Prior security interest prevails over later tax charge, protecting auction purchasers' title and removing revenue attachment.

A prior registered security interest under the SARFAESI regime takes precedence over a later State tax charge. Where the bank had mortgaged the properties before the State created its charge, and the auction purchasers bought the secured assets in public e-auction, paid full consideration, received the sale certificate and took possession, Section 26E of the SARFAESI Act gave the secured creditor priority over other debts, including tax dues, with Section 35 giving the Act overriding effect. The later statutory charge under the Gujarat VAT Act could not defeat the earlier security interest, and the revenue attachment was liable to be removed to protect the purchasers' title.

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Issues: Whether the secured creditor's dues had priority over the State tax dues, and whether the attachment in the revenue records could be removed in favour of the auction purchasers.

Analysis: The properties were mortgaged with the bank before the State authorities created their charge. The petitioners purchased the secured assets in public e-auction, paid the full sale consideration, received the sale certificate, and obtained possession. Section 26E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 gives priority to secured creditors over all other debts, including taxes, and Section 35 gives the Act overriding effect. The statutory charge under Section 48 of the Gujarat Value Added Tax Act, 2003 could not defeat the prior security interest already enforced by the bank. The petitioners, as bona fide purchasers from the secured creditor, could not be burdened with the State's later claim.

Conclusion: The secured creditor's claim prevailed over the State tax dues, and the petitioners were entitled to protection of their title and removal of the revenue attachment.

Ratio Decidendi: A prior registered security interest under the SARFAESI regime has priority over a subsequent statutory tax charge, and the auction purchaser from the secured creditor acquires title free from the later State attachment.

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