JUDGMENT M.S. Menon, J. 1. The Commercial Tax Officer, Malabar (South), Kozhikode, is the appellant before us. He filed M. P. No. 1408 of 1955 in O. S. No. 305 of 1123 before the Subordinate Judge of Chittur and prayed for the payment of a sura of Rs. 7,048-15-II from the amounts deposited in court by the receiver appointed in that case. The petition was dismissed by the court below. 2. O. S. No. 305 of 1123 was a suit filed by the first respondent -- the Chaldian Syrian Bank Ltd. -- against the second respondent for the recovery of about a lakh of rupees on the basis of a mortgage by deposit of title deeds. In the suit a receiver was appointed at the instance of the plaintiff (see order on M. P. No. 2534 of 1123) and the receiver collected certain amounts in pursuance of his appointment. The lower court states that the deposits made by the receiver amounted to about Rs. 21, 000/- on 6-6-1956. 3. The appellant filed the petition under S.151 of the Code of Civil Procedure, 1908. In C. R. P. No. 326 of 1957 we have already held -- differing from AIR 1935 Lahore 319 and following AIR 1938 Madras 360 (FB) -- that such a petition is maintainable. AIR 1957 Bombay 91 is also a case where the reasoning in AIR 1935 Lahore 319 was not accepted and the reasoning in AIR 1938 Madras 360 (FB) was adopted. 4. Our attention has been drawn to AIR 1956 Calcutta 26 wherein Chakravartti C. J. referred to AIR 1938 Madras 360 (FB) and said: "Had it been necessary to decide whether after a decree holder had attached some money belonging to his judgment - debtor and caused it to be brought to Court, the State might obtain it for satisfaction of a public debt by a simple application under S. 151, I would have required strong reasons to agree with the view taken in the Madras case." We see no reason to depart from the view taken in C. R. P. No. 326 of 1957 on the strength of this observation. 5. It is common ground that the State is not a secured creditor in respect of the sales tax payable by the second respondent. 5. It is common ground that the State is not a secured creditor in respect of the sales tax payable by the second respondent. The only question, therefore, that arises for consideration is whether the State by virtue of its position is entitled to a priority over the subject. 6. In (1878) 9 Ch. D. 469 Lord Justice James said: and in AIR 1955 Bombay 305 Chagla C. J. observed : "If the debts are of equal degree and the rights of the Crown and the subject are equal, the Crown's right will prevail over that of the subject." We have already held in C. R. P. No. 326 of 1957 that the rule applies to this country and that there is nothing in the Constitution which militates against its application. It is unnecessary to go over the ground again. 7. There is no doubt that apart from express agreement a simple mortgagee or a mortgagee by deposit of title deeds does not possess as part of the interest that is transferred to him under the mortgage, the right to possession of the property or the right to the rents and profits accruing therefrom during the subsistence of the mortgage. This, however, has not been considered as disentitling the mortgagee from inviting and the court from appointing a receiver whenever it is considered just and convenient to do so whether the right of the mortgagee to obtain a personal decree against the mortgagor subsisted or had been lost. (AIR 1936 Rangoon 290 and 296). And "for more than a century" according to the decision first mentioned "it has never been doubted in England that when a receiver is so appointed the mortgagee, if successful in the suit, will be given the accruing rents and profits in the hands of the receiver". 8. The reason for the appointment of a receiver in such cases is stated as follows in AIR 1936 Rangoon 290 : "But for the delay that invariably and inevitably occurs on account of the procedure that must be followed before the sale of the property takes place, or as Swinfen Eady J. put it in (1912) 2 Ch. D. 497, by reason of 'the exigencies of the business of the Courts,' the mortgagee would have received the proceeds of the sale on the day upon which his suit or petition had been filed. D. 497, by reason of 'the exigencies of the business of the Courts,' the mortgagee would have received the proceeds of the sale on the day upon which his suit or petition had been filed. The Court, therefore, treats that as done which ought to be done, and on the application of the mortgagee in a proper case will take the possession of the property and of the accruing rents and profits out of the hands of the mortgagor by appointing a receiver, and if the claim of the mortgagee ultimately succeeds will allocate to the mortgagee the rents and profits accruing from the property from the date when the receiver was appointed." 9. Basu in his law and Practice relating to Receivers says : "The general rule is that a junior mortgagee, who obtains a receiver of the rents and profits, in aid of a bill to foreclose his mortgage, is entitled to the rents and profits at the hands of such receiver, up to the time of appointing a receiver upon a bill by a prior mortgagee, not a party to the original suit." (Page 391); and states the principle behind the statement as follows: "This is on the principle that a mortgagee acquires a specific lien upon the rents by obtaining the appointment of a receiver of them, and if he be a second or a third encumbrancer, the Court will give him the benefit of his superior diligence over his senior in respect to rents which accrued during the time that the elder mortgagee took no measures to have the receivership extended to his suit and for his benefit." (Page 392). That a prior encumbrancer who intervenes in an action by a subsequent incurabrancer to enforce his security is entitled only to the rents in the hands of a receiver appointed in the action which have been received after the date when the prior incumbrancer first applies to the court for the discharge of the receiver is also clear from 72 Law Journal, Chancery Division, Page 774. 10. If a mortgagee has a lien over the funds collected by a receiver appointed at his instance, then, it will not be possible to say that the rights of the first respondent and of the State in the funds in question are equal in degree. 10. If a mortgagee has a lien over the funds collected by a receiver appointed at his instance, then, it will not be possible to say that the rights of the first respondent and of the State in the funds in question are equal in degree. The existence of a lien in favour of the first respondent will militate against the equality of the rival claims and thus negative the right of the State to a preferential payment. 11. In AIR 1940 Madras 703 it was held that the preferential right of the mortgagee is not available as against the Crown. Wadsworth J. said : "The preferential claim of the mortgagee to the profits in the hands of the receiver is not based on any substantive rights to those profits which the terms of the mortgage do not warrant, but is merely granted by way of an equitable relief to the mortgagee against the consequences of the delay in enforcing his legal remedy. If it is conceded that a mortgagee has no charge over the rents in the hands of the receiver, it is difficult to see how he can have a preferential claim as against the Crown. His preferential claim as against the simple creditors has been recognised, but not, so far as I am aware, on any other grounds than as an equity which is recognized in his favour as a diligent creditor trying to enforce his legal remedy. As against all the unsecured creditors the claim of the Crown is paramount. The statement that "as against all the unsecured creditors the claim of the Crown is paramount" “ we must say with respect -- is apparently not a precise statement of the rule concerned. The rule as pointed out in para 6 of this judgment only postulates that when the claims of the State and of the subject are equal in degree the former should prevail. 12. In ILR 1957 AP 505 the State of Andhra Pradesh claimed a preferential payment of the sales tax due from the mortgagors out of the rents and profits collected by the receiver appointed at the instance of the mortgagee in the suit filed by him on the basis of his simple mortgage. The court negatived the claim of the State on another line of reasoning. The court negatived the claim of the State on another line of reasoning. Subba Rao C. J. discussed the decisions cited before him -- they are also cited before us -- and summarised the position as follows : "An appointment of a receiver in a mortgage action to collect rents of the mortgaged property and deposit the same to the credit of the suit is one of the equitable modes of proceeding against the mortgaged property itself. On the making of that order, the mortgagor is deprived of his right to possession and to collect the rents. Thereafter neither the mortgagor nor persons claiming under him such as a purchaser or a mortgagee of the equity of redemption can have a higher right than the mortgagor himself. So too, none of the creditors who have no prior mortgage or security over the property, can claim to have a right to the amounts realised in so far as the said amounts were necessary to discharge the mortgage debts for, in the case of unsecured creditors, they can only claim that amount in the shoes of the mortgagor and when the mortgagor himself has no right, a fortiori they will have none. Whatever privileged position the Crown occupies, in a competition inter se among unsecured creditors it is settled law that the Crown is not a secured creditor and, therefore, it can only claim just like any other unsecured creditor and as the mortgagor lost the right to possession and to collect the rent, to the extent, indicated above, the State also cannot claim any priority in the sums collected by the receiver." 13. In either view of the matter the State is not entitled to succeed and this appeal has to be dismissed. We order accordingly. In the circumstances of the case, however there will be no direction as to costs.