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"I had occasion to consider this question in the case of ILR 11 Rang. 467 : (AIR 1934 Rang 8), when sitting as a judge of the rangoon High Court, and, following the decision of Sale J in Gayanoda Bala Dassee v. Butta Krishna Dass; ILR 33 Cal 1040 held that inasmuch as the Crown has priority over unsecured creditors in the payment of debts the court can, on application and without a formal attachment being issued, order the payment of a Crown debt due by the debtor where there are funds in court belonging to the debtor. The District Munsif referred to this decision in his order. The order which I passed in that case was passed by consent, and the only arguments were those addressed to the court on behalf of the Crown, but the question has been fully argued before us today, and I see no reason for changing the opinion there expressed.'' (10) There can thus be no doubt that the Income-tax Officers in both the cases will be entitled to be paid out the amounts of tax due from the respective debtors from whose properties the respective receivers have collected the rents and profits and deposited them into court, if the fund in court is not already burdened with any lien or charge or mortgage in favour of the decree holders or not earmarked or appropriated for the benefit of the decree holders at whose instance the Receivers were appointed.

In this view of the matter any debt due by the debtor to the Crown will of court have priority over the claims of all the other creditors of the debtor inclusive of the creditor who made the properties custodia legis by the appointment of a receiver in enforcement of a mortgage or charge over the corpus of the properties. But if it were to be held that a receiver appointed at the instance of a mortgagee or charge holder in the course of his realisation of any amount due under a mortgage or charge functions only for the benefit of the mortgagee or charge holder and that the rents and profits emanating from the huypotheca and the charged property are also stamped with security in favour of the creditor he alone will be entitled to appropriate and adjust them towards his dues even in preference to a Crown debt, as the Crown has no priority over the secured claim against the debtor.

(29) The decision of the learned Judges rests upon the simple ground, that the mortgage has no charge over the rents and profits collected by the receiver and that at best he can occupy only the position of a simple money creditor in which case his claim will have to be postponed to the claim of the Crown.

(30) In , the question raised was whether a Crown debt for income-tax due by mortgagor is payable on the application of the Income-tax Officer in priority out of the rents and profits collected by a receiver appointed in a simple mortgage suit filed by the mortgagee. Mack, J., held that although such rents and profits can be held by the mortgagee in priority to other simple creditors, they cannot be appropriated by the mortgagee in priority over a Crown debt. At page 498 (of in priority over a Crown debt. At page 498 (of Mad LJ): (at pp. 198-199 of AIR) the learned Judges observed thus:

"The rents and profits collected by a receiver appointed by a court cannot strictly be regarded as property charged with the debt. Wadsworth, J., took the view that the court gave preference to the mortgagee over the simple creditors, merely by way of justice and equity, to ensure that the mortgagee shall not be damnified by the protraction of the suit. I find it difficult to accept this as the basis for giving preference to the mortgagee over simple creditors, in view of the mortgagee being more often than not responsible for his own difficulties, in not suing on his mortgage earlier and h is not bringing the property to quick sale. It is not always easy to lay down precise reasons to support every just and equitable principle laid down by the courts. Mr. Nambiar urges that if the mortgagee is given a preferential claim to simple creditors, a Crown debt which is also in the category of an unsecured debt has no claims to priority. I am unable to agree. A Crown debt is not a secured debt in the sense that there is no specific property charged with its payment. It is given a privileged priority over other debts by judicial decisions and also under statutes... They occupy a special and privileged category of their own. It is only a secured debt, that is, one in respect of a strictly specified security which can have priority over a Crown debt. I have no hesitation in agreement with Wadsworth, J., in holding that the rents and profits collected by a receiver appointed by a court in a simple mortgage suit in prosecution of an equitable remedy open to the mortgagee do not constitute part of the security as such. Although such rents and profits can be claimed by the mortgagee in priority to other simple creditors, they cannot be appropriated by the mortgagee in priority over a Crown debt."