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TMI Blog1987 (12) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ors and trustees of Hargovandas Laxmichand Charity Trust, filed Civil Suit No. 3497 of 1976 in the City Civil Court at Ahmedabad against opponents Nos. 4 to 7 (judgment-debtors) for recovering Rs. 6,55,817.25 together with interest at the rate of 12 per cent. per annum and costs by selling properties given under equitable mortgage by the judgment-debtors to the judgment-creditors in the year 1971. The said suit was decreed on August 20, 1978. According to the final decree, the decretal amount has to be paid by the judgment-debtors by half-yearly instalments of Rs. 75,000. It is further provided in the decree that in case of default of payment of any two instalments, the judgment creditors are entitled to execute the decree at once. With res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt contained in the final decree amounts to creating charge in favour of the mortgagees, i.e., judgment-creditors. In that view of the matter the learned judge negatived the claim of the applicant who also appeared in those proceedings and claimed priority on the basis that the Crown debt has a priority over other debts. The question which falls for consideration is whether the view taken by the learned judge is correct in law. What is urged by Bhatt, learned advocate for the petitioners, is that the judgment-creditors, in this case, are merely decree-holders and the decree which they have obtained is on the basis of an equitable mortgage created in their favour. Therefore, mere passing of a decree in such a case cannot amount to creating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the dues of the State will have priority over the creditors of equal degree to payment out of the assets of a debtor which are distributed by a receiver or an administrator. This rule of priority in favour of the Crown for the realisation of its dues can only prevail and be enforceable as between unsecured creditors of equal degree and it has no application where there is any lien, charge or mortgage. The priority of the State can (sic) rank as against a secured creditor so as to deprive him of his security or to affect or injure his rights as such secured creditor. Even though this doctrine of " Priority of Crown Debts " is the outcome of the maxim salus populi suprema lex (regard for the public welfare is the highest law), it applies o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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