The judgment establishes the preservation of the priority of Crown debts under the Constitution and its compatibility with fundamental rights, emphasizing the necessity of prioritizing revenue claims for the functioning of the State.

1. This petition by the State of Kerala questions the correctness of the order of the District Munsiff of Trivandrum in C.M.P. No. 2215 of 1957 in O.S. No. 477 of 1956. The petition states the facts necessary to appreciate the contention urged before us as follows:

"Respondents I to 3 obtained simple money decrees against Respondent No. 4. Respondent No.1 executed his decree by attaching and selling movables belonging to the debtor. Respondents 2 and 3 claimed rateable distribution. The State has to get Rs. 1225-3-11 from Respondent No. 4 as sales tax under 3 assessments made by the Sales tax Officer, Trivandrum. Before the amounts were disbursed the State made an application objecting to the payment of the amount to respondents 1 to 3 and claiming preferential payment to the State towards the sales tax due from the debtor. The learned District Munsiff 'dismissed the petition stating that the State's claim was not tenable. This petition is to revise the said order."

2. The State does not claim any charge in respect of the amount due from the fourth respondent by way of sales tax. The only question for determination is whether when the amounts due to the State and to respondents 1 to 3 are all unsecured, the State is entitled to a priority or not.

3. The priority claimed has always been considered at any rate since Lord Coke enunciated the rule in Quick's case (9 Rep. 129b.) as one of the established prerogatives of the Crown in English Law. In Rex v. Wells (16 East. 278), in a passage oft quoted, Macdonald, C.B., said:

"I take it to be an incontrovertible rule of law that where the King's and the subject's title concur the Kings's shall be preferred."

In 1907 A.C. 179, the Privy Council quoted the passage with approval and said:

"Except so far as the Legislature has thought fit to interfere, the rule is one of universal application, and perhaps not unreasonable, when it is considered that, after all, it; only means that the interests of individuals are to be postponed to the interests of the community."

4. The right of the Crown to priority when debts of equal degree due to it and a subject compete was certainly part of the law of British India. In A.I.R. 1938 Madras 360 (F.B.) the Court said:

"It cannot be denied that the Crown had the right of priority in payment of debts due to it. It is a right which has always existed and has been repeatedly recognised in India;"

and in A.I.R. 1956 Calcutta 26:

"Taken as a question of fact the question whether priority in respect of Crown debts has or has not been a part of the law of India admits of only one answer. There was a fairly exhaustive citation of authority before us from which it clearly appeared that the principle of the priority of Crown debts had been accepted and given effect to by the courts whenever it had been invoked and that instances without number could be found among the decisions of the Calcutta Bombay, Madras, Allahabad and Rangoon High Courts."

5. In A.I.R. 1955 Bombay 305, it was contended that "the English principle of debts of the Crown having priority is based upon the prerogative of the Crown", that principle would not apply to India after the Constitution came into force, and that "to uphold the king's prerogative in India after 1950 would be to go counter to the basic structure of our Constitution." The Court said:

"In our opinion, 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, and if this principle formed part of the Common Law of England, then that law has been preserved under Art.372 (1) of the Constitution. This was the law in force in India immediately before the commencement of the Constitution and it must continue in force until altered or repealed or amended by a competent Legislature or other competent authority."

In that case it was also contended that this part of