Statutory first charge for public revenue prevails over secured creditor rights under SARFAESI in property recovery disputes.

A statutory first charge for recovery of public revenue under the Andhra Pradesh Revenue Recovery Act, 1864 was treated as prevailing over a mortgagee's and secured creditor's rights under SARFAESI. The analysis applies the principle that non obstante clauses in recovery statutes do not displace a State law that expressly creates priority over property, so land, buildings and their products remain security for public revenue. On that basis, the revenue dues ranked ahead of the bank's claim, and the secured creditor could recover only from any balance remaining after satisfaction of the State's dues.

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Issues: Whether the dues recoverable under Section 2 of the Andhra Pradesh Revenue Recovery Act, 1864 created a statutory charge having priority over the mortgage and secured creditor rights asserted under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Analysis: Section 2 of the Andhra Pradesh Revenue Recovery Act, 1864 treats the land, buildings and their products as security for public revenue. The prior Supreme Court authority relied upon in the judgment held that the non obstante clauses in the recovery statutes do not displace State enactments that create a first charge on property, and that such statutory first charge has primacy over bank and secured creditor claims. Applying that principle, the dues of the civil supplies corporation were held to be subject to the statutory charge under the Revenue Recovery Act and to rank ahead of the bank's claim. The bank could recover only from the balance remaining after satisfaction of the State's dues.

Conclusion: The statutory revenue claim was held to have precedence over the secured creditor's claim, and the order directing delivery of possession to the bank was set aside.

Final Conclusion: The writ petition supporting revenue recovery succeeded, while the bank's writ petition failed, because the statutory charge for public revenue was held to prevail over the secured creditor's enforcement rights.

Ratio Decidendi: A statutory first charge created for recovery of public revenue has priority over a secured creditor's claim under SARFAESI proceedings unless the legislature clearly provides otherwise.

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