Secured creditor priority defeats sales tax attachment over mortgaged property sold in SARFAESI proceedings, with mutation directed.

State tax dues do not override a secured creditor's rights in mortgaged property unless a statute creates an express first charge in favour of the State. Where the properties were sold under the SARFAESI Act, a Sales Tax Department attachment could not survive against the secured sale in the absence of such statutory priority. Because the charge had already been deleted, the revenue record had to be corrected to reflect the auction purchaser's ownership, and mutation of the petitioner's name was required.

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Issues: Whether the charge created by the Sales Tax Department could prevail against the secured creditor's sale of the mortgaged property, and whether the petitioner was entitled to mutation of its name in the revenue record as owner of the auction-purchased properties.

Analysis: The governing principle applied was that State dues may have priority over unsecured debts, but such priority does not prevail over secured debts unless a statute expressly creates a first charge in favour of the State. The properties had been sold through proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and the court relied on the settled position that the secured creditor's rights are not defeated by a mere revenue recovery claim in the absence of a statutory first charge. Since the attachment entry of the Sales Tax Department could not survive against the secured sale and the charge had already been deleted, the revenue record was required to reflect the petitioner's ownership.

Conclusion: The issue was decided in favour of the petitioner. The Sales Tax Department's charge could not be enforced against the secured sale, and the respondents were required to mutate the petitioner's name in the revenue record.

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