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IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH
Sheel Nagu, C.J., Sanjiv Berry, J.
State Bank of India - Petitioner
Versus
Sub Registrar, Sub Tehsil Nighdu Karnal And Others - Respondents
CWP-26875-2021 (O&M)
Decided On : 10-12-2025
Key Points: - The petitioner-bank’s prior charge over assets is affirmed; petition allowed; sale deed registration mandated (!) (!) - Section 26E of SARFAESI Act establishes priority of secured creditors over government dues after registration of security, though not applicable to the facts since 2020 notification; court notes priority despite later amendments (!) (!) (!) - Rapat entry or administrative notes cannot defeat prior statutory rights of mortgagee; cannot be used to refuse registration (!) - The court quashes the prior rapat entry in favor of the District Food and Supply Department; permits Haryana to recover its dues after bank’s dues are satisfied (!) (!) - Costs of petition awarded Rs. 25,000, with breakdown to petitioner and Bar Association, due to delay by State of Haryana (!) - The court directs compliance within two months and contemplates listing IOIN if not complied (!) - The decision references prior judicial principles that secured creditor rights to recover debt are prior to crown/government debts (Dena Bank v. Bhikhabhai Prabhudas Parekh) (!)
| Table of Content |
|---|
| 1. failure to register sale deed by sub-registrar. (Para 1) |
| 2. petition for writ of mandamus to register sale deed. (Para 2 , 3) |
| 3. priority dispute between bank and state over secured assets. (Para 4 , 5) |
| 4. section 26e of the sarfaesi act pertains to priority. (Para 6) |
| 5. rapat entry administration does not trump prior statutory mortgage. (Para 7 , 8) |
| 6. issuance of writ of mandamus in favor of petitioning bank. (Para 9) |
| 7. cost of petition assessed against the state of haryana. (Para 10) |
| 8. clarification on the future application of section 26e. (Para 11) |
| 9. disposal of pending applications. (Para 12) |
JUDGMENT :
SHEEL NAGU, C.J.
1. This petition under Article 226/227 of the Constitution of India has been filed by State Bank of India (‘SBI’ for brevity) aggrieved by inaction on the part of respondent No.1/Sub-Registrar, Sub-Tehsil Nigdhu, District Karnal in failing to register the sale deed in favour of the auction purchaser-respondent No.2 (M/s Mahadev Foods), despite the said auction purchaser having been declared as a ‘successful bidder’ in the e-auction held on 21.09.2021 and depositing the entire sale consideration of Rs.738.00 lacs, and the sale certificate having been issued in favour of respondent No.2 on 29.09.2021.
1.1 The Bank has approached this Court aggrieved due to the above and the fact that failure on the part of respondent No.1 to register the sale deed is causing grave prejudice to the petitioner-Bank as it is unable to recover the outstanding dues of Rs.6,38,81,387/- as on 12.08.2018 standing against the borrower-M/s Mahavir Cereals, who had availed credit facility of Rs.8,10,00,000/- in the year 2013 and had later defaulted in repayment, leading to initiation and conclusion of proceedings under SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT , 2002 (‘SARFAESI Act’ for brevity).
1.2 The respondent No.1/Sub-Registrar concerned has declined to register the sale deed on the ground of attachment order of the secured asset in question, having been passed by Deputy Commissioner on 28.11.2018 as outstanding tax dues against borrower-M/s Mahavir Cereals.
2. The petitioner-Bank had made a representation dated 09.11.2021 (Annexure P-4) in this regard to respondent No.1 requesting for registration of sale deed in respect of the secured assets sold in the above said e-auction, but to no avail.
3. In the aforesaid factual matrix, the petitioner-Bank has essentially prayed for issuance of a Writ of Mandamus directing respondent No.1 to register the sale deed in respect of the secured assets sold through e-auction held on 21.09.2021 in respect of which sale certificate dated 29.09.2021 has been issued; and further to quash the revenue entry in the records as regards charge of respondent No.3/District Food and Supply Department, State of Haryana over the secured asset which was created on 28.11.2018.
4. Learned counsel for the rival parties are heard on the question of admission and also final disposal.
5. It is undisputed at the Bar that the charge in favour of District Food and Supply Department, State of Haryana was created as late as on 28.11.2018 over the secured assets, whereas the charge of the petitioner-Bank over the secured assets was created much earlier upon deposit of original title deeds by the borrower-M/s Mahavir Cereals with the petitioner-Bank on 04.07.2013.
6. As such, this Court has to ascertain as to which authority i.e. either the State of Haryana or the petitioner-Bank, has priority over the secured assets.
6.1 It is undisputed that the charge in favour of petitioner-Bank was created in 2013.
6.2 Prior to the Amendment Act No.44 of 2016, the concept of priority of charge in favour of a particular secured creditor was not statutorily codified. A generic kind of assistance could be had from Section 35 read alongwith Sec 2(zc) to (zf) and Sec. 13 of SARFAESI Act which stipulated that the provisions of SARFAESI Act shall have effect notwithstanding anything i
AI
Priority of secured creditors established over government tax dues based on statutory interpretations of the SARFAESI Act, affirming the rights of banks to recover dues first.
Section 26(E) of the SARFAESI Act and Section 31B of Act 51 of 1993, there cannot be any doubt that the rights of a secured creditor to realize the debts due and payable by sale of assets over which ....
The provisions of the SARFAESI Act grant secured creditors priority over state tax dues, rendering any conflicting claims by tax authorities ineffective.
Section 26-E of the SARFAESI Act prioritizes secured creditors over tax dues, establishing that tax attachments are subordinate to secured interests.
Secured creditors have priority over debts, permitting registration of sale certificates despite existing civil court attachments, with purchasers taking the property subject to said attachments.
The main legal principle established in the judgment is the priority of the secured creditor over government dues as per the SARFAESI Act, particularly in relation to the registration with CERSAI and....
Point of law: It would be seen that so far as clause (1) of Article 254 is concerned it clearly lays down that where there is a direct collision between a provision of a law made by the State and tha....
The SARFAESI Act gives priority to secured creditors over government dues, overriding conflicting provisions in other laws.
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