1.The above writ petition is filed seeking the following reliefs:

                  “A. Issue a writ of Mandamus or such other appropriate writ or order commanding the 1st Respondent to delete/efface the attachments noted in favour of Respondents 2 to 4 in respect of the immovable property having an extent of 0.1781 Hectares (17.81 Ares = 43.99 cents) in Re Survey No.507/20 (Old Sy.No.1/2/2A in Kalpetta Village, Vythiri Taluk, Wayanad District.

                  B. Pass an order directing the 1st Respondent to issue fresh encumbrance certificate to the petitioners after effacing the entry of attachment noted in favour of Respondents 2 to 4 within a time limit prescribed by this Honble Court.

                  C. Grant such other reliefs as are deemed fit and proper.

                  D. Grant the cost of this Writ Petition.”

2. Brief facts necessary for the disposal of the writ petition are as follows: Petitioners are the successful Auction Purchasers of land having an extent of 43.99 cents and building thereon in Re.Sy.No.507/4 of Kalpetta Village, Vythiri Taluk, Wayanad District, which was brought for sale by the 5th respondent as per the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “SARFAESI Act”). Ext.P1 sale certificate was issued and registered as Deed No.1943/1/2021 of SRO, Kalpetta. The property is stated as mortgaged by one Sri.Sushil Kumar to the 5th respondent towards security for the financial facilities availed. Ext.P2 is the letter dated 06.09.2014 confirming the deposit of the title deed and creation of mortgage on 05.09.2014. Though the sale deed was registered in favour of the petitioners, in Ext.P3 encumbrance certificate, it is shown that an attachment over the property has been effected by respondents 2 and 3, Employees Provident Fund Organisation and by the 4th respondent, the plaintiff in O.S. No. 246/2018 on the file of the Munsiff’s Court, Thaliparamba. On enquiry, it is found that the 2nd respondent has effected an attachment through the 3rd respondent for Employees Provident Fund (EPF) dues of Kalpetta Janakshema Maruthi Chits Pvt. Ltd. as per Ext.P4 order dated 09.10.2019. Similarly, the 4th respondent has also obtained Ext.P5 attachment order dated 16.07.2018 from the Munsiff’s Court, Taliparamba in O.S.No.246 of 2018. Petitioners contend that all the attachments are subsequent to the creation of the mortgage in favour of the 5th respondent Bank, and the same is liable to be effaced. Petitioners also submit that this position is covered by the decisions of this Court in Madhan v. Sub Registrar (2014 (1) KLT 406), Ali Ashraf M.M. and another v. Sub Registrar, Thrissur (judgment dated 24.07.2015 in W.A.No.612 of 2015) and the judgment in Secretary, Keechery Service Co-operative Bank Ltd. v Sajitha Nizar alias Sajitha P.M. and others, 2020 (6) KLT 68. Thereupon, Ext.P6 representation was filed before the 1st respondent, Sub Registrar and the petitioners were informed that no steps would be taken to efface the attachment in favour of respondents 2 to 4 unless there is a direction issued by this Court. It is in the said circumstance that the petitioners have approached this Court.

3. A statement has been filed on behalf of respondents 2 and 3 through the learned standing counsel for EPF Organisation, wherein it is stated that M/s. Kalpetta Janakshema Maruthi Chits Pvt. Ltd. is an establishment covered under the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to “Act 1952”) and the Schemes framed thereunder. The establishment has defaulted in payment of the statutory dues within a stipulated time to the tune of Rs.36,59,331/-. In order to recover the amount, an order of attachment of the immovable property as per EPF CP-16 in respect of the landed property of the establishment was sent to Sri. E. K.Sushil Kumar, Managing Director, M/s. Kalpetta Janakshema Maruthi Chits Pvt. Ltd., Kalpetta, with a copy to the Sub Registrar, Kalpetta Sub Registry and other officials. A request was also submitted to the Sub Registrar, Kalpetta, to note the encumbrance of the EPFO on the said property and not to allow any transaction on the property without written permission from the Recovery Officer. Petitioners are purchasers of the said property, which has already been encumbered, and therefore, the purchaser should remit the outstanding dues to the tune of Rs.36,59,331/-. It is further stated that the action of 5th respondent in selling the property, which was under attachment of the Employees' Provident Fund Organisation (EPFO) for recovery of outstanding dues, without informing the organisation, is highly illegal and unwarranted. It is also stated that the Act 1952 is a beneficial piece of legislation for the benefit and betterment of the employees and their families, and it is a statutory obligation of every employer to ensure that their employees and workers are not deprived of the benefits of the said statutory scheme. It is further contended that the EPFO has priority over all other dues as per the provisions contained in Section 11 of the Act 1952. Learned standing counsel relies on the judgment of the Apex Court in Employees’ Provident Fund Commissioner v. O.L. of Esskay Pharmaceuticals Limited, (2011) 10 SCC 727 and also the judgment in Maharashtra State Co-operative Bank v. Assistant Provident Fund Commissioner and another, (2009) 10 SCC 123, in support of his contentions. On the basis of the same, respondents 2 and 3 sought for dismissal of the writ petition.

4. An additional statement has been filed by the standing counsel for respondents 2 and 3, wherein it is stated that Ext.R3(a) is for the EPF dues for the period from July 2014 to December 2014 and from January 2015 to September 2015 and that the said dues arose much before the property was mortgaged to the respondent bank. It is further stated that Section 26-E of the SARFAESI Act, which came into force only with prospective effect from 24.02.2020, cannot have any impact on the proceedings initiated by the EPFO. The learned counsel would further submit that the company in question is a chit company and the establishment itself does not have any assets, and therefore, the EPFO has moved against the assets of the Director, which they are legally entitled to as per the provisions of the Act 1952.

5. A detailed reply has been filed by the petitioners, wherein it is stated that, as evident from Ext.P2, the property is that of an individual and not of M/s.Kalpetta Janakshema Maruthi Chits Pvt. Ltd. and that the property does not belong to the employer or the establishment. It is further stated that the attachment does not create an encumbrance, and the sale was conducted by the 5th respondent bank after giving wide publicity by publishing the same in two leading newspapers, as evident from Exts.P11 and P11(a) paper publications and therefore, sought to allow the writ petition.

6. Learned counsel appearing for the 5th respondent bank supported the claim of the petitioners, stating that the property sold is the personal property of Sri. Sushil Kumar E.K., which was mortgaged to the 5th respondent bank as early as on 05.09.2014. The first charge, as per the provisions of the Act 1952, is on the property of the establishment, and since the property covered by Ext.P2 is not the property of the establishment, the provisions of Section 11(2) of the Act 1952 will not apply in the facts of the present case. The learned counsel would submit that it is settled law by the decisions of this Court in Madhan case and Keechery Service Co-operative Bank Ltd. case cited supra that attachment does not create an encumbrance. It is further submitted that Section 26(E) of the SARFAESI Act gives priority to the secured creditors in respect of the debts due to them, and that being so, the petitioners are entitled to the reliefs sought for.

7. A detailed counter affidavit has been filed by the 1st respondent, also, wherein it is stated that the Provident Fund authorities have issued a warrant of attachment to Sri. E K.Sushil Kumar, who is the Managing Director of M/s.Kalpetta Janakshema Maruthi Chits Pvt. Ltd., attaching 0.1781 hectares of landed property in resurvey No.507/4 in Kalpetta Village as per Ext.R1(a). Likewise, the Munsiff’s Court, Taliparamba, in I.A.No.1807 of 2018 in O.S.No.246 of 2018 has also prohibited the respondent from alienating the schedule property until further orders, as evident from Ext.R1(b). Later, the Provident Fund authorities issued an order of attachment of the immovable property, as evident from Ext.R1(c) letter. It is further stated that as per Ext.R1(d) order, the Debt Recovery Tribunal in O.A.No.375 of 2016 filed by the 5th respondent, directed the Sub Registrar to maintain status quo in respect of the schedule property until further orders. It is in the said circumstance that the Sub Registrar has not taken steps to efface the attachment in the property, but the sale certificate has been registered in the office, as evident from Ext.R1(e).

8. The 4th respondent has also filed a detailed counter affidavit, wherein it is stated that the 4th respondent attached the property through the Munsiff’s Court, Taliparamba, for realisation of an amount of Rs.4,34,625/-. It is also stated that various other customers of the Kalpetta Janakshema Maruthi Chits Pvt. Ltd. have filed complaints against Sri. Sushil Kumar, who is the Director of the said company, who had mortgaged the property with the 5th respondent. It is submitted that the sale conducted by the bank while the attachments in the case filed by the 4th respondent and also by the EPFO over the subject property were in force, is illegal and cannot be acted upon. Therefore, it is submitted that the 1st respondent has no authority to remove the attachment by the Civil Court and Debt Recovery Tribunal, and the bank or the purchaser has to approach the proper forum to remove the said attachment.

9. I have heard the rival contentions on both sides.

10. The following facts are admitted from the pleadings on either side. The equitable mortgage was created by Sushil Kumar on 06.09.2014 who is the Director of Kalpetta Janakshema Maruthi Chits Pvt. Ltd., in favour of the 5th respondent bank by mortgaging 43.99 cents of land comprised in resurvey No.507/4 of Kalpetta Village. The EPF contribution was due for the period from July 2014, as evident from Ext R3(a). The order of attachment by the 3rd respondent, EPFO, in respect of the very same property mortgaged by Sushil Kumar was on 04.11.2015. The mortgage was registered by the bank with the Central Registry (CERSAI) on 05.11.2016. The 4th respondent got an attachment in respect of the subject property on 16.07.2018. The encumbrance certificate issued shows two attachments, ie, the attachment on 04.11.2015 by respondents 2 and 3 and the attachment on 16.07.2018 by the 4th respondent. The petitioners have approached this Court seeking a direction to delete/efface the attachment noted in favour of respondents 2 to 4 in respect of the subject property and for the issuance of a fresh encumbrance certificate to the petitioners after effacing the entry of attachment noted in favour of respondents 2 to 4 within a time limit to be fixed by this Court.

11. First, let me consider the request of the petitioners for the effacement of the attachment obtained by the 4th respondent. The attachment of the property was as per an order of the Munsiff’s Court, Taliparamba, in O.S.No.246 of 2018 filed by the 4th respondent. Petitioners rely on the judgments in Madhan, Ali Ashraf and Keechery Service Co-operative Bank Ltd.’s cases cited supra in support of their contentions. But the Full Bench of this Court in Fathima v. Canara Bank (2025 (3) KLT 367) has overruled the propositions of law laid down in Madhan, Ali Ashraf and Keechery Service Co-operative Bank Ltd.’s cases cited supra to the effect that an order directing effacement or deletion of entry in Book No.1 maintained by a registering authority, regarding attachment ordered by a Civil Court or a Family Court cannot be granted under Article 226 of the Constitution of India and the Court held that a party who wants to enter a footnote that the attachment ordered by a Civil Court or Family Court stands extinguished or removed should approach the court which issued the order of attachment invoking the appropriate provision in the Civil Procedure Code. In the light of the above, the request of the petitioners for issuance of a direction invoking the power under Article 226 of the Constitution and in the light of the judgments relied on by the petitioners is only to be rejected in the light of the Full Bench judgment in Fathima’s case cited supra.

12. Now let me consider the request for effacement of attachment effected in favour of respondents 2 and 3, the EPF Organisation in the subject property. The essential contention raised by the learned counsel for the petitioners as well as the learned counsel appearing for the respondent bank is that the first charge as provided in Section 11(2) of the Act 1952 will not be available to the EPF Organisation in the facts and circumstances of the present case, inasmuch as the proceedings have been initiated against the property of the Director, whereas the first charge over the property as provided under Section 11(2) is only against the assets of the establishment. Therefore, it is contended that since the creation of the equitable mortgage on 05.09.2014 being much prior to the attachment by the EPFO on 04.11.2015, the priority of the bank as provided in Section 26-E of the SARFAESI Act will prevail. In support of the contention, reliance is placed on the judgment of the Madurai Bench of the Madras High Court in Manipal Sowbhagya Nidhi Limited v. The Regional Provident Fund Commissioner (W.P.(C) No.6725 of 2007), wherein the Madurai Bench of the Madras High Court considering the impact of Section 11 of the Act 1952 held that the benefit of first charge as provided under Section 11(2) of the Act 1952 will not be applicable in respect of a property of the Director, which is proceeded against for the dues of the EPF.

13. Section 2(e) of the Act 1952 defines “employer” as follows:

                  “(e) “employer” means— (i) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and, where a person has been named as a manager of the factory under clause (f) of sub-section (1) of section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and

                  (ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent”

                  (underline supplied)

                  Going by the said definition, the employer includes the manager, managing director or managing agent. Admittedly, the property now proceeded against is the assets of the Director, to whom Ext.R1(a) order of attachment and Exts.R3(a) and R3(b) proceedings were initiated. Sri. Sushil Kumar, who is the owner of the property which is proceeded, is the Director of the company, having ultimate control over the affairs of the establishment and would fall within the definition of “employer”. Section 8 of the Act 1952 provides the mode of recovery of money due from the employer as arrears of land revenue. Section 8-B of the Act, 1952 reads as follows:

                  “8B. Issue of certificate to the Recovery Officer.—(1) Where any amount is in arrear under section 8, the authorised officer may issue, to the Recovery Officer, a certificate under his signature specifying the amount of arrears and the Recovery Officer, on receipt of such certificate, shall proceed to recover the amount specified therein from the establishment or, as the case may be, the employer by one or more of the modes mentioned below:—

                  (a) attachment and sale of the movable or immovable property of the establishment or, as the case may be, the employer;

                  (b) arrest of the employer and his detention in prison;

                  (c) appointing a receiver for the management of the movable or immovable properties of the establishment or, as the case may be, the employer:

                  Provided that the attachment and sale of any property under this section shall first be effected against the proportion of the establishment and where such attachment and sale is insufficient for recovering the whole of the amount of arrears specified in the certificate, the Recovery Officer may take such proceedings against the property of the employer for recovery of the whole or any part of such arrears.

                  (2) The authorised officer may issue a certificate under sub-section (1), notwithstanding that proceedings for recovery of the arrears by any other mode have been taken.”

(underline supplied)

                  Going by Section 8-B of the Act 1952, proceedings could be initiated against the establishment or the employer for the EPF dues and the only rider is that the attachment and sale of any property shall be first effected against the property of the establishment and where such attachment and sale is insufficient for recovering the whole of the amount of arrears specified in the certificate, the Recovery Officer may take proceedings against the property of the employer for recovery of the whole or any part of such arrears. In this case, the specific contention raised by the learned counsel appearing for the EPFO is that the company, being a chit company, has no assets and therefore, proceedings were initiated against the Director, who comes within the definition of an “employer” under Section 2(e) of the Act 1952. Further, it is to be noted that Sri.Sushil Kumar, who is the Director of the company, in charge of the affairs of the company was aware of the fact that provident fund amounts are due even at a time when he has created an equitable mortgage in favour of the bank. This issue has been considered by the Madras High Court in Raj Kumar Khemka v. EPF Organisation and Others and connected cases (W.P.(C) Nos.28490 to 28493 of 2013), and the operative portion of the said judgment reads as follows:

                  “11.In the case of Harish F Shah Vs. Employees Provident Fund Organization reported in 2011 SCC Online Guj 4849, the Hon'ble Division Bench of the High Court of Gujarat, relying upon the judgment of the Hon'ble Division Bench of the Punjab and Haryana High Court rendered in the case of Mohan Vs. Regional Provident Fund Commissioner reported in 2002-III-LLJ 779, in which also the cases referred by the learned Single Judge of this Court and the Hon'ble Punjab and Haryana High Court, held that the ratio of those decisions cannot be applied to the case in hand, because the definition of the employer contained in Section 2(e) of EPF and MP Act in relation to an establishment other than a factory is totally different and the issue relating to the liability of the Manager, Managing Director etc. would depend on the finding as to whether he is in the control of the affairs of the establishment. Therefore, the definition of 'employer' under ESI Act is not applicable to the decision under EPF and MP Act. Further held that the modes of recovery specified in clauses (a), (b) and (c) of Section 8-B(1) of the Act are alternative modes and not exclusive of each other and it is open to the Recovery Officer to resort to one or more of the modes. The use of the expression "by one or more of the modes mentioned below" in the substantive part of Section 8-B(1) makes it clear that the legislature has, with a view to ensure that the dues payable under the Act are recovered, empowered the Recovery Officer to resort to one or all the modes for recovery of the arrears. The only rider placed on the exercise of power by the Recovery Officer is that in the case of attachment and sale of any property, he must first do so qua the properties of the establishment and take proceedings against the properties of the employer for recovery of the whole or any part of the arrears only where the attachment and sale of properties of the establishment is insufficient for recovery of the whole amount specified in the certificate. However, there is nothing in Section 8-B(1) and other provisions of the Act from which it can be inferred that the Recovery Officer cannot adopt the mode specified in Clause (b) of Section 8-B(1) before exhausting other modes of recovery." Therefore, the petitioners are being the Directors of the establishment held liable for the attachment of their properties.”

                  The said view was reiterated by the Punjab and Haryana High Court in Mohan v. Regional Provident Fund Commissioner and another (2002- III-LLJ 779). Paragraphs 18 and 19 of the said judgment read as follows:

                  “18. We are further of the view that the 50 modes of recovery specified in clauses (a), (b) and (c) of Section 8-B(1) of the Act are alternative modes and not exclusive of each other and it is open to the Recovery Officer to resort to one or more of the modes. The use of the expression “by one or more of the modes mentioned below” in the substantive parts of Section 8-B(1) makes it clear that the legislature has, with a view to ensure that the dues payable under the Act are recovered, empowered the Recovery Officer to resort to one or all the modes for recovery of the arrears. The only rider placed on the exercise of power by the Recovery Officer is that in the case of attachment and sale of any property, he must first do so qua the properties of the establishment and take proceedings against the properties of the employer for recovery of the whole or any part of the arrears only where the attachment and sale of properties of the establishment is insufficient for recovery of the whole amount specified in the certificate. However, there is nothing in Section 8-B(1) and other provisions of the Act from which it can be inferred that the Recovery Officer cannot adopt the mode specified in Clause (b) of Section 8-B(1) before exhausting other modes of recovery.

                  19. A similar question was considered by this court in Sobha Textile Ltd v. Regional Provident Fund Commissioner, Haryana and another. 2000(3) R.S.J. 178 and answered in the following words;

                  "Sub-Section (1) of Section 8-B of the 1952 Act prescribes alternative modes of recovery of the arrears on the basis of certificate issued by the authorised officer. Attachment on sale of moveable or immovable property of the establishment or, as the case may be, and arrest of the employer and his detention in prison are two of the three modes which can be adopted by the Recovery Officer. Proviso appearing below clause (c) of Section 8- B(1) of the 1952 Act lays down that attachment and sale of any property under Section 8-B shall first be effected against the properties of the establishment and proceedings against the property of the employer can be taken only if the amount due cannot be recovered from the properties of the establishment. However, there is nothing in the said proviso from which it can be inferred that respondent No.2 is not entitled to have recourse to the mode prescribed in clause (b) of Section 8-B(1) before taking recourse to the sale of property under Section 8-B(1)(a) and in the absence of any such embargo, it is not possible to agree with Shri Grover that the notice issued by respondent No.2 should be declared illegal, arbitrary and unjustified."

                  Therefore, it is without any doubt that the statute empowers the EPFO to proceed against the assets of the Director. But, it is true that Section 11(2) of the Act 1952 gives the first charge only in respect of the assets of the establishment and the property now being proceeded against is the assets of the Director of the company, and therefore the EPFO cannot rely on Section 11(2) of the Act 1952 to claim first charge on the assets over the subject property. But, an aspect to be noted is that Section 11(2) of the Act 1952 not only deals with the first charge over the property but also priority over all other debts, which reads as follows:

                  “11. Priority of payment of contributions over other debts.—

                  (1) Where any employer is adjudicated insolvent or, being a company, an order for winding up is made, the amount due—

                  (a) from the employer in relation to an establishment to which any Scheme or the Insurance Scheme] applies in respect of any contribution payable to the Fund 12[or, as the case may be, the Insurance Fund], damages recoverable under section 14B, accumulations required to be transferred under sub-section (2) of section 15 or any charges payable by him under any other provision of this Act or of any provision of the Scheme or the Insurance Scheme; or

                  (b) from the employer in relation to an exempted establishment in respect of any contribution to the Provident Fund or any Insurance Fund (in so far it relates to exempted employees), under the rules of the Provident Fund or any Insurance Fund, any contribution payable by him towards the Family Pension Fund under sub-section (6) of section 17, damages recoverable under section 14B or any charges payable by him to the appropriate Government under any provision of this Act or under any of the conditions specified under section 17,

                  shall, where the liability thereof has accrued before the order of adjudication or winding up is made, be deemed to be included] among the debts which under section 49 of the Presidency- towns Insolvency Act, 1909 (3 of 1909), or under section 61 of the Provincial Insolvency Act, 1920 (5 of 1920), or under section 530 of the Companies Act, 1956 (1 of 1956), are to be paid in priority to all other debts in the distribution of the property of the insolvent or the assets of the company being wound up, as the case may be.

                  Explanation.—In this sub-section and in section 17, “insurance fund” means any fund established by an employer under any scheme for providing benefits in the nature of life insurance to employees, whether linked to their deposits in provident fund or not, without payment by the employees of any separate contribution or premium in that behalf.

                  (2) Without prejudice to the provisions of sub-section (1), if any amount is due from an employer whether in respect of the employee’s contribution (deducted from the wages of the employee) or the employer’s contribution], the amount so due shall be deemed to be the first charge on the assets of the establishment, and shall, notwithstanding anything contained in any other law for the time being in force, be paid in priority to all other debts.”

                  (underline supplied)

                  Section 11(2) of the Act 1952 gives priority for the amount due to the EPFO over all other debts. Admittedly, going by Ext R3(a), the amount due towards EPFO is from July 2014. The equitable mortgage was created in favour of the bank only on 06.09.2014, and much before the same, the EPF amount had become due. Going by Paragraph 38 of the Employees Provident Funds Scheme, 1952 (hereinafter referred to as ‘Scheme 1952’), it is mandatory for the employer to pay the provident fund contribution within 15 days of the close of every month. The amount held by the employer is a statutory due, a portion of which is the employee's contribution, which is held illegally by the employer without remitting the same to the fund. The said default makes the director/employer even liable to prosecution under Section 14A of the Act 1952. Therefore, the EPFO can claim priority towards payment of contribution dues over other debts, going by Section 11(2) of the Act 1952, though they cannot claim first charge over the subject property since the first charge is provided only against the assets of the establishment.

14. Now coming to the SARFAESI Act, Section 26-E is an identical provision, which also provides for priority to secured creditors, which reads as follows:

                  “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.

                  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.”

                  (underline supplied)

                  So, both statutes provide for a priority for recovery of the amount due under the respective statutes. As held by the Apex Court in Jalgaon District Central Coop. Bank Ltd. v. State of Maharashtra and others, 2025 SCC OnLine SC 2513, since the SARFAESI Act being the latter Act giving an overriding effect over any law for the time being in force, it would prevail. But the question is whether the respondent bank could claim priority as provided under Section 26-E of the SARFAESI Act. Admittedly, though the equitable mortgage was created on 05.09.2014, the mortgage was registered with CERSAI only on 05.11.2016, whereas the EPF amount became due in July 2014, and the attachment order in favour of the EPFO was on 04.11.2015, much before the registration of the mortgage with CERSAI as mandated in Section 26-E. Further, it is to be noted that the provident fund contribution became due even prior to the equitable mortgage created in favour of the bank. Section 26-E of the SARFAESI Act, giving priority to secured creditors, provides that after the registration of the security interest with the CERSAI, the debt due to any secured creditor shall have priority. The question is whether the bank could claim priority as provided under Section 26E of the SARFAESI Act since the mortgage was registered with CERSAI only on 05.11.2016, and even the equitable mortgage in favour of the bank was much after the amount became due towards EPF and the consequent attachment order issued by the EPFO. Section 26-C deals with the effect of registration of the transaction, wherein Section 26-C(2) provides that where security interest or attachment order upon any property in favour of the secured creditor or any other creditor are filed for the purpose of registration, the claim of such secured creditor or other creditor holding attachment order shall have priority over any subsequent security interest created upon such property. The Full Bench of the Bombay High Court in Jalgaon Janatha Sahakari Bank Ltd. v. Joint Commissioner of Sales (2022 KHC OnLine 5615) while considering the claim of the secured creditor under Section 26-E has considered the claim of priority interest by a secured creditor without registration of security interest with the Central Registry and has held that unless security interest is registered, no question of priority would arise. Paragraph 129 of the said judgment reads as follows:

                  “129. The entire scheme of Chapter IVA of the SARFAESI Act, as introduced by the Amending Act of 2016, leaves no manner of doubt that the object for its introduction is salutary. We have, in fact, discussed the noble objects that introduction of Chapter IVA of the SARFAESI Act intends to achieve. The drastic power made available to a secured creditor by provisions contained in section 13 and the other provisions of the SARFAESI Act to dispossess the borrower/guarantor from the secured asset without intervention of courts but necessarily upon compliance with the procedural safeguards laid down therefor has seemingly been arrested to a limited extent by incorporation of section 26D by the 2016 Amending Act. Section 26D, which also opens with a non obstante clause, prohibits a secured creditor from exercising the rights for enforcement of security interest conferred by Chapter III, unless the secured interest created in its favour by the borrower has been registered with the CERSAI. Not only therefore registration with the CERSAI has been made a mandatory pre-condition for invocation of the provisions contained in Chapter III of the SARFAESI Act, the provisions relating to debts that are due to any secured creditor being payable to such creditor in priority over all other debts and revenue, taxes, etc., is available to be invoked only after the registration of security interest.

                  This being the text of section 26E, which is to be read in the context in which it is set, leads to the irresistible and inevitable conclusion that unless the security interest is registered, neither can the borrower seek enforcement invoking the provisions of Chapter III of the SARFAESI Act nor does the question of priority in payment would arise without such registration.”

(underline supplied)

                  The Apex Court in Maharashtra State Co-operative Bank’s case cited supra was considering the claim of the Employment Provident Fund Organisation invoking Section 11(2) of the Act 1952 and held that Section 11 not only declares that the amount due from the employer towards contribution under the Act shall be treated as the first charge on the assets of the establishment but also laid down that such dues shall be paid in priority to all other debts. Paragraph 28 of the said judgment reads as follows:

                  “28. Sub-section (2), which was added to Section 11 by Act 40 of 1973 contains a non obstante clause and lays down that if any amount is due from the employer whether in respect of the employees' contribution deducted from the wages of the employee or the employer's contribution, the same shall be deemed to be the first charge on the assets of the establishment and shall, notwithstanding anything contained in any other law for the time being in force, be paid in priority to all other debts. To put it differently, sub-section (2) of Section 11 not only declares that the amount due from the employer towards contribution under the Act shall be treated as the first charge on the assets of the establishment, but also lays down that notwithstanding anything contained in any other law, such dues shall be paid in priority to all other debts.”

                  In the said judgment, the Apex Court further held that the Act 1952, being a social welfare legislation intended to protect the interests of a weaker section of society, it is imperative for the Courts to give a purposive interpretation to the provisions of the Act. Paragraph 30 of the said judgment reads as follows:

                  “30. Since the Act is a social welfare legislation intended to protect the interest of a weaker section of the society i.e. the workers employed in factories and other establishments, it is imperative for the courts to give a purposive interpretation to the provisions contained therein keeping in view the Directive Principles of State Policy embodied in Articles 38 and 43 of the Constitution. In this context, we may usefully notice the following observations made by Krishna lyer, J. in Organo Chemical Industries v. Union of India?: (SCC pp. 587 & 591-92, paras 28 & 40-41)

                  "28. The pragmatics of the situation is that if the stream of contributions were frozen by employers' defaults after due deduction from the wages and diversion for their own purposes, the scheme would be damnified by traumatic starvation of the Fund, public frustration from the failure of the project and psychic demoralisation of the miserable beneficiaries when they find their wages deducted and the employer get away with it even after default in his own contribution and malversation of the workers' share. 'Damages' have a wider socially. semantic connotation than pecuniary loss of interest on non-payment when a social welfare scheme suffers mayhem on account of the injury. Law expands concepts to embrace social needs so as to become functionally effectual.”

                  The Apex Court in the said judgment also considered the priority of the provident fund dues against debts like mortgage, pledge etc. Paragraph 31 of the said judgment reads as follows:

                  “31. We shall now consider the question whether the provision contained in Section 11(2) of the Act operates against other debts like mortgage, pledge, etc. Answer to this question is clearly discernible from the plain language of Section 11. The priority given to the dues of provident fund, etc. in Section 11 is not hedged with any limitation or condition. Rather, a bare reading of the section makes it clear that the amount due is required to be paid in priority to all other debts. Any doubt on the width and scope of Section 11 qua other debts is removed by the use of expression "all other debts" in both the sub-sections. This would mean that the priority clause enshrined in Section 11 will operate against statutory as well as non-statutory and secured as well as unsecured debts including a mortgage or pledge. Subsection (2) was designedly inserted in the Act for ensuring that the provident fund dues of the workers are not defeated by prior claims of secured or unsecured creditors, This is the reason why the legislature took care to declare that irrespective of time when a debt is created in respect of the assets of the establishment, the dues payable under the Act would always remain first charge and shall be paid first out of the assets of the establishment notwithstanding anything contained in any other law for the time being in force. It is, therefore, reasonable to take the view that the statutory first charge created on the assets of the establishment by sub-section (2) of Section 11 and priority given to the payment of any amount due from an employer will operate against all types of debts.”

                  (underline supplied)

                  Paragraph 63 of the Apex Court judgment reiterates the priority and first charge towards EPFO and held as follows:-

                  “63. At the cost of repetition, it is apposite to mention that Section 11 is declaratory in nature. Sub-section (2) thereof declares that any amount due from an employer shall be deemed to be first charge on the assets of the establishment and shall be paid in priority to all other debts. For recovery of the amount due from an employer which is treated as arrear of land revenue, the Recovery Officer or any other authorised officer has to take recourse to the provisions contained in Section 8 read with Sections 8-B and 8-F. The recovery can be effected by attachment or sale of the movable or immovable property of the establishment or, as the case may be, the employer, or by arrest of the employer and his detention in prison or by appointing a Receiver for the management of the movable or immovable properties of the establishment or, as the case may be, the employer or by taking action in the manner laid down in the Third Schedule to the Income Tax Act, 1961.”

                  The recent judgment of the Apex Court in Jalgaon District Central Coop. Bank Ltd. cited supra has quoted with approval the earlier judgment of the Apex Court in Maharashtra State Co-operative Bank’s case cited supra.

                  So, from the facts and circumstances stated above and the judgments relied on, it is without any doubt that EPFO as well as the respondent bank will have a priority over all other dues and the SARFAESI Act being the latter Act, the provisions of the said Act will prevail. But, the bank could get priority as mandated in Section 26-E of the SARFAESI Act only after the registration with the CERSAI, which happened only on 05.11.2016, and the provident fund became due much prior to that, and the attachment by the EPFO was also before such registration. Even the mortgage in favour of the bank was after the provident fund amount had become due. As per Section 11(2) of the Act 1952, any amount due from an employer with respect to Provident Fund contribution shall have priority over all debts. Admittedly, the amount towards provident fund contribution became due in July 2014, much prior to the mortgage created in favour of the bank. I have already held that the bank would get priority only after registration with CERSAI, which was a subsequent act after the provident fund amount became due and after the attachment by the EPF Organisation has come into force. Therefore, in the above facts and circumstances, the bank cannot claim priority on the strength of Section 26-E of the SARFAESI Act, and the EPF Organisation enjoys priority over other debts as provided under Section 11(2) of the Act 1952 since the amount became due towards the EPF arrears much prior to the mortgage created in favour of the bank. Therefore, I am of the view that the claim of the bank on the ground of priority over the debts relying on Section 26-E of the SARFAESI Act cannot be accepted. Consequently, no direction could be issued to the 1st respondent to delete/efface the attachment noted in favour of respondents 2 and 3 in this writ petition. In view of the above, no relief could be granted to the petitioners and the writ petition is accordingly dismissed.