Statutory first charge for tax arrears prevails over bank mortgages, and recovery follows the taxing statute.

A statutory first charge for sales tax arrears under the Kerala General Sales Tax Act prevails over prior equitable mortgages, and the State may enforce that charge through the Kerala Revenue Recovery Act. The Debts Recovery Tribunal's jurisdiction is confined to applications by banks and financial institutions for recovery of debts, so it cannot be used by the State to recover sales tax dues or proceed against property already subject to the State's first charge. The overriding effect of the debt recovery statute does not displace the State's separate statutory recovery mechanism where the dispute concerns enforcement of tax arrears.

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Issues: Whether the Debt Recovery Tribunal had jurisdiction to proceed against properties on which the State claimed a statutory first charge for sales tax arrears, and whether the State was bound to submit its claim before the Tribunal instead of enforcing recovery under the Kerala Revenue Recovery Act.

Analysis: The statutory scheme under section 26B of the Kerala General Sales Tax Act, 1963 creates a first charge in favour of the State for tax arrears, and that charge prevails over prior equitable mortgages in favour of banks and financial institutions. The Kerala Revenue Recovery Act, 1968 provides the machinery for enforcing that charge by attachment and sale, while the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 confers jurisdiction on the Tribunal only for applications by banks and financial institutions for recovery of their debts. The Tribunal is a creature of statute and can act only within the jurisdiction expressly granted to it. Since the Act does not authorise the State or its officers to invoke the Tribunal for enforcement of sales tax dues, the Recovery Officer cannot proceed against properties already subjected to the State's first charge. The overriding effect of the RDB Act does not alter this position because the dispute concerns enforcement of the State's statutory charge, not a claim within the Tribunal's competence.

Conclusion: The Debt Recovery Tribunal had no jurisdiction to adjudicate or proceed against the properties over which the State had a first charge, and the State was entitled to recover the dues under the Kerala Revenue Recovery Act.

Final Conclusion: The State's statutory priority for sales tax arrears prevailed, and the direction subjecting the State to the Tribunal's process was set aside.

Ratio Decidendi: Where a statute creates a first charge in favour of the State for tax arrears, that charge must be enforced through the recovery machinery provided by the taxing statute and the general debt recovery tribunal cannot assume jurisdiction over such properties unless the statute expressly confers it.

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