The return of crown preference: Perspectives from India and the United Kingdom

Over the past few decades, there has been some formal convergence regarding the treatment of crown debts, with several jurisdictions limiting the preference given to crown debts in their insolvency legislations. However, two jurisdictions have notably diverged from this general trend: the United Kingdom and India. In the United Kingdom, the initial legislative priority accorded to crown debts was removed in the early 21st century, only to be brought back by the Parliament in 2020. Conversely, in India, while the legislature has consistently relegated crown debts to a lower position in the liquidation waterfall, a 2022 Supreme Court decision has resulted in crown debts occupying a higher priority. This Article traces the chequered history of crown preference across both jurisdictions. In doing so, this Article argues that while the two jurisdictions have arrived at a similar end result of according priority to crown debts, they have traversed vastly different paths in reaching the said outcome. Further, the Article reconsiders the policy considerations in favour of crown preference and argues that such policy considerations may not fully justify the reintroduction of crown preference.