Secured creditor priority overrides State dues, and revenue mutation must follow an auction sale of secured assets.

State excise and revenue dues are stated to have no priority over a secured creditor's claim in respect of secured assets, particularly where the binding Supreme Court position recognises no first charge for excise dues before Section 11E of the Central Excise Act, 1944, and the SARFAESI Act, 2002 prevails through its overriding provision. On that basis, the revenue entries could not defeat rights acquired through the bank's auction sale. The revenue authorities were therefore required to attest the mutation, enter the auction purchasers as owners, and remove the red entries.

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Issues: Whether the State departments' dues, including Excise and Revenue dues, have priority over the secured creditor's debt and whether the revenue authorities were bound to mutate the auction-purchased property and remove the red entries.

Analysis: The issue stood covered by the binding Supreme Court ruling holding that, prior to the insertion of Section 11E of the Central Excise Act, 1944, there was no first charge in favour of excise dues, and that even thereafter the SARFAESI Act, 2002, by virtue of its overriding provision, gives priority to the secured creditor in respect of secured assets. The Court applied that legal position to the auction sale conducted by the bank and treated the revenue entries as incapable of defeating the petitioners' rights flowing from the secured creditor's sale.

Conclusion: The secured creditor's claim had priority over the State departments' dues, and the revenue authorities were required to attest the mutation, record the petitioners as owners, and remove the red entries.

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