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The Stock Exchange, Bombay vs. V.S. Kandalgaonkar (Supreme Court)

COURT:
CORAM: , ,
SECTION(S):
GENRE:
CATCH WORDS: ,
COUNSEL:
DATE: September 25, 2014 (Date of pronouncement)
DATE: October 4, 2014 (Date of publication)
AY: 1989-90
FILE: Click here to download the file in pdf format
CITATION:
Income Tax Act does not provide for any paramountcy of dues by way of income tax. Government dues only have priority over unsecured debts

The first thing to be noticed is that the Income Tax Act does not provide for any paramountcy of dues by way of income tax. This is why the Court in Dena Bank’s case (supra) held that Government dues only have priority over unsecured debts and in so holding the Court referred to a judgment in Giles vs. Grover (1832) (131) English Reports 563 in which it has been held that the Crown has no precedence over a pledgee of goods. In the present case, the common law of England qua Crown debts became applicable by virtue of Article 372 of the Constitution which states that all laws in force in the territory of India immediately before the commencement of the Constitution shall continue in force until altered or repealed by a competent legislature or other competent authority. In fact, in Collector of Aurangabad and Anr. vs. Central Bank of India and Anr. 1967 (3) SCR 855 after referring to various authorities held that the claim of the Government to priority for arrears of income tax dues stems from the English common law doctrine of priority of Crown debts and has been given judicial recognition in British India prior to 1950 and was therefore “law in force” in the territory of India before the Constitution and was continued by Article 372 of the Constitution (at page 861, 862).

In the present case, as has been noted above, the lien possessed by the Stock Exchange makes it a secured creditor. That being the case, it is clear that whether the lien under Rule 43 is a statutory lien or is a lien arising out of agreement does not make much of a difference as the Stock Exchange, being a secured creditor, would have priority over Government dues.

2 comments on “The Stock Exchange, Bombay vs. V.S. Kandalgaonkar (Supreme Court)
  1. What is paramountacy revenue claims? in fact tax is a levy on one’s taxable income. how taxable income is possible to be computed if one gives paramountacy to revenue demand, first income tax men shall have common sense that is no doubt missing all over the world because of so called useless education one gets which never helps you to think directly while you collect direct tax on taxable income dear revenue!

  2. What is paramountacy revenue claims? in fact tax is a levy on one’s taxable income. how taxable income is possible to be computed if one gives paramountacy to revenue demand, first income tax men shall have common sense that is no doubt missing all over the world because of so called useless education one gets which never helps you to think directly while you collect direct tax on taxable income dear revenue!

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