Secured creditor priority prevails over State tax charge where Central law gives statutory priority after registration.

Section 26E of SARFAESI gives a secured creditor priority over other debts once the security interest is registered, and Section 37 of the Maharashtra VAT Act creates a first charge for tax dues but expressly yields to any Central law creating a first charge. Read together, the Central statutory priority prevails and the State's charge must rank behind the secured debt. The secured creditor is therefore entitled to the sale proceeds of the secured assets in priority to VAT dues, with any surplus payable to the State.

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Issues: Whether, after insertion of Section 26E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the secured creditor's claim has priority over the State's first charge under Section 37 of the Maharashtra Value Added Tax Act, 2002.

Analysis: Section 26E gives secured creditors priority over all other debts after registration of the security interest. Section 37 of the Maharashtra Value Added Tax Act, 2002 creates a first charge for tax dues, but expressly makes that charge subject to any provision regarding creation of first charge in any Central Act. Read harmoniously, the Central enactment prevails and the State's charge must yield to the secured creditor's statutory priority.

Conclusion: The secured creditor has priority over the sale proceeds of the secured assets, and the State's claim ranks only after satisfaction of the secured debt.

Final Conclusion: The petitioner bank was entitled to receive the sale proceeds lying in court in priority to the State's VAT dues, with any surplus payable to the State.

Ratio Decidendi: Where a Central enactment confers statutory priority on a secured creditor and a State tax statute's first charge is made subject to Central law, the secured creditor's priority prevails over the State's charge.

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