Secured creditor priority over State tax dues applies to pending attachment proceedings under the amended recovery law.

Amended Section 31B gives secured creditors priority to realise secured debts from secured assets over State tax dues, including taxes and cesses. The provision also applies to pending attachment proceedings, because the law in force at the time of disposal governs the matter and prior initiation of recovery does not exclude the amended priority rule. The 1993 Act is treated as a special law overriding the State tax enactment to the extent of conflict, so secured recovery proceeds in preference to Government dues.

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Issues: Whether the secured creditor's right under Section 31B has priority over State tax dues and whether the amendment applies to pending attachment proceedings.

Analysis: The amended Section 31B gives secured creditors priority to realise secured debts by sale of secured assets over all other debts and Government dues, including taxes and cesses. The Court held that the attachment proceedings had to be dealt with in light of the law in force at the time of disposal, and rejected the contention that the prior initiation of recovery proceedings excluded the operation of the amended provision. It also noted that the 1993 Act is a special law and would prevail over the State tax enactment.

Conclusion: The bank's claim had priority over the State's tax recovery claim, and the impugned orders were not liable to interference.

Final Conclusion: The writ appeals failed, and the bank was held entitled to proceed with recovery against the secured assets in preference to State dues.

Ratio Decidendi: Section 31B confers statutory priority on secured creditors over other debts and Government dues, and that priority governs pending attachment proceedings.

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