Secured creditor priority prevails over later State claim; revenue order quashed and matter remanded for reconsideration.

A prior mortgage and secured financial assistance could not be displaced by a later State revenue claim treated as unsecured. The Gujarat HC note records that a Division Bench had already declared Section 137 of the Bombay Land Revenue Code void to the extent it gave the State preference over a secured creditor's debt, so an order recording such priority could not survive. The impugned mutation-confirming order was therefore unsustainable and was quashed, and the matter was remanded to the Mamlatdar for fresh decision in accordance with law.

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Issues: Whether the charge recorded in favour of the Sales Tax Department could override the petitioner bank's prior secured interest in the property, and whether the impugned order could stand in view of the declaration that Section 137 of the Bombay Land Revenue Code is void to the extent it gives preference to the State's unsecured claim over secured debt.

Analysis: The petitioner had a prior mortgage and had advanced financial assistance on the strength of the security. The State's claim arose later and was treated as an unsecured claim. A Division Bench had already held that the State cannot claim preference over a secured creditor's debt and had declared Section 137 of the Bombay Land Revenue Code void to that extent. The impugned order failed to consider that binding position and therefore could not be sustained.

Conclusion: The order confirming the mutation entry was unsustainable and was quashed. The matter was remanded to the Mamlatdar for fresh decision in accordance with law.

Final Conclusion: The petitioner obtained relief against the impugned revenue order, but the dispute was sent back for reconsideration on the governing legal position.

Ratio Decidendi: A later State claim cannot take priority over an existing secured debt, and an administrative order recording such priority cannot survive when it disregards a binding declaration that the contrary statutory provision is void to that extent.

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