Pappu Reddiar and Another vs Union of India (UOI) and Others

Ramachandra Iyer, C.J.—Two persons Pappu Reddiar and Sankaralingam Pillai, the appellants before us, had simple money claims against

the estate of A. S. T. F. Rodrigues, whose sons are respondents 2 and 3. The creditors brought a suit for administration of the estate of the

deceased Rodrigues ana in the course of administration it appears that a sum of about Rs. two lakhs had been brought into Court. There were

income tax assessment proceedings in regard to the estate of the deceased in the hands of his sons, and the Income Tax Department, had a claim

of nearly Rs. 2,38,819-14-0 by way of arrears of income tax. The Second Additional Income Tax Officer, Tuticorin, applied on behalf of the

Union of India in I. A. No. 430 of 1957 in the administration suit referred to above for payment of the arrears clue to the department out of the

monies in deposit in the administration suit.

It was claimed on behalf of the petitioner who is the first respondent before us that as amongst the simple money creditors who were alone parties

to the administration suit the charge holders having been already paid--the Government would have a preferential claim for payment. This was

accepted by the lower Court and the amount in deposit was directed to be paid out in discharge of the Income Tax arrears. The two creditors

feeling aggrieved by the decree of the lower Court have filed this appeal.

It is contended on their behalf that although they were only simple money creditors of the estate of deceased Rodrigues, as they had taken

enormous trouble in bringing the monies into Court it is highly inequitable that such monies should be paid out to the Income Tax authorities who

did nothing to bring these monies into Court. We are unable to find any principle of law behind this argument. It is a well accepted rule that as

between creditors in equal degree the Sovereign or Government would be entitled to priority in the matter of payment. This position has now been

settled beyond doubt so far as this Court is concerned by the Full Bench decision in Collector of Tiruchirapalli Vs. Trinity Bank Ltd., Trichirapalli

and Another, .

Mr. Natesan, learned counsel for the appellants faintly contended that to recognise such a principle would be to contravene the provisions of

Article 14 of the Constitution as it would be discriminating one class of creditors against another. This argument was considered by the learned

Judges of the Full Bench and also in the decision in Bank of India Vs. John Bowman and Others, . These two decisions are in full accord with the

principle lain down by the Supreme Court in Nav Rattanmal and Others Vs. The State of Rajasthan, . The order of the lower Court is therefore

correct. This appeal is dismissed, but In the circumstances there will be no order as to costs.