Secured creditor priority provisions do not override an earlier State first charge or attachment when applied prospectively.

The article explains that Section 26E of the SARFAESI Act and Section 31B of the RDB Act, inserted in 2016, were treated as prospective and did not displace the State's earlier first charge and attachment under the Rajasthan VAT Act and Rajasthan Land Revenue Act. Because the property had already been attached in 2014, the later secured-creditor priority could not nullify the State's statutory charge by implication. The discussion also rejects the purchaser's reliance on lack of knowledge and constructive notice, noting that the purchase was made after attachment and existing revenue proceedings could not be ignored. Relief under the Specific Relief Act and Transfer of Property Act was held inapplicable on those facts.

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Issues: Whether the amended priority provisions for secured creditors under Section 26E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and Section 31B of the Recovery of Debts and Bankruptcy Act, 1993 could displace the State's prior first charge and attachment created under Section 47 of the Rajasthan Value Added Tax Act, 2003 and Sections 230 and 239 of the Rajasthan Land Revenue Act, 1956.

Analysis: The attachment of the property was made in 2014, whereas the provisions conferring priority on secured creditors were inserted only in 2016. The amended provisions were treated as prospective and not retrospective. The State legislation created a first charge on the property, and the earlier attachment under the revenue laws was therefore not liable to be nullified by a later auction. The distinction between a secured creditor's priority and a statutory first charge was maintained, and the later central amendments were held not to destroy the State's charge by implication. The claim based on lack of knowledge and constructive notice was rejected on the facts, since the petitioner purchased after the attachment and could not ignore the existing revenue proceedings. The relief sought under the Specific Relief Act, 1963 and the Transfer of Property Act, 1882 was also held inapplicable on the facts.

Conclusion: The amended priority provisions did not override the earlier State first charge or invalidate the attachment, and the challenge to the impugned order failed.

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