Prior equitable mortgage defeats later attachment; SARFAESI sale prevails, and rateable distribution fails without statutory conditions.

A later attachment cannot defeat rights created by a prior equitable mortgage, and it does not displace the secured creditor's priority where the property has already been sold in SARFAESI proceedings. The subsequent attachment therefore cannot affect title passed to the auction purchaser or justify directing deposit of the auction proceeds. Rateable distribution under Section 73 of the Code of Civil Procedure, 1908 is available only if the statutory preconditions are met, including a timely execution application and assets in court custody. Those conditions were not satisfied, so the claim for rateable distribution failed and the order requiring deposit of the auction amount was unsustainable.

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Issues: (i) Whether an attachment obtained after creation of an equitable mortgage could defeat the secured creditor's rights in the mortgaged property sold under the SARFAESI regime. (ii) Whether the decree holder could claim rateable distribution under Section 73 of the Code of Civil Procedure, 1908 on the facts of the case.

Issue (i): Whether an attachment obtained after creation of an equitable mortgage could defeat the secured creditor's rights in the mortgaged property sold under the SARFAESI regime.

Analysis: The equitable mortgage was created before the attachment, and the property had already been sold in auction under the SARFAESI proceedings. Once the mortgage preceded the attachment, the later attachment could not affect the title passed in favour of the auction purchaser or limit the secured creditor's enforcement rights. The statutory scheme under the SARFAESI Act gives primacy to the secured creditor's enforcement measures, and the later attachment could not operate to displace that priority.

Conclusion: The subsequent attachment had no effect on the SARFAESI sale and could not justify directing deposit of the auction proceeds.

Issue (ii): Whether the decree holder could claim rateable distribution under Section 73 of the Code of Civil Procedure, 1908 on the facts of the case.

Analysis: Rateable distribution is available only when the statutory conditions are strictly satisfied, including that the decree holder must have applied for execution before the assets came into the custody of the court and that the assets sought to be shared must be assets held by the court. Those requirements were not met here, so the foundation for invoking Section 73 was absent.

Conclusion: The decree holder was not entitled to rateable distribution under Section 73 of the Code of Civil Procedure, 1908.

Final Conclusion: The order directing the bank to deposit the auction amount was unsustainable, and the petition succeeded.

Ratio Decidendi: A later attachment cannot defeat rights arising from a prior equitable mortgage and SARFAESI sale, and rateable distribution under Section 73 of the Code of Civil Procedure, 1908 is available only when all statutory preconditions are satisfied.

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