Punjab & Haryana High Court Affirms Priority of Bank’s Mortgage Over State Dues; Directs Registration of SARFAESI Sale Deed Despite Later Revenue Attachment

Case Name: State Bank of India v. Sub Registrar, Sub Tehsil Nigdhu, Karnal and Others
Date of Judgment: 10 December 2025
Citation: CWP-26875-2021
Bench: Hon’ble Mr. Justice Sheel Nagu, Chief Justice and Hon’ble Mr. Justice Sanjiv Berry

Held: The Punjab and Haryana High Court allowed a writ petition filed by State Bank of India and held that a secured creditor’s prior mortgage created under SARFAESI proceedings takes precedence over subsequent revenue attachments for State dues that do not have statutory first charge. The Court directed the Sub-Registrar to register the sale deed in favour of the auction purchaser and quashed the later revenue entry created in favour of the State. It was held that an administrative rapat entry cannot defeat a prior statutory right of mortgage.

Summary: The petitioner-Bank challenged the refusal of the Sub-Registrar to register a sale deed arising out of a SARFAESI e-auction, despite the auction purchaser having paid the entire sale consideration and a sale certificate having been issued. The refusal was based on a revenue attachment created by the District Food and Supply Department for alleged State dues against the borrower, which had been entered after the Bank’s mortgage.

The High Court examined the competing claims of priority and noted that the Bank’s security interest had been created much earlier by deposit of title deeds, whereas the State’s charge was a later administrative attachment unsupported by any statute creating a first charge. The Court reiterated the settled principle that in the absence of a statutory first charge, State dues arising out of contractual or policy-based recoveries do not override the rights of a secured creditor.

Relying on authoritative Supreme Court precedents, the Court held that even prior to the express statutory recognition under Section 26E of the SARFAESI Act, the right of a secured creditor to recover its dues has consistently been recognised as having priority over crown debts. The Court further clarified that revenue entries are merely administrative in nature and do not determine substantive rights.

The refusal to register the sale deed was therefore held to be illegal, arbitrary, and contrary to law, resulting in unjustified delay in liquidation of the secured asset.

Decision: The writ petition was allowed. A writ of mandamus was issued directing the Sub-Registrar to register the SARFAESI sale deed in favour of the auction purchaser. The revenue entry creating charge in favour of the State was quashed. The State was left at liberty to recover its dues after satisfaction of the Bank’s claim or through any other lawful means. Costs were imposed on the State for unjustified delay in the process.