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Report No. 60

10.16. Need for settling the law.-

The above discussion will show that there is need to settle the law on the subject of the priority of the debt due to Government for several reasons:-

(i) the possible limitations on the doctrine, referred to even in the judgment of the Supreme Court1;

(ii) the practical importance of one of the possible limitations namely, the operation of the doctrine in relation to debts other than taxes;

(iii) the conflict of decisions between the Bombay and Calcutta High Court on the last-mentioned point2;

(iv) the question of effect of the Supreme Court judgment relating to the binding effect of statutes on the Government on the doctrine of priority3; and

(v) the uncertain position as to how far the doctrine of priority of debts due to the Government is applicable to territories not formerly comprised in British India4.

1. Builders Supply Corporation v. Union of India, (1965) 56 ITR 91 (96 to 98), para. 10.12, supra.

2. Paras. 10.12 and 10.13, supra.

3. Para. 10.15, supra.

4. Paras. 10.12 and 10.14, supra.

General Clauses Act, 1897 Back

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