Inter se priority between secured creditor and tax department must be decided by the statutory appellate authority when facts are disputed.

Priority between a secured creditor's claim under the SARFAESI framework and the State tax department's claim under the Tamil Nadu Value Added Tax Act turned on disputed facts about the timing and validity of the mortgage, charge, and recovery steps. Section 42(2) gives tax arrears priority, Section 43 protects revenue against transfers or charges created to defeat tax recovery, and Section 26E of SARFAESI and Section 31B of the Recovery of Debts and Bankruptcy Act also confer priority on secured creditors. Because the inter se priority dispute required factual determination, writ jurisdiction under Article 226 was inappropriate and the matter had to be pursued before the statutory appellate authority.

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Issues: Whether the petitioner bank, claiming to be a secured creditor under the SARFAESI framework, could displace the State tax department's claim of priority over the property and obtain quashing of the demand order under the Tamil Nadu Value Added Tax Act, 2006.

Analysis: The competing claims of priority depended on when the mortgage and the tax recovery proceedings were initiated, and that factual sequence could not be conclusively determined on the writ record. The statutory scheme under Section 42(2) of the Tamil Nadu Value Added Tax Act, 2006 gives tax arrears priority over other claims, while Section 43 of the same Act renders transfers or charges created to defraud revenue void against tax claims. At the same time, the secured creditor provisions under Section 26E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act and Section 31B of the Recovery of Debts and Bankruptcy Act, 1993 also confer priority. In such a conflict, the Court held that the disputed questions of fact and priority should be examined by the competent appellate authority under the tax statute, not in writ proceedings under Article 226 of the Constitution of India.

Conclusion: The writ relief was not granted, and the petitioner was required to pursue the statutory appellate remedy for adjudication of the priority dispute.

Ratio Decidendi: Where the inter se priority between a secured creditor and the tax department turns on disputed facts about the timing and validity of the charge or transfer, writ jurisdiction is not the proper forum and the parties must work out the controversy before the competent statutory appellate authority.

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