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2022 (5) TMI 970 - RAJASTHAN HIGH COURTPreferential payments of state claim over workmen and other creditors - Seeking priority and preference over other creditors and to release the amount said to be due in favour of the applicant-department - preferential treatment or priority to be accorded to the State claim/crown’s debt vis-a-vis the claim of workmen and other secured creditors - HELD THAT:- The issue of priority of secured creditor’s debt over that of the State Government, commonly known as crown’s debt, has been examined by different High Courts and the Hon’ble Supreme Court. This Court deems it proper to narrate the facts and law, with respect to different High Courts, as how the priority issue has been dealt with by them. The Gujarat High Court in the case of BANK OF INDIA VERSUS STATE OF GUJARAT & 3 OTHER (S) [2020 (1) TMI 1197 - GUJARAT HIGH COURT] again considered the provisions of Section 48 of the Value Added Tax Act, 2003 vis-àvis the provisions contained in the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short ‘the RDB Act’) and whether Section 31B of the RDB Act give priority to the secured creditor to realize its dues over the Government debts. The Gujarat High Court held that the secured creditor will have priority over the dues of the State Government. This Court finds that Article 246 of the Constitution of India opens with a non-obstante clause and the Parliament has been given exclusive power to make laws in respect of matters enumerated in List-I of the 7th Schedule, known as Union List - This Court finds that both the Parliament and the State legislature are supreme in their respective assigned fields and it becomes duty of the Court to interpret the legislations made by both the Parliament and the State legislature in such a manner as to avoid any conflict. This Court in no way finds that the State had no competence to insert Section 47 in the Act of 2003 and the same law is in no way useless or redundant, however, if the Central Act, as enacted by the Parliament, provides for proceeds of the assets of a Company being wound up, to be given to the secured creditors and the workers, then the same has to be distributed pari passu among others, as per the priority given in Section 529A of the Act of 1956 - this Court finds that even the preferential payments to the revenues, taxes, cesses, etc. due from the Company in winding up to the Central or the State Government or the local authority, will be subject to the provisions of Section 529A of the Act of 1956. This Court, if accepts the plea of the learned Advocate General, in a way, would be re-writing Section 530 of the Act of 1956 and the same cannot be done by this Court. The legislature-Parliament, if has brought any change in respect of the preferential payment and only the dues of workmen have been given priority, no grievance can be allowed to be raised by any other person including the State. This Court finds that the claim of the applicant- State to give them priority for payment of their dues over other secured creditors, cannot be granted - Application dismissed.
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