Prior registered security interest prevails over later tax attachment, confirming secured creditor priority over departmental dues.

A prior and duly registered security interest prevails over a later tax attachment, so the secured creditor's claim ranked ahead of the Commercial Tax Department's recovery claim. The bank's mortgage and security interest arose on 13.10.2008, while the departmental charge was created only on 27.05.2015; the revenue did not invoke any fraudulent transfer provision and the transaction was not found tainted. The court applied the statutory priority accorded to secured creditors and held that governmental dues must yield to that priority, leaving only the exact quantification to be worked out between the bank and the Official Liquidator.

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Issues: Whether the secured creditor's prior mortgage and registered security interest had priority over the Commercial Tax Department's subsequent attachment and tax recovery claim over the properties in question.

Analysis: The security interest in favour of the bank was created from 13.10.2008, whereas the Commercial Tax Department's charge was created only on 27.05.2015. The revenue did not invoke the provision dealing with fraudulent transfers, and the transaction was not found to be tainted. The later statutory framework, including the priority accorded to secured creditors after registration of security interest, was applied to hold that the secured creditor's claim stood ahead of revenues, taxes and other governmental dues. The issue of quantification of the exact amount payable was left to be worked out between the bank and the Official Liquidator and did not affect the determination of priority.

Conclusion: The bank's secured claim has priority over the Commercial Tax Department's attachment and tax dues.

Final Conclusion: The writ petition was allowed with the declaration that the petitioner bank's security interest ranks in priority, while quantification of the amount to be appropriated was kept open for working out with the Official Liquidator.

Ratio Decidendi: A prior and duly registered security interest prevails over a later governmental tax attachment and the dues of the tax department must yield to the secured creditor's priority.

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