The interests of secured creditors like banks override those of the tax department.

Recently, the Madras High Court in an important decision, 

State Bank of India v. TheTax Recovery Officer, 

has clarified the quandary holding that the interests of secured creditors like banks override those of the tax department. The HC categorically spelt out that the rights of secured creditors under Section 26E of the SARFAESI and Section 31B of the RDBA must prevail over Section 281 of the Income Tax Act, 1961 (“ITA”) in cases of conflict