Statutory first charge for sales tax prevails over a bank's mortgage claim where the securitisation law creates no priority.

Section 38C of the Bombay Sales Tax Act creates a first charge on a dealer's property for tax-related dues, subject only to a contrary first charge under a Central Act. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act is only an enforcement mechanism for secured assets and does not itself create a first charge in favour of a bank. As the two statutes operate in different fields and no inconsistent Central Act provision confers priority on the secured creditor, the sales tax first charge prevails over the bank's mortgage-based claim.

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Issues: Whether the non obstante clause in section 35 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 overrides section 38C of the Bombay Sales Tax Act, 1959, and whether the bank's contractual mortgage and recovery under the Securitisation Act can prevail over the statutory first charge for sales tax dues.

Analysis: Section 38C of the Bombay Sales Tax Act creates a first charge on the property of the dealer for tax, penalty, interest and other dues, subject only to any provision regarding first charge in a Central Act. Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is only a machinery provision for enforcement of security interest without court intervention; it does not itself create any first charge in favour of a secured creditor. The two enactments operate in different fields, and there is no inconsistency between them. As there is no Central Act provision creating first charge in favour of the bank, the statutory first charge under section 38C remains effective. The claim of priority under section 169 of the Maharashtra Land Revenue Code, 1966 does not displace the sales tax first charge.

Conclusion: Section 35 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 does not override section 38C of the Bombay Sales Tax Act, 1959, and the sales tax authorities' first charge has priority over the bank's mortgage-based claim.

Final Conclusion: The writ petition failed because the bank could not claim precedence over the statutory sales tax first charge, and its sale of the secured properties was held unauthorised.

Ratio Decidendi: A statutory first charge for sales tax prevails over a secured creditor's contractual mortgage where the later Central enforcement statute does not itself create a first charge and contains no inconsistent provision overriding that charge.

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