# Regional Stressed Assest Recovery Branch Bank Of Baroda v. State Of U.P. & Ors

- **Citation:** (2025) 10 ILRA 1004
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-10-14
- **Case number:** Writ - C No. 33632 of 2024
- **Bench:** Shekhar B. Saraf, Praveen Kumar Giri
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/regional-stressed-assest-recovery-branch-bank-of-baroda-v-state-of-u-p-ors-54700
- **Pages:** 12

## Headnote

C.S.C., Ram Kishun Misra

ISSUE FOR CONSIDERATION
Whether the secured creditors have priority over
the charge of unsecured creditors ?

HEADNOTE
Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act,
2002 - Sections 13, 14, 26E - Recovery of
Debts and Bankruptcy Act, 1993, Section 31B -
Priority of charge - Secured creditor vs.
Government dues - Cash credit facility secured
by mortgage - Borrower default - Account
declared NPA - SARFAESI proceedings initiated -
Demand notice under Section 13(2) followed by
possession under Section 13(4) - Application
under Section 14 allowed - State authorities
issued recovery certificate for Food & Civil
Supplies dues and tax dues and attached
mortgaged property - Attachment order passed
by Sub-Divisional Magistrate - Objection by bank
asserting statutory priority - Contention that
Government dues preceded SARFAESI action
rejected - Sections 26E SARFAESI Act and 31B
RDB
Act
inserted
by
2016
Amendment
containing
non
obstante
clauses
granting
priority to secured creditors over all other debts
including
Government
dues
-
Subsequent
enactment with overriding clause prevails -
Revenue authorities have no jurisdiction to
obstruct SARFAESI recovery or attach secured
assets - Attachment order held illegal and
without jurisdiction - Impugned attachment
quashed.

HELD A secured crediter shall always have
precedence over an unsecured creditor. In cases
where two enactments refer to secured creditors
having charge over the property, the later
enactment would prevail. When two enactments
have competing non obstante provision and
there is nothing repugnant, then the non
obstante clause of the subsequent statute would
prevail over the earlier enactments. Priority
conferred under Section 26-E of the SARFAESI
Act that came into existence in 2016 would
prevail over an unsecured creditor even though
the unsecured creditor is the Government. If
there is a wrangle between secured creditor and
unsecured creditor, the former will have a
priority of first charge over the latter for
recovery
against
the
delinquent.
Secured
creditors will always have priority over the
unsecured
creditors.
Impugned
attachment
order passed by respondent no.4 for recovery of
dues of State Government quashed and set
aside. (Paras 19, 20)
Writ petition allowed. (E-5)

CASE LAW CITED
Punjab National Bank v. Union of India, (2022)
7 SCC 260;
Kotak Mahindra Bank Ltd. v. Girnar Corrugators
(P) Ltd., (2023) 3 SCC 210;
Central Bank of India v. Siriguppa Sugars &
Chemicals Ltd., (2007) 8 SCC 353;
Union of India v. SICOM Ltd., (2009) 2 SCC 121;
Dena Bank v. Bhikhabhai Prabhudas Parekh &
Co., (2000) 5 SCC 694;

List of Acts
Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act,
2002;
Recovery of Debts and Bankruptcy Act, 1993

## Text

1004 INDIAN LAW REPORTS ALLAHABAD SERIES

46. Pending application(s), if any,
stands disposed of.
----------
(2025) 10 ILRA 1004
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 14.10.2025

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.
THE HON'BLE PRAVEEN KUMAR GIRI, J.

Writ - C No. 33632 of 2024

Regional Stressed Assest Recovery Branch
Bank Of Baroda ...Petitioner
Versus
State Of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Atul Dayal, Sr. Adv., Maneesh Mehrotra

Counsel for the Respondents:
C.S.C., Ram Kishun Misra

ISSUE FOR CONSIDERATION
Whether the secured creditors have priority over
the charge of unsecured creditors ?

HEADNOTE
Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act,
2002 - Sections 13, 14, 26E - Recovery of
Debts and Bankruptcy Act, 1993, Section 31B -
Priority of charge - Secured creditor vs.
Government dues - Cash credit facility secured
by mortgage - Borrower default - Account
declared NPA - SARFAESI proceedings initiated -
Demand notice under Section 13(2) followed by
possession under Section 13(4) - Application
under Section 14 allowed - State authorities
issued recovery certificate for Food & Civil
Supplies dues and tax dues and attached
mortgaged property - Attachment order passed
by Sub-Divisional Magistrate - Objection by bank
asserting statutory priority - Contention that
Government dues preceded SARFAESI action
rejected - Sections 26E SARFAESI Act and 31B
RDB
Act
inserted
by
2016
Amendment
containing
non
obstante
clauses
granting
priority to secured creditors over all other debts
including
Government
dues
-
Subsequent
enactment with overriding clause prevails -
Revenue authorities have no jurisdiction to
obstruct SARFAESI recovery or attach secured
assets - Attachment order held illegal and
without jurisdiction - Impugned attachment
quashed.

HELD A secured crediter shall always have
precedence over an unsecured creditor. In cases
where two enactments refer to secured creditors
having charge over the property, the later
enactment would prevail. When two enactments
have competing non obstante provision and
there is nothing repugnant, then the non
obstante clause of the subsequent statute would
prevail over the earlier enactments. Priority
conferred under Section 26-E of the SARFAESI
Act that came into existence in 2016 would
prevail over an unsecured creditor even though
the unsecured creditor is the Government. If
there is a wrangle between secured creditor and
unsecured creditor, the former will have a
priority of first charge over the latter for
recovery
against
the
delinquent.
Secured
creditors will always have priority over the
unsecured
creditors.
Impugned
attachment
order passed by respondent no.4 for recovery of
dues of State Government quashed and set
aside. (Paras 19, 20)
Writ petition allowed. (E-5)

CASE LAW CITED
Punjab National Bank v. Union of India, (2022)
7 SCC 260;
Kotak Mahindra Bank Ltd. v. Girnar Corrugators
(P) Ltd., (2023) 3 SCC 210;
Central Bank of India v. Siriguppa Sugars &
Chemicals Ltd., (2007) 8 SCC 353;
Union of India v. SICOM Ltd., (2009) 2 SCC 121;
Dena Bank v. Bhikhabhai Prabhudas Parekh &
Co., (2000) 5 SCC 694;

List of Acts
Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act,
2002;
Recovery of Debts and Bankruptcy Act, 1993

50. List of Keywords
Secured
creditor
-
Priority
of
charge
-
Government dues - SARFAESI Act - Section 26E
10 All. Regional Stressed Assest Recovery Branch Bank Of Baroda Vs. State Of U.P. & Ors.
1005
- Section 31B RDB Act - Mortgage - Non
obstante clause - Attachment - Recovery
certificate - Writ jurisdiction

51. CASE ARISING FROM
Attachment order dated 09.02.2015 passed by
the Sub-Divisional Magistrate (Sadar), Jaunpur.

52. Appearances for Parties
Advs For Petitioner: Atul Dayal, Sr. Advocate;
Maneesh Mehrotra
Advs For Respondents: C.S.C.; Ram Kishun
Misra

(Delivered by Hon'ble Shekhar B. Saraf, J.)

The present writ petition has been
filed under Article 226 of the Constitution
of India wherein the petitioner (hereinafter
referred to as the bank) have prayed for
the issuance of a writ of certiorari quashing
the impugned attachment order dated
February 9, 2015 passed by Sub-Divisional
Magistrate Sadar, Jaunpur (hereinafter
referred to as the respondent no.4). The
petitioner in furtherance prays for the
issuance
of
a
writ
of
mandamus
commanding the
respondent
no.4
to
withdraw the attachment order dated
February 9, 2015 and direct him to not
interfere in recovery proceedings initiated
by the bank in view of priority of dues of
bank
over
the
dues
of
State
Government/Central
Government/Local
Bodies in view of the provisions laid down
under Section 26E of the Securitisation and
Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002
(hereinafter referred to as the SARFAESI
Act) and 31B of the Recovery of Debts
and Bankruptcy Act, 1993 (hereinafter
referred to as the RDB Act).

FACTS

2. The factual matrix of the present
writ petition is delineated below:

a. The bank sanctioned a cash
credit
facility
of
Rs.30,00,000
on
November 10, 2011 in favour of M/s L.G.
Corporation, a proprietorship firm owned
by one Smt. Geeta Devi (hereinafter
referred to as the respondent no.9)
wherein respondent no.9 had mortgaged
20407.23 square feet land out of 0.089
Hectare from her land situated at Siddiqpur,
Pargana Haveli, Tehsil Sadar, District
Jaunpur, Khata No. 603, 255/0.809 (new
no. 825/809) as secured asset in favour of
bank by depositing title deeds.

b. Since respondent no.9 was
unable to maintain financial discipline and
defaulted in payment of interest on the
loan, the account was declared as NonPerforming Asset (NPA) on September 11,
2015 and consequently bank initiated
proceedings under SARFAESI Act against
respondent no.9.

c. On December 28, 2015, bank
issued demand notice to respondent no.9
and other guarantors under Section 13(2) of
the SARFAESI Act for discharging liability
of Rs.42,27,417/- towards bank within 60
days from the date of notice.

d. Upon failure to discharge the
liability within 60 days period, the bank
issued possession notice on March 1, 2016
under Section 13(4) of the SARFAESI Act
and also took over the symbolic possession
by pasting over the possession notice on the
same date.

e.
Bank
then
moved
an
application under Section 14 of the
SARFAESI Act, wherein order was passed
by the Additional District Magistrate
(Finance
and
Revenue)
(hereinafter
referred to as respondent no.3) for
1006 INDIAN LAW REPORTS ALLAHABAD SERIES
handing over physical possession of the
property to the bank.

f. However, during the pendency
of the execution of the aforesaid order
before civil authorities, it was encountered
that before passing of the aforesaid order a
recovery certificate had already been issued
on October 16, 2014 by the department of
Food and Civil Supply, U.P. , Jaunpur for
the recovery of outstanding amount of
Rs.54,75,499 from respondent no.9 and on
default of payment of dues the mortgage
property was confiscated vide order dated
February 9, 2015 passed by respondent
no.4 but could not be auctioned due to
absence of participants. Similarly, another
notice dated September 12, 2014 was
issued for recovery of tax liability of
petitioner from commercial tax department.
Therefore,
the
bank
raised
specific
objections before the concerned authority
with regard to the priority of charge of the
bank over the properties .

g. The bank also filed a writ
petition bearing no. 32446 of 2022 before
the coordinate bench of this Court for
taking over possession of the secured assets
which was dismissed on the ground of
alternative
remedy
vide
order
dated
December 1, 2022 wherein the court
directed bank to approach Debt Recovery
Tribunal
wherein
the
Securitisation
application filed by the borrower and third
party was pending.

h.
Both
the
Securitisation
application filed by the borrower and third
party was dismissed vide order dated April
21, 2023 and September 25, 2023 on want
of prosecution.

i. Bank again filed a writ petition
no. 8501 of 2024 before the coordinate
bench of this court for getting physical
possession over the property wherein it was
formed by the State that the secured asset
had
already
been
attached
by
the
respondent no.4 vide order dated February
9, 2015 for the dues of other two
departments, therefore, writ petition was
dismissed as withdrawn by the bank vide
order dated April 19, 2024 for seeking
other alternative remedies.

j. Being aggrieved by the order
dated
February
9,
2015
passed
by
respondent no.4 for attaching the secured
assets in contravention to Section 26E and
31B of the SARFAESI Act, the bank has
approached this Court by means of the
present writ petition.

ISSUE

3. Whether the secured creditors have
priority over the charge of unsecured
creditors?

CONTENTIONS OF PETITIONER

4. The senior advocate appearing on
behalf of the petitioner has made the
following submissions:

a. The order of attachment passed
by respondent no.4 against the secured
assets is totally illegal and without
jurisdiction in view of Section 26E of the
SARFAESI Act and Section 31B of RDB
Act.

 b. Respondent no.2 is duty bound
to hand over the possession of the secured
assets to the secured creditor under Section
14(1A) of the SARFAESI Act.

 c. Respondent no.4 attaching the
secured assets is an action against the
10 All. Regional Stressed Assest Recovery Branch Bank Of Baroda Vs. State Of U.P. & Ors.
1007
provisions of law and the power of
respondent no.4 is barred under Section
26E of the SARFAESI Act and Section
31B of the RDB Act. Therefore, the
attachment order is not sustainable.

 d.
The
aforesaid
land
is
mortgaged in favour of the petitioner bank
since November 10, 2009 and the original
title deed is still in possession of the
secured creditor-petitioner/bank.

 e. The mortgage was created in
the year 2009 in favour of the petitioner by
depositing title deeds. Hence, in view of
Section 26E of SARFAESI Act and Section
31B of the RDB Act, the petitioner has
priority over the State dues. Ergo, the
secured assets cannot be attached under the
recovery
certificate
issued
by
State
Government and respondent no.4 has no
power to attach the secured assets.

 f. The impugned attachment order
passed by respondent no.4 is against the
settled principles of law and is liable to be
set aside

 g. To buttress his arguments,
counsel has placed reliance on Punjab
National Bank v. Union of India and
others reported in (2022) 7 SCC 260;
Kotak Mahindra Bank Limited v.
Girnar Corrugators Private Limited and
Others reported in (2023) 3 SCC 210;
Central Bank of India v. Siriguppa
Sugars & Chemical limited and others
reported in (2007) 8 SCC 353; Union of
India and others v. Sicom Limited
reported in (2009) 2 SCC 121 wherein the
court has held that secured debt has priority
over unsecured debt.

CONTENTIONS
OF
RESPONDENTS

5. The learned counsel appearing
on behalf of the respondents has rebutted
the arguments of the petitioner and made
the following submissions:

 a. No information was provided
by the petitioner bank to the Sub-Registrar
office or Tehsil Office regarding the
mortgage of the said property due to which
the mortgaged property could not be
recorded in the revenue records and the
mortgaged property remained
in
the
original Khata.

 b. Before the order passed by
respondent no.3, a recovery certificate was
issued on October 16, 2014 by the
Department of Food and Civil Supply,
U.P., Jaunpur for the recovery of dues from
the petitioner and as the respondent no. 9
failed to discharge their liability of the said
due amount, the concerned property was
confiscated and the same was also recorded
in the revenue records.

 c. The recovery certificate was
issued on October 16, 2014 by the
Department of Food and Civil Supply,
U.P.,
Jaunpur
for
the
recovery
of
outstanding amount of Rs.54,75,499 from
respondent no.9 and was prior to the
recovery actions initiated by the Bank
under the SARFAESI Act.

 d. The impugned order passed by
respondent no.4 is passed within the
parameters of law and does not suffer from
any infirmity.

 ANALYSIS
1008 INDIAN LAW REPORTS ALLAHABAD SERIES
6. I have given my thoughtful
consideration to the submissions canvassed
by the learned counsel for the parties and
have also perused the relevant records and
the affidavits filed on behalf of both the
parties.

7. Banks and financial institutions
provide financial assistance to borrowers
and upon default in repayment the due
amount becomes Non-Performing Assets.
On the recommendation of a committee
headed by Mr. M. Narasimham in the year
1991, a quasi-judicial establishment was
required for the speedy recovery of debts.
Ergo, the RDB Act was enacted in 1993 by
which Debt Recovery Tribunals (DRTs)
and Debt Recovery Appellate Tribunals
(DRATs) were established. Subsequently,
to facilitate a special machinery for speedy
recovery of debt and to further smoothen
the functioning of DRTs and DRATs, the
SARFAESI Act was passed in the year
2002.

8. In this regard, the Supreme
Court in United Bank of India v. Debts
Recovery Tribunal reported in (1999) 4
SCC 69 while dealing with the provision of
RDB Act, inter alia remarked as quoted
hereinbelow:

 "The
prime
object
of
the
enactment appears to be to provide for the
establishment of tribunals for expeditious
adjudication and recovery of debts due to
banks and financial institutions and for
matters connected therewith or incidental
thereto."

9.
With
the
continuous
advancement of the financial regulations,
the rights of the secured creditors/banks
have gained much importance. To fortify
the rights of the secured creditors and
provide priority to the secured creditors to
recover their secured debts over all other
debts and all revenues, taxes, cesses, and
other rates payable to the Government, the
SARFAESI Act and the RDB Act was
amended by the Amendment Act of 2016
respectively which inserted a non-obstante
clause in Section 26E and Section 31B that
provides for payment to secured creditors
in priority over all other debts. Section 26E
of the SARFAESI Act and Section 31B of
the RDB Act are delineated below:

 "26E.
Priority
to
secured
creditors.--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.

 31B.
Priority
to
secured
creditors.-Notwithstanding
anything
contained in any other law for the time
being in force, the rights of secured
creditors to realise secured debts due and
payable to them by sale of assets over
which security interest is created, shall
have priority and shall be paid in priority
over all other debts and Government dues
including revenues, taxes, cesses and rates
due to the Central Government, State
Government or local authority."

10. It is evidently clear that
respondent no. 9 has taken loans from
petitioner
bank
and
also
from
the
Department of Food and Civil Supply that
is a Department of the State Government. It
is undisputed that the loan taken from the
petitioner bank was a secured one by
mortgaging the land whereas the loan taken
10 All. Regional Stressed Assest Recovery Branch Bank Of Baroda Vs. State Of U.P. & Ors.
1009
from State Government was an unsecured
one.

11. The SARFAESI Act was
purposefully
enacted
to
regulate
securitisation
and
reconstruction
of
financial assets and the enforcement of
security interests and in furtherance to
provide a central database of security
interests created over the property rights.
This act empowered the secured creditors
to recover the dues by enforcing the
security interest created in the secured
assets without the intervention of the court
or tribunal.

12. Concomitantly, it is quite
discernible from a bare perusal of Section
26E of the SARFAESI Act and 31B of the
RDB Act that both are non-obstante clause
that
starts
with
the
phrase
notwithstanding anything contained in
any other law for the time being in force
which enunciates that this provision will
prevail over any other provision in any
other law that is concurrently in force at the
same time.

13. One may look into the
judgment of the Supreme Court in SICOM
Limited (Supra) wherein the court while
dealing with the issue of priority of charge
for realisation of dues under the Central
Excise Act vis-a-vis secured debts under
the State Financial Corporations Act, 1951
has succinctly held that a debt which by
statute becomes the first charge over the
property must be held to prevail over the
crown debt which is an unsecured one. The
relevant paragraphs of the judgment are
quoted hereinbelow:

 "9. Generally, the rights of the
Crown to recover the debt would prevail
over the right of a subject. Crown debt
means the debts due to the State or the
King; debts which a prerogative entitles the
Crown to claim priority for before all other
creditors. [See Advanced Law Lexicon by
P. Ramanatha Aiyar (3rd Edn.), p. 1147.]
Such creditors, however, must be held to
mean unsecured creditors. Principle of
Crown debt as such pertains to the common
law principle. A common law which is a
law within the meaning of Article 13 of the
Constitution is saved in terms of Article
372 thereof. Those principles of common
law, thus, which were existing at the time of
coming into force of the Constitution of
India are saved by reason of the
aforementioned provision. A debt which is
secured or which by reason of the
provisions of a statute becomes the first
charge over the property having regard to
the plain meaning of Article 372 of the
Constitution of India must be held to
prevail over the Crown debt which is an
unsecured one.

 10.
It
is
trite
that
when
Parliament or a State Legislature makes an
enactment, the same would prevail over the
common law. Thus, the common law
principle which was existing on the date of
coming into force of the Constitution of
India must yield to a statutory provision.
To achieve the same purpose, Parliament
as also the State Legislatures inserted
provisions in various statutes, some of
which have been referred to hereinbefore
providing that the statutory dues shall be
the first charge over the properties of the
taxpayer. This aspect of the matter has
been considered by this Court in a series of
judgments.

***

23. Furthermore, the right of a
State Financial Corporation is a statutory
1010 INDIAN LAW REPORTS ALLAHABAD SERIES
one. The Act contains a non obstante
clause in Section 46-B of the Act which
reads as under:

 "46-B. Effect of Act on other
laws.The provisions of this Act and of any
rule or orders made thereunder shall have
effect
notwithstanding
anything
inconsistent therewith contained in any
other law for the time being in force or in
the memorandum or articles of association
of an industrial concern or in any other
instrument having effect by virtue of any
law other than this Act, but save as
aforesaid, the provisions of this Act shall
be in addition to, and not in derogation of,
any other law for the time being applicable
to an industrial concern."

 The non obstante clause shall not
only prevail over the contract but also
other laws. (See Periyar & Pareekanni
Rubbers Ltd. v. State of Kerala [(2008) 14
SCC 704 : (2008) 4 Scale 125] .)"

14. The Supreme Court in Punjab
National Bank (Supra) has held the dues of
the secured creditor that is the appellant
Bank, will have priority over the dues of
the Central Excise Department, as even
after insertion of Section 11E in the Central
Excise Act, the provisions contained in the
Sarfaesi Act, 2002 will have an overriding
effect on the provisions of the Central
Excise Act, 1944. The relevant paragraphs
of the judgment are quoted hereinbelow:

 "42. Secondly, coming to the
issue of priority of secured creditor's debt
over that of the Excise Department, the
High Court in the impugned judgment has
held [Punjab National Bank v. Union of
India, 2008 SCC OnLine All 1576] that
In this view of the matter, the question of
first charge or second charge over the
properties would not arise. In this
context, we are of the opinion that the High
Court has misinterpreted the issue to state
that the question of first charge or second
charge over the properties, would not
arise.

 43. A Full Bench of the Madras
High Court in UTI Bank Ltd. v. CCE [UTI
Bank Ltd. v. CCE, 2006 SCC OnLine Mad
1182 (FB)] , while dealing with a similar
issue, has held that : (SCC OnLine Mad
paras 25-26)

 "25. In the case on hand, the
petitioner Bank which took possession of
the property under Section 13 of the
Sarfaesi Act, being a special enactment,
undoubtedly is a secured creditor. We have
already referred to the provisions of the
Central Excise Act and the Customs Act.
They envisage procedures to be followed
and
how
the
amounts
due
to
the
Departments are to be recovered. There is
no specific provision either in the Central
Excise Act or the Customs Act, claiming
first charge as provided in other
enactments, which we have pointed out in
earlier paragraphs.

 26. In the light of the above
discussion, we conclude,

 (i) Generally, the dues to
Government i.e. tax, duties, etc. (Crown's
debts) get priority over ordinary debts.

 (ii) Only when there is a specific
provision in the statute claiming first
charge over the property, the Crown's
debt is entitled to have priority over the
claim of others.

 (iii) Since there is no specific
provision claiming first charge in the
10 All. Regional Stressed Assest Recovery Branch Bank Of Baroda Vs. State Of U.P. & Ors.
1011
Central Excise Act and the Customs Act,
the claim of the Central Excise Department
cannot have precedence over the claim of
secured creditor viz. the petitioner Bank.

 (iv) In the absence of such
specific provision in the Central Excise Act
as well as in Customs Act, we hold that the
claim of secured creditor will prevail over
Crown's debts.

 In view of our above conclusion,
the petitioner UTI Bank, being a secured
creditor is entitled to have preference over
the claim of the Deputy Commissioner of
Central Excise, first respondent herein.

***

 46. This Court in Dena Bank v.
Bhikhabhai Prabhudas Parekh & Co.
[Dena Bank v. Bhikhabhai Prabhudas
Parekh & Co., (2000) 5 SCC 694] ,
wherein the question raised was whether
the recovery of sales tax dues (amounting
to crown debt) shall have precedence over
the right of the bank to proceed against the
property of the borrowers mortgaged in
favour of the bank, observed as under :
(SCC p. 703, para 10)

 10.
However,
the
Crown's
preferential right to recovery of debts over
other creditors is confined to ordinary or
unsecured creditors. The common law of
England or the principles of equity and
good conscience (as applicable to India) do
not accord the Crown a preferential right
of recovery of its debts over a mortgagee or
pledgee of goods or a secured creditor.

 47. Further, in Central Bank of
India v. Siriguppa Sugars & Chemicals
Ltd. [Central Bank of India v. Siriguppa
Sugars & Chemicals Ltd., (2007) 8 SCC
353 : (2007) 2 SCC (L&S) 919] , while
adjudicating a similar matter, this Court
has held as under : (SCC pp. 360-61, para
17)

 "17.
Thus,
going
by
the
principles
governing
the
matter
propounded by this Court there cannot be
any doubt that the rights of the appellant
Bank
over
the
pawned
sugar
had
precedence over the claims of the Cane
Commissioner and that of the workmen.
The High Court was, therefore, in error in
passing an interim order to pay parts of the
proceeds to the Cane Commissioner and to
the Labour Commissioner for disbursal to
the cane growers and to the employees.
There is no dispute that the sugar was
pledged with the appellant Bank for
securing a loan of the first respondent and
the loan had not been repaid. The goods
were forcibly taken possession of at the
instance of the revenue recovery authority
from the custody of the pawnee, the
appellant Bank. In view of the fact that the
goods were validly pawned to the appellant
Bank, the rights of the appellant Bank as
pawnee cannot be affected by the orders of
the Cane Commissioner or the demands
made by him or the demands made on
behalf of the workmen. Both the Cane
Commissioner and the workmen in the
absence of a liquidation, stand only as
unsecured creditors and their rights cannot
prevail over the rights of the pawnee of the
goods.'

 48. The Bombay High Court in
Krishna Lifestyle Technologies Ltd. v.
Union
of
India
[Krishna
Lifestyle
Technologies Ltd. v. Union of India, 2008
SCC OnLine Bom 137] , wherein the issue
for consideration was whether tax dues
recoverable under the provisions of the
Central Excise Act, 1944 have priority of
1012 INDIAN LAW REPORTS ALLAHABAD SERIES
claim over the claim of secured creditors
under the provisions of the Securitisation
and Reconstruction of Financial Assets and
Enforcement of Security Interest Act,
2002 held that : (SCC OnLine Bom paras
19-20)

"19. Considering the language of
Section 35 and the decided case law, in our
opinion it would be of no effect, as the
provisions of the Sarfaesi Act override the
provisions of the Central Sales Tax Act and
as such the priority given to a secured
creditor would override Crown dues or the
State dues.

20. Insofar as the Sarfaesi Act is
concerned a Full Bench of the Madras
High Court in UTI Bank Ltd. v. CCE [UTI
Bank Ltd. v. CCE, 2006 SCC OnLine Mad
1182 (FB)] has examined the issue in
depth. The Court was pleased to hold that
tax dues under the Customs Act and
Central Excise Act, do not have priority of
claim over the dues of a secured creditor as
there is no specific provision either in the
Central Excise Act or the Customs Act
giving those dues first charge, and that the
claims of the secured creditors will prevail
over the claims of the State. Considering
the law declared [Ed. : The reference
appears to be to Dena Bank v. Bhikhabhai
Prabhudas Parekh & Co., (2000) 5 SCC
694] by the Supreme Court in the matter of
priority of State debts as already discussed
and the provision of Section 35of the
Sarfaesi Act we are in respectful agreement
with the view taken by the Madras High
Court [UTI Bank Ltd. v. CCE, 2006 SCC
OnLine Mad 1182 (FB)] ."

 ***

 50. In view of the above, we are
of the firm opinion that the arguments of
the learned counsel for the appellant, on
Issue 2, hold merit. Evidently, prior to
insertion of Section 11-E in the Central
Excise Act, 1944 w.e.f. 8-4-2011, there was
no provision in the 1944 Act inter alia,
providing for first charge on the property
of the assessee or any person under the
1944 Act. Therefore, in the event like in the
present case, where the land, building,
plant,
machinery,
etc.
have
been
mortgaged/hypothecated
to
a
secured
creditor, having regard to the provisions
contained in Sections 2(1)(zc) to (zf) of the
Sarfaesi Act, 2002, read with provisions
contained in Section 13 of the Sarfaesi Act,
2002, the Secured Creditor will have a first
charge on the secured assets. Moreover,
Section 35 of the Sarfaesi Act, 2002 inter
alia, provides that the provisions of the
Sarfaesi Act, shall have overriding effect on
all other laws. It is further pertinent to note
that even the provisions contained in
Section 11-E of the Central Excise Act,
1944
are subject to the provisions
contained in the Sarfaesi Act, 2002.

***

 53. Further, the contention that in
the
present
case,
the
confiscation
proceedings were initiated almost 8-9 years
prior to the charge being created in respect
of the very same properties in favour of the
bank is also inconsequential. The fact that
the charge has been created after some
time period has lapsed post the initiation of
the confiscation proceedings, will not
provide legitimacy to a confiscation order
that is not rooted in any valid and existing
statutory provision."

 (emphasis added)

15. The Supreme Court in the case
of Kotak Mahindra Bank Limited
10 All. Regional Stressed Assest Recovery Branch Bank Of Baroda Vs. State Of U.P. & Ors.
1013
(Supra) has very recently and aptly dealt
with the issue of repugnancy between
priority of dues under SARFAESI Act,
2002 and Micro, Small and Medium
Enterprises Development Act, 2006 as both
the statutes contain non-obstante clause.
The court held that the subsequent
legislation with an overriding effect will
prevail over the prior statute.

 "29. In sharp contrast to this,
Section 26-E of the Sarfaesi Act which has
been inserted vide Amendment in 2016, it
provides that notwithstanding anything
inconsistent therewith 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 revenue taxes and cesses and other
rates payable to the Central Government or
the State Government or local authority.
However, the priority to secured creditors
in payment of debt as per Section 26-E of
the Sarfaesi Act shall be subject to the
provisions of IBC. Therefore, such dues
vis--vis dues under the Msmed Act, as per
the decree or order passed by the
Facilitation Council, debts due to the
secured creditor shall have a priority in
view of Section 26-E of the Sarfaesi Act
which is later enactment in point of time
than the Msmed Act.

 30. At this stage, it is required to
be noted that Section 26-E of the Sarfaesi
Act which is inserted in 2016 is also
having a non obstante clause. Even as per
the submission on behalf of Respondent 1,
two enactments have competing non
obstante provision and nothing repugnant,
then the non obstante clause of the
subsequent statute would prevail over the
earlier enactments. As per the settled
position of law, if the legislature confers
the later enactment with a non obstante
clause, it means the legislature wanted the
subsequent/later enactment to prevail.
Thus, a priority conferred/provided
under Section 26-E of the Sarfaesi Act
would
prevail
over
the
recovery
mechanism of the Msmed Act. The
aforesaid is to be considered along with the
fact that under the provisions of the Msmed
Act, more particularly Sections 15 to 23, no
priority is provided with respect to the
dues under the Msmed Act, like Section 26E of the Sarfaesi Act.

 33. Even otherwise the Naib
Tahsildar was not at all justified in not
taking
possession
of
the
secured
assets/properties as per order dated 24-92014 passed by the District Magistrate
under Section 14 of the Sarfaesi Act. The
order passed by the Naib Tahsildar
refusing to take possession of the secured
assets/properties despite the order passed
under Section 14 of the Sarfaesi Act on the
ground that recovery certificates issued by
Respondent 1 for recovery of the orders
passed by the Facilitation Council are
pending, is wholly without jurisdiction.
While exercising power under Section 14 of
the
Sarfaesi
Act,
even
the
District
Magistrate has no jurisdiction and/or
District Magistrate and/or even the Chief
Metropolitan
Magistrate
has
no
jurisdiction to adjudicate the dispute
between secured creditor and debtor.

 34. Under Section 14 of the
Sarfaesi Act, the District Magistrate or the
Chief Metropolitan Magistrate as the case
may be is required to assist the secured
creditor in getting the possession of the
secured assets. Under Section 14 of the
Sarfaesi
Act,
neither
the
District
Magistrate
nor
the
Metropolitan
Magistrate would have any jurisdiction to
1014 INDIAN LAW REPORTS ALLAHABAD SERIES
adjudicate and/or decide the dispute even
between the secured creditor and the
debtor. If any person is aggrieved by the
steps under Section 13(4)/order passed
under Section 14, then the aggrieved
person has to approach the Debts Recovery
Tribunal by way of appeal/application
under Section 17 of the Sarfaesi Act.

 35. Therefore, the order passed
by the Naib Tahsildar refusing to take the
possession pursuant to the order passed by
the District Magistrate under Section 14 of
the Sarfaesi Act was wholly without
jurisdiction and therefore also the same
was liable to be set aside."

 (emphasis added)

16. One may also look into the
judgment of the Supreme Court in Vinod
Realities Private Limited v. State of
Gujarat in special civil application no.
7807 of 2011 and in Dena Bank v.
Bhikhabhai Prabhu Dass Parikh and
another reported in (2000) 5 SCC 694, the
judgment of Gujarat High Court in
Madhaviben Jitendrabhai Rupareliya v.
State of Gujarat reported in AIR 2024 Guj
175 and in M/s Mahadevan Cotton
Industries v. Department of Central Tax
reported in (0) AIJEL-HC 245523, the
judgment of Bombay High Court in
Krishna Lifestyle Technologies limited v.
Union of India reported in 2008 SCC
Online Bombay 137 wherein the courts
have consistently vouchsafed that priority
of charge of secured creditors on the
mortgaged assets will always precede over
the
other
dues
even
if
it
is
a
crown/Government debt.

CONCLUSION
17.
Upon
a
perusal
of
the
judgments cited above, the first principle
that emerges is that a secured crediter shall
always have precedence over an unsecured
creditor. Seconly, in cases where two
enactments refer to secured creditors
having charge over the property, the later
enactment would prevail. The Supreme
Court judgment in Kotak Mahindra Bank
limited (Supra) has categorically come to
the finding that when two enactments have
competing non obstante provision and there
is nothing repugnant, then the non obstante
clause of the subsequent statute would
prevail over the earlier enactments. In light
of the above ratio, it is crystal clear that the
priority conferred under Section 26-E of
the Sarfaesi Act that came into existence in
2016 would prevail over an unsecured
creditor even though the unsecured creditor
is the Government.

18. Section 26E of the SARFAESI
Act and Section 31B of RDB Act explicitly
elucidates the issue involved in this case. If
there is a wrangle between secured creditor
and unsecured creditor, the former will
have a priority of first charge over the latter
for recovery against the delinquent.
19.
Undoubtedly,
the
issue
involved in this case is no longer res
integra and has been repeatedly accentuated
in a catena of judgments of Supreme Court
and various High Courts as in SICOM
Limited (Supra), Punjab National Bank
(Supra), Kotak Mahindra Bank limited
(Supra) wherein the law is patently
transparent that even the debt which is due
to the government comes subsequent to the
recovery of dues of a secured creditor. The
said enactment is intended not only to
facilitate loan recovery procedures of the
financial institutions but also to impede the
conversion of their resources into NonPerforming Assets. Ergo, the secured
creditors will always have priority over the
unsecured
creditors.
10 All. Rahimuddin Vs. U.O.I. & Anr.
1015
20.
In
view
of
the
above
judgments, the impugned attachment order
dated
February
9,
2015
passed
by
respondent no.4 for recovery of dues of
State Government is quashed and set aside.
----------
(2025) 10 ILRA 1015
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 10.10.2025

BEFORE

THE HON'BLE AJIT KUMAR, J.
THE HON'BLE MRS. SWARUPAMA
CHATURVEDI, J.

Writ - C No. 34412 of 2025

Rahimuddin ...Petitioner
Versus
U.O.I. & Anr. ...Respondents

Counsel for the Petitioner:
Gulabul Hasan, Pradeep Kumar Aditya,
Rajesh Kumar Verma

Counsel for the Respondents:
A.S.G.I., Arvind Nath Agarwal

Issue for consideration
The Regional Passport Officer, Bareilly issued a
passport to the petitioner for one year despite
the competent criminal court granting No
objection/sanction/approval. The petitioner filed
the writ petition seeking a direction to the
Passport Officer to re-issue/renew his passport
for the standard period of ten years.

Headnotes
Civil matter-Constitution of India, 1950Article 226-Indian Penal Code, 1860section 447-Prevention of Damage to
Public
Property
Act,1984-Section
3Passport Act,1967-Sections, 5, 6(2)(f), 22Validity of one year upheld-The provision
under section 22 of the Passport Act,1967
and the Notification dated 25.08.1993
allows the Passport Authority to issue a
passport with a validity of one year only.
Held
The court held that the passport-issuing
authority was well within its power to grant a
one -year passport, and the petitioner cannot
demand a passport or its renewal for ten years
as a matter of right-The court granted liberty to
the petitioner to seek renewal before its expiry
by following the due procedure prescribed in
law-The court issued administrative directions,
emphasizing that Regional Passport Officers
must inform applicants of any impediments
within one month of application and that the
police department must submit its verification
report within four weeks to avoid unnecessary
delays, thereby recognizing the Right to Travel
as part of the right to life and personal
liberty.(Para 9 to 29) (E-6)

List of Acts/Rules
Constitution
of
India,1950,
Indian
Penal
Code,1860, Prevention of Damage to Public
Property Act,1984, Passport Act,1967, The
passport rules,1980, Government Notification
dated 25.08.1993 (G.S.R. 570(E) under section
22 of Passport Act,1967, Office Memorandum
No. VI/401/1/5/2019 dated 10.10.2019. (E-6)

List of Keywords
Passport,
Passport
Authority,
Office
Memorandum, Right to Travel, No. Objection
Certificate, Constitution of India,1950, Indian
Penal Code,1860, Prevention of Damage to
Public Property Act,1984, Passport Act,1967,
One Year Validity, Pending Criminal Cases.

Case Arising From
CIVIL JURISDICTION- WRIT-C No.- 34412 of
2025
 Rahimuddin Vs. Union of India & Another
 From
the
Judgment
and
Order
dated
10.10.2025 of the High Court of Judicature at
Allahabad.

Appearances for Parties
Advs. for Petitioner(s):
 Gulabul Hasan,Pradeep Kumar Aditya, Rajesh
Kumar Verma
Advs. for Respondent(s):
 A.S.G.I., Arvind Nath Agrawal

Case law cited:
Pawan Kumar Rajbhar Vs Union of India & 2 Ors
(Neutral Citation No., (2024):AHC:9963-DB),