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Issues: Whether the petitioner, having purchased the property in a sale held under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, as a bona fide purchaser for valuable consideration without notice of prior attachment, could be made personally liable to satisfy the provident fund arrears of the erstwhile owner and be restrained from alienating the property.
Analysis: The property had been taken into possession by the secured creditor and sold in public auction before the attachment and proclamation effected by the recovery authority were reflected in the encumbrance records. The sale certificate itself recorded that there was no encumbrance, and the petitioner had no notice of any subsisting claim when the purchase was completed. Although the provident fund dues carried a priority claim and the recovery authority could assert its right against the bank as the earlier holder of the asset, that priority could not, on these facts, be enforced against a bona fide auction purchaser who acquired title for value without notice. The proper course was to proceed against the bank, not against the petitioner.
Conclusion: The claim could not be enforced against the petitioner, and the restraint on alienation was unsustainable.
Final Conclusion: The writ petition succeeded, and the recovery notice and consequential restraint against the petitioner were set aside, while the authority was left free to pursue its claim against the bank.
Ratio Decidendi: A statutory priority or first charge for recovery dues cannot be enforced against a bona fide purchaser for value without notice who acquires the property in a valid auction sale under the secured creditor's powers.
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