Statutory Charges And Secured Creditors: Analyzing Priority Post-Section 26E SARFAESI

Introduction

In a significant ruling, the Madras High Court, comprising of the Hon'ble Dr. Justice Anita Sumanth and the Hon'ble Mr. Justice G. Arul Murugan, held that the provisions of Section 26E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and Section 34 of the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act) prevail over charge created under Section 24 of the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act). The court in the case of Indian Bank, Kilpauk Branch vs. Commercial Tax Officer, Ambattur Assessment Circle & Ors., brought clarity vis-à-vis the priority of claims between secured creditors and taxation authorities over subsequent tax demands.