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of <h1>Priority of secured creditors' dues where security interest is registered with central registry; bank claims prevail over state authorities' claims</h1> Priority of secured creditors' dues is affirmed where a security interest is registered with the central registry, resulting in secured creditor claims ... Priority of secured creditor's dues over all other dues - Registration of security interest with the Central Registry (CERSAI) - Security interest enforcement and non-obstante clauses - HELD THAT:- It is correctly pointed out by the learned counsel appearing for the Petitioner-Bank that the full bench of this Court comprehensively considered rival submissions, with the focal point being on the expression “priority” used in the relevant provisions of the Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 and the Rules framed thereunder. We are of the opinion that in the light of the aforesaid sweeping observations made by the full bench of this Court while clarifying the position of law as regards the priority of dues of secured creditors, the artificial distinction now sought to be made by the learned AGP cannot be accepted. Thus, according to us, the ratio of the full bench judgment applies on all fours to the facts concerning Writ Petition (L) No. 172 of 2026 also. The dues of the Petitioner-Bank clearly have priority over the claims made by the Respondent-State Authorities, in the facts and circumstances of both the Writ Petitions. Issues: Whether prior registration of a security interest with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) confers priority on a secured creditor over claims and demand notices issued by State or Central tax authorities (including MVAT and GST), and whether impugned demand notices, prohibitory orders and communications issued after such registration are liable to be quashed.Analysis: The Court examined the ratio of the full bench decision in Jalgaon Janta Sahakari Bank Ltd. & Anr. v. Joint Commissioner of Sales Tax Nodal 9, Mumbai & Anr., focusing on the statutory scheme in the SARFAESI Act and the significance of CERSAI registration, including paragraphs 74, 78 and 85 which interpret sections 26B and 26E and the effect of non-obstante clauses. The full bench treated 'priority' under section 26E as conferring precedence of a secured creditor's claim in enforcement of security interest over all other dues, including revenues, taxes and cesses payable to Central or State authorities. The Court rejected the State's contention that the full bench ratio does not apply to central enactments such as GST, holding that the full bench's sweeping statement on priority applies to dues payable to Central Government as well as State authorities. On the facts, the security interests were registered with CERSAI in 20152018 and the impugned tax demands, prohibitory order and communications were issued thereafter (2025); accordingly the secured creditor's priority applies and the State authorities' attempts to claim priority were contrary to the law as clarified by the full bench.Conclusion: The petitions are allowed: the bank's CERSAI registration confers priority of its dues over the impugned demands, prohibitory order and communications issued later, and those demands/communications are quashed to the extent they assert priority over the secured creditor's claim.
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