Page 121 - GSTL_21st May 2020_Vol 36_Part 3

2020 ] STATE BANK OF INDIA v. UNION OF INDIA 367
and dispose of the secured assets without the intervention of the Court or Tribunal.
The reason for this omission appears to be that the new legal regime envis-
ages transfer of secured assets to private companies.”
(emphasis supplied)
50. Thus the Supreme Court based its decision on the absence of a pro-
vision in the Recovery of Debts and Bankruptcy Act, 1993 and SARFAESI Act,
2002 giving priority to the secured creditors’ claims over the claims of the State
like Sales Tax dues.
51. But when the decision in Central Bank of India (supra) was delivered
on 27-2-2009, the provision of Section 31B of the Recovery of Debts and Bank-
ruptcy Act, 1993 or Section 26E of the SARFAESI Act, 2002 were not in existence.
52. Section 31B of the Recovery of Debts and Bankruptcy Act, 1993 and
Section 26E of the SARFAESI Act, 2002 were introduced in the respective statutes
only on 1-9-2016 by Act 44 of 2016.
53. So, in our opinion, after introduction of Section 31B of the Recovery
of Debts and Bankruptcy Act, 1993 and Section 26E of the SARFAESI Act, 2002
w.e.f. 1-9-2016, the claim of the petitioner Bank would prevail over that of the
respondents 1-3, and the decision in Central Bank of India (supra) cannot be relied
on by the respondents 1-3.
54. But the following discussion in Central Bank of India (supra) about
the interpretation of a non obstante clause is relevant for our purposes.
55. The Supreme Court explained in Central Bank of India (supra) :
“103. A non obstante clause is generally incorporated in a statute to give
overriding effect to a particular section or the statute as a whole. While inter-
preting non obstante clause, the court is required to find out the extent to
which the legislature intended to do so and the context in which the non ob-
stante clause is used.”
56. The said non obstante clause in both Section 31B of the Recovery of
Debts and Bankruptcy Act, 1993 and Section 26E of the SARFAESI Act, 2002
would override over the provisions of the Finance Act,1994 like Section 87(b)(i).
57. The Gujarat High Court in Bank of Baroda v. State of Gujarat and Ors.
[MANU/GJ/1885/2019] has also taken an identical view and has held that the
insertion of Section 31B of the Recovery of Debts and Bankruptcy Act, 1993 with
the non obstante clause contained therein, will give priority to the secured credi-
tors even over the subsisting charges under other laws on the date of the imple-
mentation of the new provision, i.e. 1-9-2016.
58. We respectfully agree with the said view and hold that having re-
gard to the clear language contained in Section 31B of the Recovery of Debts and
Bankruptcy Act, 1993 giving priority to rights of secured creditors (to realize se-
cured debts due and payable to them by sale of assets over which security inter-
est is created) over all other debts and Government dues including revenues,
taxes, cesses and rates due to the Central Government, State Government or local
authority, the law has undergone a sea change; and in view of Section 31B of the
Recovery of Debts and Bankruptcy Act, 1993 and Section 26E of the SARFAESI
Act, 2002 w.e.f. 1-9-2016 the claims of secured creditors such as the petitioner
Bank have priority over the claims of the respondents 1-3 for service tax dues.
59. So we reject the claim of the respondents 1-3 that they are entitled to
GST LAW TIMES  21st May 2020  121