Prior registered security interest under SARFAESI prevails over tax attachment when the revenue claim is not registered with CERSAI.

A prior registered security interest under the SARFAESI framework takes precedence over subsequent governmental attachment or tax claims over the secured asset. Where enforcement is undertaken under SARFAESI and the security interest is registered with CERSAI, a revenue authority must register its own claim to preserve any competing interest; failure to do so is fatal to its claim against the secured asset. The departmental attachment cannot displace the secured creditor's enforcement rights, and the creditor may proceed with sale and appropriation of proceeds, subject to remittance of any surplus to the revenue authority.

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Issues: (i) Whether the secured creditor had priority over the State Sales Tax Department in realisation of sale proceeds from the secured assets. (ii) Whether the departmental attachment could survive when the security interest had been registered with CERSAI and the department had not registered its claim.

Issue (i): Whether the secured creditor had priority over the State Sales Tax Department in realisation of sale proceeds from the secured assets.

Analysis: The secured assets were already subjected to a valid security interest, enforcement had proceeded under the SARFAESI Act, and the security interest had been registered with CERSAI. The governing legal position, as settled by the Full Bench, is that a secured creditor's claim ranks in priority over governmental tax dues, subject to compliance with the statutory scheme and the relevant registration requirements. The priority conferred by the SARFAESI framework overrides a claim of first charge asserted by the revenue authorities in respect of the secured assets.

Conclusion: The secured creditor had priority over the State Sales Tax Department, and the attachment could not prevail against the secured creditor's claim.

Issue (ii): Whether the departmental attachment could survive when the security interest had been registered with CERSAI and the department had not registered its claim.

Analysis: Once Chapter IV-A of the SARFAESI Act operated, the department was required to register its claim with CERSAI. The department had not done so, and a subsequent attachment or recorded charge could not displace a prior registered security interest. The absence of departmental registration was fatal to its claim against the secured asset and could not prejudice the auction process or the secured creditor's enforcement rights.

Conclusion: The departmental attachment could not survive, and the secured creditor was entitled to proceed with sale and appropriation of the proceeds.

Final Conclusion: The writ petition succeeded, the impugned attachment was set aside, and the secured creditor was permitted to realise its dues with any surplus to be remitted to the revenue authority.

Ratio Decidendi: A prior registered security interest under the SARFAESI framework has precedence over subsequent governmental attachment or tax claims, and a revenue authority that does not register its claim with CERSAI cannot defeat the secured creditor's enforcement rights.

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