IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH AU SMALL FINANCE BANK LTD.

....Petitioner Versus STATE OF HARYANA AND OTHERS ...Respondents Reserved on: 13.11.2025 Pronounced on: 16.12.2025 Uploaded on: 16.12.2025 Whether only operative part of the judgment is pronounced or the full judgment is pronouned: full judgment *****

CORAM: HON'BLE MR. JUSTICE SHEEL NAGU, CHIEF JUSTICE HON'BLE MR. JUSTICE SANJIV BERRY *****

Present: Mr. Pritinker Diwaker, Senior Advocate, with Mr. Nitin Thatai, Advocate Ms. Monika Thatai, Advocate Ms. Shruti Sharma, Advocate Mr. Karan Sharma, Advocate for the petitioner.

Mr. Neeraj Gupta, Addl. Advocate General, Haryana.

Mr. Pankaj Midha, Advocate, and Mr. Jatin Bansal, Advocate for respondents No.4 and 5.

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SHEEL NAGU, C.J.

1. This petition under Article 226/227 of the Constitution of India has been filed by AU Small Finance Bank (‘Bank’ for brevity) praying for issuance of a Writ of Mandamus directing Respondent Nos. 4 and 5 to remove additional charge on properties of Respondent Nos. 6 to 13 which are already mortgaged in favour of Petitioner Bank since 2022 and to further restrain respondents from interfering with the petitioner Bank’s process of recovering its dues under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’ for brevity).

1.1 The Bank has approached this Court aggrieved due to the above and the fact that Haryana State Cooperative Supply and Marketing Federation Ltd. (HAFED) has put restrictions on sale and purchase etc. of said properties on 01.08.2024 and has illegally taken symbolic possession vide attachment order on 28.11.2024, having been passed by Deputy Commissioner as outstanding dues against borrowers and guarantors, causing grave prejudice to the petitioner-Bank as it is unable to recover the outstanding dues standing against the borrowers and guarantors (Respondent Nos. 6 to 13), who had availed 3 different credit facilities qua 3 separate firms in the year 2022 by mortgaging a total of 6 different properties but had later defaulted in repayment, leading to initiation of proceedings under SARFAESI Act.

2. The petitioner-Bank had made representations dated 12.02.2025 and 25.02.2025 in this regard to respondent Nos. 4 and 5 requesting for removal of charge in respect of the secured assets marked as lien prior in time in favour of Petitioner Bank, but to no avail.

3. It is pertinent to mention herein that vide order dated 22.05.2025, a clarification in the order dated 04.04.2025 has been made by this Court that status quo shall be maintained qua three properties on which HAFED has a charge, while on other three properties as pointed out in the order dated 22.05.2025, on which HAFED does not have any charge, the order of status quo stood vacated.

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 Respondent Nos. 4 and 5 (HAFED), was created vide rapat no. 141 as late as on 28.11.2024 after putting restrictions on 01.08.2024 over the secured assets, whereas the first charge/lien (by way of mortgage) of the petitioner-Bank over the secured assets was created much earlier by the borrowers with the petitioner-Bank by way of equitable mortgage, on 26.04.2022.

6. As such, this Court has to ascertain as to which authority i.e. either the HAFED or the petitioner-Bank, has priority of charge over the secured assets. 6.1 It is undisputed that the charge/lien in favour of petitioner-Bank was created in 2022. It is also not in dispute that the petitioner Bank had duly registered the said security interests with CERSAI in 2022, thereby completing statutory perfection of charge under Chapter IV-A of SARFAESI Act.

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