad Land Revenue Act, but there was no proof that the doctrine was given judicial recognition in the Hyderabad State prior to January 26 1950 and therefore the doctrine w.as not a "law in force" in that 'territory which was 'continued by virtue of Art. 3720) of the Constitution. (862 H-863AJ Builders Supply Corporation v. Union of India, .(1965] 2 S.C.R. 289; 56 I.T.R. 91 (S.C.) and Superintendent & Remembrancer of Legal Affairs, L9Sup.CI/67-ll · 856 SUPREMB COURT REPORT~ [1967) 3 S.C.R. W•st Be11g<1/ v. 1'/ie C01·porc11io11 of C<dc1111a [1967] 2 S.C.R. 170 A referred to. CIVIL APPELLATE J UR!SOICTION : Civil Appeal No. 1128 of 1965. Appeal by special leave from the judgment and order dated December 17, 1962 of the Bombay High Court in Letters Patent Appeal No. 29 of 1960. · S. T. Desai, R. Ganapathy Iyer and S. P. Nayyar, for the appellants. Hans Raj Sawhney, P. C. Bhartari and 0. C. Mathur, for the respondents. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by special leave, from the judgment of the Bombay High Court dated December 17, 1962 in Letters Patent Appeal No. 29 of 1900. Respondent No. 2, the firm of Chandmal Manmal was m· debted to the 1st respondent, Central Bank of India, Aurangabad branch. On March 11, 1955 the first respondent filed a suit being Civil Suit No. 28/l of 1955 against the second respondent for recovering a sum of Rs. 14,541/· and odd in the Court of Subordinate Judge at Aurangabad. On the application of the first respondent an order for interim injunction was passed in respect of certain properties belonging to the second respondent. The Court had ordered the second respondent to furnish secu<ity for the amount of the decree which may be passed against the firm in the suit. On April 28, 1955 Jogila
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