In case of assignment of debt during CIRP application pending before NCLT, there is no prohibition in the IBC from continuing the proceeding by an assignee – Siti Networks Ltd. Vs. Assets Care and Reconstruction Enterprises Ltd. & Anr. – NCLAT New Delhi
In this case, HDFC Limited filed CP under Section 7 of the IBC seeking initiation of CIRP against the Corporate Debtor. HDFC Ltd. assigned the debt to the Assets Care and Reconstruction Enterprise Ltd. Assets Care and Reconstruction Enterprise Limited filed an I.A. seeking to be substituted as Financial Creditor in place of original Applicant and to be permitted to pursue the C.P. filed by the HDFC Limited. Learned Counsel for the Appellant submits that the assignee could not have been permitted to continue Section 7 proceedings although it is open for the assignee to file a fresh Application under Section 7 which was permissible on the strength of assignment.
NCLAT held that the order of the Bengaluru Bench NCLT dated 26.08.2019 on which reliance has been placed by the Appellant cannot be said to be laying down a correct law to be followed as a precedent. As has been observed rightly by the Adjudicating Authority, there is no prohibition in the IBC or any of the Regulations from continuing the proceeding by an assignee. Section 5(7) of the IBC which defines Financial Creditor also includes a person to whom such debt has been legally assigned or transferred to.