Priority of secured creditor's charge over later tax attachment bars revenue entry against SARFAESI-sold asset.

A State tax attachment over a secured asset sold under the SARFAESI regime could not survive where the bank had already enforced its prior security interest and completed the auction sale. The Court applied the principle that a secured creditor's charge has priority over later VAT recovery proceedings against the erstwhile owner, so the subsequent revenue attachment entry could not override the bank's earlier right. The attachment entry was therefore required to be deleted.

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Issues: Whether the State tax attachment and corresponding revenue entry could survive against a secured asset sold under the SARFAESI regime, and whether the entry recording attachment was liable to be deleted.

Analysis: The property had already been proceeded against as a secured asset by the bank under the SARFAESI framework, and the auction sale in favour of the purchasers had been completed much earlier. The State's attachment entry was made later for recovery of VAT dues from the erstwhile owner. On the principle that a secured creditor's charge has priority over State tax recovery in respect of secured assets, the revenue attachment could not override the bank's prior right. The earlier judicial view that the bank's first charge prevails over VAT recovery was followed.

Conclusion: The attachment entry could not be sustained and was required to be deleted. The issue is decided in favour of the petitioners.

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