On 27 February 2009 a three-judge Constitution Bench of the Supreme Court held that neither the RDDBFI Act 1993 nor the SARFAESI Act 2002 contained any express provision giving the secured creditor priority over the State's statutory first charge for sales-tax or excise dues. The non-obstante clauses in Section 34(1) RDDBFI and Section 35 SARFAESI did not, by implication, displace specific statutory first charges in State revenue legislation. The State's first charge prevailed. The decision drove the 2016 Amendment Act, which inserted Section 31B RDDBFI and Section 26E SARFAESI and reversed the priority position for registered secured creditors prospectively.
A 2-judge bench of the Supreme Court — *S.B. Sinha, J.* and *P.K. Balasubramanyan, J.* — held in April 2006 that *Section 529-A* of the *Companies Act 1956* created a *pari-passu* charge between workmen's dues and secured creditors as a class, but did not abolish inter-se priorities among secured creditors. Where Parliament has not expressly displaced the rule, *Section 48* of the *Transfer of Property Act 1882* applies — the first-created charge prevails over the second. The decision is not, strictly, a SARFAESI judgment; it is a Companies Act and TPA judgment whose inter-creditor reasoning has since been read into consortium-lending architecture, second-charge enforcement and — in academic commentary — into the *Section 53* IBC waterfall.
On 8 April 2004 a three-judge Constitution Bench of the Supreme Court upheld the constitutional validity of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 while striking down its Section 17(2) requirement that a borrower deposit 75% of the demand before access to the Debts Recovery Tribunal. The Bench also read into Section 13(3) a duty on the secured creditor to communicate, in writing, the reasons for non-acceptance of the borrower's representation — a safeguard that Parliament codified within months as Section 13(3A) by the 2004 Amendment Act.
On 29 November 2006, a two-judge bench of the Supreme Court held that the SARFAESI Act 2002 and the RDDBFI Act 1993 are complementary, not mutually exclusive: a secured creditor may simultaneously prosecute a Debts Recovery Tribunal Original Application under Section 19 of the 1993 Act and a Section 13 SARFAESI enforcement without first withdrawing the OA. The doctrine of election does not apply. The first proviso to Section 19(1) of the 1993 Act does not require withdrawal as a condition precedent — the Section 13(2) notice is a show-cause step, not 'action' within the meaning of the proviso. Section 13(4) 'possession' extends to physical possession.
On 6 September 2022 a two-judge bench of the Supreme Court, in State Tax Officer (1) v. Rainbow Papers Ltd, read Section 48 of the Gujarat Value Added Tax Act 2003 — which creates a first charge on the dealer's property in respect of VAT dues — as creating a 'security interest' by operation of law within Section 3(31) of the Insolvency and Bankruptcy Code, with the consequence that the State became a 'secured creditor' under Section 3(30) and a resolution plan that wholly ignored the statutory dues was non-compliant with Section 30(2). A coordinate bench in Paschimanchal Vidyut Vitran Nigam v. Raman Ispat then confined the holding to its facts. A close reading of the GVAT-IBC architecture, the Section 53 waterfall analysis, the doctrinal arc that has followed, and what practitioners advising resolution applicants and statutory authorities should take from the case.