Pari-passu security ranking cannot be defeated by a consenting creditor's later Section 48 objection to agreed priority.

A secured creditor's enhanced financial support was held to fall within an agreed pari-passu charge, allowing participation in distribution of sale proceeds despite objection under Section 48 of the Transfer of Property Act. The Court noted that the financial institutions had expressly consented to the pari-passu ranking for the bank's enhanced loan and working capital facilities, so they could not later use Section 48 to defeat that arrangement. The Official Liquidator was required to act fairly, recognise the recorded arrangement, and adjudicate the claim accordingly. The mortgage certificate was to be treated as valid to the extent recorded, and the secured claim was to be reconsidered and paid on that basis.

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Issues: Whether the secured creditor was entitled to have its enhanced financial support treated as covered by a pari-passu charge and to participate in distribution of sale proceeds, notwithstanding objection based on Section 48 of the Transfer of Property Act.

Analysis: The financial institutions had expressly agreed that their mortgages and charges would rank pari-passu with the charges created in favour of the bank in respect of the enhanced loan and working capital facilities. The objection based on Section 48 could not be used by those very institutions to defeat the bank's claim after having consented to the arrangement. The Official Liquidator was also required to act fairly and take the entire recorded arrangement into account while adjudicating the claim.

Conclusion: The bank's claim could not be rejected on the basis of the Section 48 objection. The Official Liquidator was directed to treat the mortgage certificate as valid to the extent recorded and to adjudicate and pay the bank accordingly, in favour of the appellant.

Final Conclusion: The appeal succeeded and the secured claim was directed to be reconsidered and paid on the basis of the agreed pari-passu arrangement.

Ratio Decidendi: A party that has consented to a pari-passu arrangement cannot later invoke Section 48 of the Transfer of Property Act to defeat the agreed priority of another secured creditor.

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