2013 (9) TMI 1199 - HC - Companies Law

Summary

Issues Involved:
1. Validity of the assignment deed in light of the interim order dated 18.11.2009.
2. Alleged violation of the interim order by the Central Bank of India.
3. Impact of the assignment on the counter-claim of the petitioner.

Summary:

1. Validity of the Assignment Deed:
The petitioner defaulted on a loan, leading to recovery proceedings by the Central Bank of India. The bank later assigned its debts to IARC Limited under an assignment agreement dated 29.03.2011. The petitioner argued that this assignment violated an interim order dated 18.11.2009, which stayed all proceedings under the SARFESI Act. The Debts Recovery Appellate Tribunal (DRAT) clarified that the interim order was limited to actions under Section 13(4) of the SARFESI Act and did not extend to the assignment of debt under Section 5. The High Court upheld this view, stating that the assignment was valid and did not violate the interim order.

2. Alleged Violation of Interim Order:
The petitioner contended that the assignment deed amounted to transferring secured property without the Tribunal's permission, thus breaching the interim order. The DRAT found no such violation, as the interim order only pertained to actions under Section 13(4) of the SARFESI Act. The High Court agreed, emphasizing that the assignment of debt is governed by Section 5 and not Section 13(4). The Court found no perversity in the DRAT's order and dismissed the petitioner's claim.

3. Impact on Counter-Claim:
The petitioner expressed concerns that the counter-claim would be left unaddressed due to the assignment deed, which excluded the assignee's liability for the assignor's obligations. The High Court noted that issues related to the counter-claim should be addressed before the appropriate forum and not in the present proceedings. The Court dismissed the writ petition, stating that the petitioner had been unnecessarily prolonging the dispute and imposed costs of Rs. 50,000/- on the petitioner, payable to respondents No. 2 and 3 in equal share.

Conclusion:
The High Court found the writ petition meritless, upheld the validity of the assignment deed, and ruled that there was no violation of the interim order. The Court emphasized that the assignment of debt is governed by Section 5 of the SARFESI Act and not Section 13(4). The petitioner's concerns regarding the counter-claim were deemed irrelevant to the present proceedings.