Secured creditor priority over government dues confirms that revenue encumbrances cannot block sale certificate registration.

A secured creditor's statutory priority over government dues was reaffirmed, with the amended framework under Section 31B of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and Section 26-E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 giving overriding effect to secured debts. In the absence of a specific first charge for revenue claims, encumbrances entered for taxes and similar dues cannot prevail over the secured creditor's right to realise secured assets. On the stated facts, the encumbrances were treated as wrongly entered and could not obstruct registration of the auction purchaser's sale certificate.

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Issues: Whether the secured creditor's right to realise secured assets and the auction purchaser's sale certificate could prevail over encumbrances entered for government dues, so as to require registration of the sale certificate.

Analysis: The dispute turned on the settled priority between secured debts and Crown debts. The earlier Full Bench view, later affirmed in subsequent decisions, was relied upon to hold that government dues do not obtain precedence in the absence of a specific first charge. The amended statutory scheme under Section 31B of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and Section 26-E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 gives overriding priority to secured creditors over revenues, taxes, cesses and similar dues. On the undisputed facts, the encumbrances were entered wrongly and could not obstruct registration of the sale certificate.

Conclusion: The issue was answered in favour of the petitioner, and the secured creditor's priority over the revenue claims was upheld, enabling registration of the sale certificate.

Final Conclusion: The writ petitions were allowed on the basis that secured debt has priority over the governmental encumbrances and the registration authority could not refuse registration on that ground.

Ratio Decidendi: Where a statute confers overriding priority on secured creditors through a non obstante clause, secured debts prevail over government dues and related encumbrances, and such dues cannot bar registration of a sale certificate issued in enforcement of the security interest.

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