Registered secured creditor priority prevails over later tax dues, and sale certificate registration cannot be blocked by revenue encumbrance.

A secured creditor with a prior mortgage registered with CERSAI was held to have priority over later State tax dues, because Section 26-E of the SARFAESI Act gives precedence to a duly registered security interest and an unregistered departmental attachment cannot defeat it. The Court also found that revenue entries, mutation and the department's encumbrance could not override the auction purchaser's title or block registration of the sale certificate. The departmental lien and charge were therefore ineffective against the secured creditor's registered claim, and the sale certificate had to be registered free from that encumbrance.

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Issues: Whether the secured creditor's claim, having been registered with CERSAI, had priority over the State's tax dues and whether the encumbrance, mutation entry and refusal to register the sale certificate could be quashed.

Analysis: The mortgage in favour of the secured creditor predated the departmental attachment, and the security interest had been registered with CERSAI. The Court applied the Full Bench ruling that, under Section 26-E of the SARFAESI Act, a duly registered secured creditor has priority over government dues, and that a subsequent or unregistered departmental charge cannot defeat that priority. The department had not registered its claim or attachment under Chapter IV-A, and mere entries in revenue records could not override the registered security interest or prejudice the auction purchaser. The sale certificate was therefore required to be registered free from the departmental encumbrance.

Conclusion: The issue was answered in favour of the petitioner. The departmental lien, charge, encumbrance and mutation entry could not stand against the secured creditor's prior registered security interest, and the registration authority was bound to register the sale certificate without treating the property as encumbered by the departmental claim.

Final Conclusion: The writ petition succeeded, the secured creditor's priority was upheld, and the sale transaction was directed to be given full effect despite the departmental dues.

Ratio Decidendi: Where a secured creditor has a prior security interest registered with CERSAI, later governmental tax claims not registered under the statutory framework do not override that priority, and subordinate record entries cannot defeat the auction purchaser's title or registration of the sale certificate.

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