Prior mortgage prevails over later tax attachment, so encumbrance entries based on the attachment must be removed.

A prior mortgage in favour of a bank created before income tax attachment was held to prevail as a secured debt, because government dues do not rank ahead of secured creditors unless a statute expressly gives them priority. The tax recovery attachment, even taking effect from the notice date, remained later in point of time than the 2015-2016 mortgage, so it could not displace the bank's security interest. The encumbrance entries based on that attachment were therefore directed to be removed, while the revenue was left free to proceed against other available properties for recovery.

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Issues: Whether a secured creditor's mortgage, created prior to the tax attachment, has priority over income tax dues and consequent attachment entries; and whether the encumbrance entries created on the basis of the tax attachment should be deleted.

Analysis: The properties had been mortgaged to the bank in 2015 and 2016, whereas the income tax attachment was made only in 2018-19. The earlier mortgage placed the bank in the position of a secured creditor. The governing principle applied is that government or crown dues do not have priority over secured debts unless a specific statutory provision confers such priority. The reasoning also drew support from the rule that attachment under the tax recovery schedule relates back to the notice date, but even on that basis the mortgage remained earlier in point of time. On that footing, the tax attachment could not defeat the bank's prior security interest, and the encumbrance entries based on such attachment could not be allowed to continue against the mortgaged properties.

Conclusion: The issue is answered in favour of the bank. The tax attachment does not prevail over the prior mortgage, and the encumbrance entries are liable to be deleted.

Final Conclusion: The writ petition was allowed, with directions to remove the attachment entries while leaving the revenue free to proceed against other available properties for recovery.

Ratio Decidendi: A prior secured debt created by mortgage prevails over later tax recovery attachment in the absence of an express statutory provision giving crown dues priority over secured creditors.

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