Secured creditor priority prevails over later State tax lien when security interest is earlier registered.

A secured creditor's registered security interest takes priority over later State tax dues where the mortgage was created and registered earlier. Applying the statutory priority under Section 26E of the SARFAESI Act and Section 31B of the RDB Act, the earlier equitable mortgage and Central Registry registration prevailed over a subsequent revenue lien for VAT dues. A later lien entry in the revenue record cannot override the secured charge and was liable to be removed and quashed.

---

---

Issues: Whether the secured creditor had priority over the State tax dues in respect of the secured asset, and whether the later lien entered in the revenue record could be quashed.

Analysis: The petitioner Bank had created an equitable mortgage over the secured asset in 2014 and the security interest was registered in the Central Registry in 2014. The State's lien was entered much later in 2025. Section 26E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and Section 31B of the Recovery of Debts and Bankruptcy Act, 1993 give priority to secured creditors over all other debts, including Government dues, after registration of the security interest. Applying that statutory priority, the earlier secured charge of the Bank prevailed over the subsequent revenue lien claimed for VAT dues.

Conclusion: The secured creditor's charge had priority over the State's tax claim, and the lien entered later in the revenue record was liable to be removed and quashed.

---