Confiscated property vests in the State, defeating SARFAESI enforcement and leaving no locus to challenge the order.

Property confiscated in excise proceedings vests in the State by operation of law, extinguishing the erstwhile owner's and any claimant's subsisting rights. On that basis, a secured creditor cannot enforce its security interest against confiscated property under SARFAESI, because priority between secured debt and revenue claims does not arise once confiscation has taken effect. The bank also lacked locus standi to challenge the confiscation order where the owner had already appealed. The confiscated assets therefore could not be proceeded against by the bank, and the challenge failed.

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Issues: Whether property confiscated under excise proceedings vests in the State so as to defeat the secured creditor's claim and bar enforcement under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; whether the bank had locus standi to challenge the confiscation order.

Analysis: The Court held that the dispute was not one of recovery of tax dues by attachment of the borrower's assets, but one where the excise authorities had already ordered confiscation of the movable and immovable properties. Confiscation means appropriation of property by the State by way of penalty, and once property is confiscated it vests in the State, leaving no subsisting right, title or interest in the erstwhile owner or any other claimant. In that situation, the question of priority between a secured creditor and revenue dues does not arise because the debt may survive, but it cannot be enforced against confiscated property. The Court further noted that the bank had no locus standi to challenge the confiscation order when the owner had already appealed against it.

Conclusion: The confiscated property could not be proceeded against by the bank under the security enforcement , and the writ petition failed.

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