Secured creditor priority over customs dues upheld where the Customs Act exception preserved SARFAESI enforcement rights.

The Bombay HC held that a secured creditor may proceed under the SARFAESI Act despite a Customs attachment claim, because section 142A of the Customs Act gives customs dues a first charge only subject to its express statutory exceptions. As SARFAESI falls within the proviso/exception, the customs claim did not override the secured creditor's priority. The secured creditor could enforce its security against the property, while Customs retained the ability to seek information and recover only any balance remaining after satisfaction of the secured debt.

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Issues: Whether the secured creditor could proceed under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 despite the Customs authorities' attachment claim under the Customs Act, 1962.

Analysis: The Customs authorities' reliance on section 142A of the Customs Act, 1962, which gives customs dues the status of first charge, was subject to the statutory exceptions expressly carved out in that provision. Since the proviso/exception in section 142A includes the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the customs claim did not override the secured creditor's statutory priority. The secured creditor was therefore entitled to take measures against the property, while the customs authorities retained the liberty to seek information and pursue any balance remaining after satisfaction of the secured debt.

Conclusion: The secured creditor was held entitled to proceed under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and the Customs authorities' overriding charge claim was rejected to that extent.

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