Requirement of a ‘registered’ assignment agreement in case of assignment in favour of Asset Reconstruction Company(ARC) in accordance with the procedure prescribed under Section 5 of the SARFAESI Act, 2002 – Naresh Kumar Aggarwal Vs. CFM Asset Reconstruction Pvt. Ltd. – NCLAT New Delhi
NCLAT held that Section 5 of SARFAESI Act, 2002 is an enabling provision to empower the Asset Reconstruction Company to acquire financial assets in the manner provided in Sub-section (1). Sub-section (2) of Section 5 contains a deeming clause. Sub-section (2) provides that Asset Reconstruction Company on such acquisition be deemed to be the lender and all the rights of such bank or financial institution shall vest in such company.
Judgments in Palm Products Pvt. Ltd. vs. T.V.L. Narsimha Rao and Anr. (2021) ibclaw.in 115 NCLAT and Citi Securities & Financial Services Pvt. Ltd. vs. Sudip Bhatacharya (2022) ibclaw.in 747 NCLAT were not a case of an Asset Reconstruction Company, hence, in the above cases assignment of debt was not as per Section 5 of the SARFAESI Act, 2002. This is also distinguishable due to the reason that in the present case assignment is in favour of the Asset Reconstruction Company in accordance with the procedure prescribed under Section 5 of the SARFAESI Act, 2002. Thus, these judgments are clearly distinguishable.
