Secured creditor priority over tax attachment confirmed; earlier mortgage prevails and sale certificate cannot be blocked.

A prior registered mortgage in favour of the secured creditor prevails over a later attachment by the tax department, because Section 31B gives secured creditors priority over Government dues, including taxes and cesses, through a non obstante clause. That priority applies even to pending lis and prevents a subsequent departmental attachment from defeating enforcement of the earlier security interest. On that basis, the sale certificate could not be refused registration merely because of the tax attachment entry, and the attachment entry was required to be deleted.

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Issues: Whether a secured creditor with an earlier mortgage has priority over an attachment raised by the Commercial Tax Department, and whether the Sub-Registrar must register the sale certificate and delete the departmental attachment entry.

Analysis: The writ petition concerned property already under a prior registered mortgage in favour of the bank, whereas the tax department's attachment was subsequent. The decision relied on the settled position that the rights of a secured creditor to realise secured debt over mortgaged assets have priority over Government dues. The statutory mandate under Section 31B, introduced with a non obstante clause, gives secured creditors precedence over taxes, cesses and other Government dues, and the law applies even to pending lis. As the attachment could not defeat the earlier mortgage, the registration of the sale certificate could not be obstructed on that basis.

Conclusion: The prior mortgage and the secured creditor's rights prevail over the subsequent tax attachment, and the Sub-Registrar is required to register the sale certificate and delete the attachment entry.

Final Conclusion: The secured creditor's enforcement rights were upheld against the departmental encumbrance, while the tax department was left free to recover its dues from the defaulting assessee in accordance with law.

Ratio Decidendi: Under Section 31B, the rights of a secured creditor to realise secured debt from mortgaged assets take precedence over Government dues, including taxes and attachments, where the security interest is earlier in time.

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