Debt Assignment Deed cannot be challenged in petition under Sec. 7 of IBC | Proceedings under IBC are summary proceedings and it is beyond the ambit of Adjudicating Authority to delve into the details regarding the requirement or exemption of registration of Assignment Agreement – CFM Asset Reconstruction Pvt. Ltd. Vs. M.G. Finvest Pvt. Ltd. – NCLT New Delhi Bench
In this important judgment, NCLT New Delhi Bench holds that:
(i) The assignment of debt essentially being a transaction between the Creditor and the Assignee and assignment being recognized by the Code, 2016 as a valid mode of transfer of rights across the ambit of Section 5(7) of the Code, therefore, the entity who received the said assignment of debt falls within the fold of “Financial Creditor‟.
(ii) In Palm Products Pvt. Ltd. Vs T.V.L. Narsimha Rao & Anr. (2021) ibclaw.in 115 NCLAT, the issue is with regard to admission of claim by the RP not for admission of an application filed under Sec 7 of the Code, 2016.
(iii) Proceedings under Insolvency and Bankruptcy Code, 2016 are summary proceedings and it is beyond the ambit of this Adjudicating authority to delve into the details regarding the requirement or exemption of registration of the Assignment Agreement dated 18.01.2021. Therefore, the assignment agreement cannot be challenged in the petition under Section 7 of the Code, 2016.
(iv) Further, the assignment does not affect the liability and obligations of the Corporate Debtor to discharge the debt.
