Secured creditor priority over revenue attachment upheld where prior CERSAI registration and mandatory proclamation procedure were not shown.

A secured creditor with prior CERSAI registration under section 26E of the SARFAESI Act was given priority over a later revenue attachment for sales tax dues, because the security interest was registered before the respondent's attachment and later CERSAI entry. The court also found that the revenue authorities had not shown compliance with the mandatory proclamation procedure required under the Maharashtra Land Revenue Code and the Realization of Land Revenue Rules, so the attachment could not override the secured creditor's statutory priority. The attachment, lien and related charges were therefore directed to be removed.

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Issues: (i) Whether the petitioner, having registered its security interest with CERSAI prior to the revenue authorities' attachment and registration, had priority under section 26E of the SARFAESI Act over the respondent's charge for sales tax dues; (ii) Whether the respondent's attachment could prevail in the absence of a proclamation in the manner required by section 192 of the Maharashtra Land Revenue Code and rule 11(2) of the Maharashtra Realization of Land Revenue Rules, 1967.

Issue (i): Whether the petitioner, having registered its security interest with CERSAI prior to the revenue authorities' attachment and registration, had priority under section 26E of the SARFAESI Act over the respondent's charge for sales tax dues.

Analysis: The petitioner's charge was registered with CERSAI in 2019, whereas the respondent's attachment was issued in 2022 and its CERSAI registration followed in 2023. Section 26E gives priority to the secured creditor in enforcement of the security interest, and the rights of other first-charge holders yield to that statutory priority once the security interest is duly registered. On these facts, the petitioner's registration preceded the respondent's claim and the petitioner was entitled to priority.

Conclusion: The issue is answered in favour of the petitioner. The petitioner's security interest had priority over the respondent's charge.

Issue (ii): Whether the respondent's attachment could prevail in the absence of a proclamation in the manner required by section 192 of the Maharashtra Land Revenue Code and rule 11(2) of the Maharashtra Realization of Land Revenue Rules, 1967.

Analysis: The governing revenue procedure required an attachment to be followed by a proclamation in the prescribed form. No material was produced to show compliance with that mandatory procedure. In the absence of such compliance, the respondent could not displace the statutory priority available to the secured creditor under section 26E of the SARFAESI Act.

Conclusion: The issue is answered in favour of the petitioner. The respondent's attachment could not prevail.

Final Conclusion: The petitioner's secured creditor rights were held to prevail over the revenue recovery claim, and the attachment, lien and charges recorded by the respondent were directed to be removed.

Ratio Decidendi: A secured creditor with prior CERSAI registration under section 26E of the SARFAESI Act has statutory priority over subsequent revenue attachments, and such priority is not displaced unless the attachment is shown to have been completed in accordance with the mandatory revenue procedure, including the required proclamation.

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