Statutory priority of secured creditors prevails over later excise charge, protecting the auction purchaser's title.

Section 31B gives statutory priority to a secured creditor's right to realise secured debt over other debts and Government dues. Where the bank had already created and enforced its security interest before the excise charge was entered, and the property was sold in a bank auction, the later departmental charge could not defeat the auction purchaser's title. Applying the Full Bench view on priority of secured creditors, the Court treated the Central Excise Department's charge as unsustainable and directed its removal in favour of the purchaser.

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Issues: Whether the charge created by the Central Excise Department over the mortgaged property could survive in the face of the secured creditor's prior security interest and sale of the property in public auction.

Analysis: Section 31B gives statutory priority to the rights of secured creditors to realise secured debts by sale of assets over which security interest is created, over all other debts and Government dues. The property had already been attached by the bank long before the excise charge was entered, and the petitioner purchased the property in a bank auction. The Court applied the Full Bench view that the secured creditor's claim has priority over departmental dues, and held that the later excise charge could not defeat the auction purchaser's title.

Conclusion: The charge created in favour of the Central Excise Department was unsustainable and was directed to be removed, in favour of the petitioner.

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