SARFAESI priority over Government dues prevents shifting a predecessor's excise arrears to the auction purchaser for registration.

An auction purchaser of secured assets sold under the SARFAESI framework could not be compelled to clear the predecessor's excise arrears as a condition for registration of the sale deed. The sale certificate issued under Rule 9(6) recorded that the property was sold free from encumbrances known to the secured creditor, and Section 31B gave the secured creditor's dues priority over Government dues, including taxes and cesses. In the absence of a statutory first charge fastening the earlier excise liability on the property, the prior dues could not be shifted to the purchaser. Refusal to register the sale deed on that ground was therefore unsustainable.

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Issues: Whether an auction purchaser of secured assets sold under the SARFAESI framework can be compelled to clear the previous owner's excise dues as a condition for registration of the sale deed.

Analysis: The sale was conducted under Section 13(9) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and the sale certificate issued under Rule 9(6) of the Security Interest (Enforcement) Rules, 2002 stated that the property was sold free from encumbrances known to the secured creditor. Section 31B of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 gives priority to the secured creditor's dues over all other debts and Government dues, including taxes, cesses and rates. On that basis, and following the principle that a subsequent purchaser cannot be fastened with the previous owner's Government dues unless the statute creates a first charge, the prior excise liability could not be shifted to the petitioner merely to secure registration.

Conclusion: The petitioner was not liable to discharge the previous owner's excise dues, and refusal to register the sale deed on that ground was unsustainable.

Final Conclusion: Registration of the auction-purchased property could not be made conditional upon payment of the predecessor's excise dues, and the petitioner was entitled to have the sale deed registered.

Ratio Decidendi: Under Section 31B of the SARFAESI Act, the secured creditor's claim has priority over Government dues, and an auction purchaser of secured assets sold free from known encumbrances cannot be made liable for the previous owner's tax or excise arrears in the absence of a statutory first charge.

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