The main legal point established in the judgment is that the claim of the secured creditor under the SARFAESI Act has priority over other debts and attachments, and attachments made by other parties stand valid only if there is surplus money left after satisfying the loan due to the secured creditor.

JUDGMENT

(Prayer: Petition filed under Article 226 of the Constitution of India, to issue a writ of certiorarified mandamus, to call for the records of the encumbrance attachment entries in vide Document Nos:8/2019, dated 11.04.2019, Document No.9/2019, dated 12.04.2019, Document Nos: 19/2019 and 20/2019, dated 26.08.2019 on the file the first respondent/Sub Registrar, Othakadai Sub Registrar Office, Madurai and quash the same and consequently, direct the first respondent to register the Sale Certificate dated 22.11.2022 issued by the fifth respondent bank to and in favour of the petitioner/Auction purchaser M/s.Siva Automotive Trading Private Limited, within a time frame.)

D. Bharatha Chakravarthy, J.

1. The petitioner company is an auction purchaser of the property in the nature of plots in Uthangudi village, Madurai North Taluk, Madurai North Registration District in R.S.Nos.149/4A1, 149/4A3, 149/4A and 148/2. The property was sold under SARFAESI Act, by the fifth respondent bank, being the secured creditor. A sale certificate was duly issued in favour of the petitioner on 22.02.2022. Upon producing the same for registration before the first respondent namely the Sub- Registrar, Othakadai, Madurai, the same was declined orally on the ground that in respect of the property purchased, there are orders of attachment passed by the Commissioner of CGST and Central Excise Madurai, the sixth respondent herein, vide Document No.8 of 2019 dated 11.04.2019 and Document No.9 of 2019 dated 12.04.2019. This apart the eighth respondent being the sole arbitrator, at the behest of seventh respondent, namely M/s.Mahindra and Mahindra Financial Services Limited had also passed attachment orders dated 26.8.2019 which are registered as Document Nos.19 of 2019 and 20 of 2019.

2. It is the case of the petitioner that the fifth respondent alone is the secured creditor and by virtue of the provisions of the SARFAESI Act, the claim of the secured creditor is paramount and has precedence over others and therefore, the registration of the above attachment orders have to be deleted and the petitioner’s sale certificate is to be registered.

3. Heard Mr. R.Murali, learned counsel appearing on behalf of the petitioner, Mr.J.K.Jayaseelan, learned Government Advocate appearing on behalf of the respondents 1 to 4, Mrs. Ananda Gomathy, learned counsel appearing on behalf of the fifth respondent, Mr.N.Dileep Kumar, learned counsel appearing on behalf of the sixth respondent and Mr.A.P. Adhithan, learned appearing on behalf of the seventh respondent.

4. On perusal of the material records of the case more specifically the encumbrance certificate it is clear that there is a mortgage executed in favour of the fifth respondent bank. Therefore, the fifth respondent being the secured creditor under the SARFAESI Act and the security interest being duly registered, by virtue of Section 26E of SARFAESI Act, 2002, it is only the claim of the fifth respondent bank which has priority. Section 26E of SARFAESI Act, 2002, is extracted hereunder for ready reference:

“Section 26E: Priority to secured creditors. 26E. Notwithstanding anything contained in any other law for the time being in force, after the registration of security interest, the debts due to any secured creditor shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority. Explanation.—For the purposes of this section, it is hereby clarified that on or after the commencement of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), in cases where insolvency or bankruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provisions of that Code.”

5. On account of the above amendment to the SARFAESI Act, 2002, the attachment of the commissioner of CGST and Central Excise as well as the attachment under the ar