Secured creditor priority under SARFAESI overrides State tax charge where security interest is registered and attachment follows.

Section 26-E of the SARFAESI Act gives a secured creditor statutory priority over other debts and government dues once the security interest is registered with the Central Registry, and that priority operates notwithstanding other laws. Section 37 of the MVAT Act creates a first charge for tax dues, but it is expressly subject to any Central Act creating a first charge. On a harmonious reading, the State's tax charge cannot override the secured creditor's priority where the attachment over the mortgaged secured assets was made after Section 26-E came into force. The attachment and revenue charge over the secured assets were therefore not sustainable, and the bank's right to proceed against those assets was upheld.

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Issues: Whether the secured creditor's right under Section 26-E of the SARFAESI Act has priority over the State's claim of first charge for tax dues under Section 37 of the MVAT Act, and whether the attachment order over the mortgaged secured assets could be sustained.

Analysis: Section 26-E confers priority on secured creditors after registration of the security interest and operates notwithstanding other laws. Section 37 of the MVAT Act also creates a first charge, but it is expressly made subject to any Central Act creating a first charge. The security interest had been registered with the Central Registry, and the impugned attachment order was passed after Section 26-E came into force. On a harmonious reading of the two provisions, the State's charge under the MVAT Act cannot override the secured creditor's statutory priority under the Central enactment.

Conclusion: The secured creditor was entitled to priority over the State's tax dues, and the attachment and charge created by the revenue authorities over the secured assets could not be sustained.

Final Conclusion: The impugned attachment was set aside to the extent it covered the secured assets of the bank, and the bank's right to proceed against those assets was upheld.

Ratio Decidendi: After registration of security interest, Section 26-E of the SARFAESI Act gives a secured creditor statutory priority over other debts and government dues, and a State law first-charge provision yields to that priority where it is made subject to Central legislation.

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