Secured creditor priority overrides State first charge, and lack of Section 26E notification does not defeat that priority.

A later Central law granting secured creditors priority over all other debts and Government dues prevails over a State VAT statute that creates a first charge on property, because the Central non obstante provisions override inconsistent State law under constitutional supremacy and repugnancy principles. The discussion further states that the absence of notification of Section 26E of the SARFAESI Act does not defer or negate that priority for determining claims against State-created charges. The operative effect is that enforcement and sale by a secured creditor under the SARFAESI and recovery framework can take precedence over the State revenue charge.

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Issues: (i) Whether a secured creditor enforcing security under the SARFAESI Act and the RDB Act has priority in sale and payment over a statutory charge created under the Kerala Value Added Tax Act, 2003. (ii) Whether the non-notification of Section 26E of the SARFAESI Act defeats the secured creditor's priority.

Issue (i): Whether a secured creditor enforcing security under the SARFAESI Act and the RDB Act has priority in sale and payment over a statutory charge created under the Kerala Value Added Tax Act, 2003.

Analysis: The statutory charge under Section 38 of the Kerala Value Added Tax Act, 2003 ordinarily gives the State a first charge on the property. However, Sections 26E of the SARFAESI Act, 2002 and 31B of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, introduced by the 2016 amendment, contain non obstante clauses and expressly provide priority to secured creditors over all other debts and Government dues. When a Central enactment later creates such priority, it prevails over inconsistent State law by reason of constitutional supremacy and repugnancy principles under Articles 246 and 254(1) of the Constitution of India.

Conclusion: A secured creditor has priority in sale and payment over the statutory charge under the State enactment.

Issue (ii): Whether the non-notification of Section 26E of the SARFAESI Act defeats the secured creditor's priority.

Analysis: The priority created by the amendment arises from the enactment of the law itself, and repugnancy with the State law is not postponed until notification. The absence of notification does not dilute the effect of the amended provision for the purpose of determining priority against State-created first charges.

Conclusion: The non-notification of Section 26E does not defeat the secured creditor's priority.

Final Conclusion: The sale conducted under the SARFAESI framework prevails over the State revenue charge, and the requested registration and consequential mutation were directed to be carried out.

Ratio Decidendi: A later Central law that expressly grants secured creditors priority over all other debts and Government dues, backed by a non obstante clause, prevails over inconsistent State statutes creating a first charge, and such priority is not negated merely because the enabling provision has not yet been notified.

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