Priority of secured creditors under the SARFAESI Act over claims...

Priority of secured creditors under the SARFAESI Act over claims by the Income Tax Department. The respondent mortgaged the property to the petitioner in 2013-14, prior to the Income Tax Department's search in 2017. The court held that the petitioner's claim as a secured creditor dating back to 2013 would override subsequent claims, including those of the Income Tax Department in 2017, as per the Madras High Court ruling. The orders of attachment by the Tax Recovery Officer were subsequent to the mortgage created in favor of the secured creditors and hence have no legal standing. Debts due to secured creditors shall be paid in priority over all other debts, revenues, taxes, and rates payable to the government, as per the SARFAESI Act, which prevails over earlier enactments like FEMA. The Bombay High Court also held that the PMLA provisions are subservient to the rights of secured creditors under SARFAESI. Consequently, the mortgage in favor of the petitioner in 2013 overrides the Income Tax Department's proceedings initiated in 2017, and the impugned order of attachment deserves to be quashed.