Auction Purchaser Wins: Court Upholds SARFAESI Act Section 26E Priority Over CGST Attachments, Orders Deletion of Entries

The court allowed the writ petition filed by the petitioner, an auction purchaser under the SARFAESI Act, directing them to reapply for registration of the sale certificate without reference to existing attachment orders by the CGST Commissioner, an arbitrator, and others. The court held that the secured creditor's claim, as per Section 26E of the SARFAESI Act, takes precedence, and attachments by other parties are invalid if no surplus remains after satisfying the secured creditor's loan. The court ordered the deletion of attachment entries in the records, with no costs awarded, and closed the miscellaneous petition.

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Issues involved: Interpretation of SARFAESI Act, priority of secured creditors, validity of attachments by other parties, registration of sale certificate.

Summary:
The petitioner, an auction purchaser of property under SARFAESI Act, faced registration issues due to existing attachment orders by CGST Commissioner, an arbitrator, and others. The petitioner argued that as per SARFAESI Act, the claim of the secured creditor (fifth respondent bank) takes precedence. The court analyzed the records and noted the priority given to secured creditors under Section 26E of SARFAESI Act, which states that debts to secured creditors are to be paid first. The court emphasized that attachments would be valid only if money remains after satisfying the fifth respondent's loan.

Referring to a recent Supreme Court case, the court reiterated the purpose of SARFAESI Act to regulate financial assets and security interest. The court emphasized that the attachments by other respondents become irrelevant once the fifth respondent exercises its power to sell the property. Since there was no surplus money after satisfying the fifth respondent's loan, the attachments by other parties were deemed unnecessary and ordered to be deleted to avoid clouding the petitioner's title.

Based on the above analysis, the court allowed the writ petition, directing the petitioner to reapply for registration of the sale certificate without reference to the attachment orders. The court also ordered the deletion of attachment entries in the records. No costs were awarded, and the miscellaneous petition was closed.

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