Secured creditor priority under SARFAESI requires notice before tax arrears recovery proceeds against charged assets.

Statutory priority under Section 26E of the SARFAESI Act protects a registered secured creditor's charge over movable and immovable assets against recovery of tax arrears. Where the bank's security interest was undisputed, the recovery forum could not proceed without issuing notice to the secured creditor. The contrary order refusing impleadment of the bank was therefore unsustainable, and recovery was permitted to continue only after notice to the secured creditor.

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Issues: Whether notice to the bank, being a secured creditor having a prior charge over the petitioner's movable and immovable properties, was necessary before proceeding with recovery of tax arrears.

Analysis: The revision concerned recovery proceedings for arrears of tax, where the petitioner pointed out that a bank had an existing security interest over the assets. The statutory protection under Section 26E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act gives priority to secured creditors over other debts and revenue dues after registration of the security interest. In view of that priority, and since the existence of the bank's charge was not in dispute, the order refusing to issue notice to the bank could not be sustained.

Conclusion: The requirement to issue notice to the bank was upheld, and the petitioner succeeded on this issue.

Final Conclusion: The recovery proceedings were directed to continue only after impleading the secured creditor by notice, and the contrary order of the Special Court was set aside.

Ratio Decidendi: Where a secured creditor has a registered security interest, statutory priority under Section 26E prevails, and the recovery forum must give notice to the secured creditor before proceeding against the secured assets.

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