Priority of prior security interest prevails over later registered charge; liquidation realisation needs proven exclusive secured interest.

A prior consortium hypothecation over a corporate debtor's present and future movable assets retained priority over a later refinance charge, because the exclusion clause applied only to assets financed outside the consortium for new fixed assets and did not displace the earlier security. The later registration of charge with the Registrar of Companies did not, by itself, establish a first or exclusive charge or override the prior security interest. In liquidation, realisation under section 52 required proof of an enforceable secured interest, and the absence of consent or no-objection from the prior charge holder meant the respondent could not invoke that provision on the facts stated.

---

---

Issues: (i) Whether the earlier consortium security created over the corporate debtor's movable assets had priority over the respondent's later refinance charge, and whether the respondent could claim a first or exclusive charge over those assets. (ii) Whether the absence of consent or no-objection from the prior charge holder, coupled with registration of charge with the Registrar of Companies, entitled the respondent to realise the secured assets under the liquidation regime.

Issue (i): Whether the earlier consortium security created over the corporate debtor's movable assets had priority over the respondent's later refinance charge, and whether the respondent could claim a first or exclusive charge over those assets.

Analysis: The security documents of the consortium created a first pari-passu hypothecation charge over the corporate debtor's present and future movable assets. The clause relied upon for exclusion of consortium security was confined to assets financed outside the consortium for new fixed assets, and did not displace the consortium's charge over existing movable assets. The respondent's refinance came much later, after the earlier lender had been repaid and the consortium charge had crystallised. In these circumstances, the later charge could not override the prior security or be treated as a first charge.

Conclusion: The prior consortium charge had priority, and the respondent did not establish an exclusive or first charge over the movable assets.

Issue (ii): Whether the absence of consent or no-objection from the prior charge holder, coupled with registration of charge with the Registrar of Companies, entitled the respondent to realise the secured assets under the liquidation regime.

Analysis: The liquidator sought proof of the respondent's charge and specifically required the no-objection of the existing charge holder. No such consent was produced. Registration of charge under company law could not, by itself, displace the substantive priority created earlier under the security arrangement or cure the absence of proof of an enforceable exclusive charge. Since realisation under section 52 depends on an established secured interest, the respondent could not invoke that provision on the facts found.

Conclusion: The respondent was not entitled to realise the assets under section 52 of the Code on the strength of registration alone, in the absence of consent from the prior charge holder and proof of an exclusive charge.

Final Conclusion: The appeal succeeded because the respondent failed to establish a superior enforceable security interest over the movable assets, and the impugned order permitting realisation of those assets could not stand.

Ratio Decidendi: A later registered charge cannot prevail over an earlier subsisting security interest over the same assets, and the right to realise security in liquidation is available only where an exclusive or clearly established secured interest is proved in accordance with the liquidation framework.

---