1. The property in suit belonged to one Kuli Muttu Nadan, who hypothecated it, together with other property, to the appellant Ramachandra Rayar for Rupees, 8,000 on the 9th April 1874. On the 14th August 1879 respondent, Pitchaikanni Marakayar, purchased it when it was put up to sale for arrear of abkari revenue due by Kuli Muttu. In original suit 44 of 1879 the appellant obtained a decree upon the hypothecation bond and attached the property in execution. The respondent, who was then in possession, opposed the attachment, and his objection prevailed. This suit was then instituted on the ground that under Madras Act II of 1864 the sale for arrear of abkari revenue was not free of prior encumbrances : but both the Lower Courts held that it was, and the question for our decision is whether the respondent's purchase was free of the prior hypothecation, either under Act II of 1864, or because debts due to the Crown take precedence of private debts. As to Act II of 1864, the term 'public revenue,' as defined by Section 1, does not include abkari revenue. Reading Sections 31 and 42 together, the expression 'arrear of revenue' must be taken to signify public revenue payable on the land in the mode indicated by Section 3. Section 5 declares the several remedies available to the Collector for the recovery of arrear of revenue as defined by Section 4. The following sections go on to prescribe the procedure to be followed by the Collector in enforcing each of those remedies. The sections material to our present purpose are Section s 3, 37, 42 and 52. Section 3 declares that the land, the buildings upon it, and its products shall be regarded as the security of the public revenue. Section 37 reserves to persons claiming an interest in the land power to save such interest by payment of the arrear. Section 42 declares that all lands brought to sale on account of arrears of revenue shall be sold free of all encumbrances. Taking these sections together, the intention is clear that the purchase is free of prior encumbrances only when the arrear is of public revenue of which the land is the first security by statutory declaration. By Section 10 of the Abkari Act, it is enacted that Collectors may proceed against abkari renters or other persons licensed under that Act for the recovery of arrears due by them in like manner as for the recovery of arrears of land revenue and may further, at their discretion, take the farm under Government management at the risk of the renter, or may declare the lease forfeited, and re-sell the farm at the said renter's risk and loss: The question is--Has Section 42 been extended by Section 52 to sales for arrears of abkari revenue? We must certainly answer it in the negative. The expression, 'In like manner as for the recovery of arrears of land revenue,' indicates only that the same procedure is to be followed, and the language used in Section 52 is to the same effect. Arrear of abkari revenue is not due upon any specific land owned by the abkari renter, and Section 3 of Madras Act II of 1864 can have no application, and Section 42, which must be construed in relation to it, cannot otherwise apply.
2. The next question is whether as a Crown-debt the arrear of abkari revenue takes precedence of the hypothecation-debt. The late East India Company was only a corporation with limited powers of sovereignty delegated to it, and in the Courts was treated as a subject. That the right of Government to priority to a mortgagee was not recognized in the mufassal is shown by the express language of the Act which declares the land revenue to be a first charge on the land--an unecessary provision, if by common law every debt due to the Crown was a first charge on the land. With every respect for the learned Judges who have held otherwise, (See Collector of Moradabad v. Mahammad Daim Khan I.L.R. 2 All. 196 we hesitate to import into places outside the presidency towns the doctrine of the common law of England relating to Crown-debts with all its inconveniences to purchasers, but it is not necessary, for the purpose of this appeal, to consider whether debts due to Government in this country have the same preference over private debts as Crown-debts in England. In the case before us the hypothecation was in 1874, and the abkari revenue fell into arrear in a subsequent year, and even in England the lien of the Crown attached only from the time: when the owner of land became a debtor to the Crown, and since 1839 the common law has been greatly modified by statute for the protection of purchasers.
3. We set aside the decrees of the Lower Courts and decree the claim with costs.
1 [q. v. supra 7 Mad. 405
2 The whole or a portion of a kist remaining unpaid shall be deemed to be an arrear of revenue.
[Section 4 : When the whole or a portion of a kist shall not be so paid, the amount of the kist or of its unpaid portion shall be deemed to be an arrear of revenue.]