Statutory first charge for provident fund dues prevails over prior mortgage security and supports recovery measures.

Provident fund dues under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 were treated as a statutory first charge on the establishment's assets and given priority over other debts, notwithstanding contrary provisions in other laws. That later and specific legislative protection for workers' social security dues was held to override the State Financial Corporations Act, 1951 and the corporation's prior mortgage security. Reliance on transferee-for-value arguments and Income Tax Act provisions was rejected because they did not create a comparable substantive priority. The recovery notices and prohibitory orders for realisation of provident fund dues were therefore valid.

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Issues: Whether provident fund dues under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 have priority over the claim of a State Financial Corporation secured by mortgage under the State Financial Corporations Act, 1951, and whether the statutory first charge under the provident fund law overrides the corporation's prior security interest.

Analysis: The provident fund statute creates a first charge on the assets of the establishment and gives the dues priority over all other debts notwithstanding anything contained in any other law. That later and specific legislative mandate was treated as expressing Parliament's intention to protect workers' terminal social security dues. The overriding clause in the State Financial Corporations Act was held not to defeat this later enactment. The reasoning also rejected reliance on the mortgagee's status as transferee for value and on provisions of the Income Tax Act, since those did not confer a substantive priority comparable to the first charge created by the provident fund law.

Conclusion: Provident fund dues rank in priority over the secured debt of the State Financial Corporation, and the recovery notices and prohibitory orders issued for realization of those dues were valid.

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