Assignee secured creditor may enforce and sell secured assets in liquidation, subject to Official Liquidator participation and court supervision.

An assignee of a secured creditor under the SARFAESI framework steps into the assignor's shoes for enforcement purposes in winding up proceedings and may be substituted as secured creditor. The assignee may take possession of the secured assets and proceed with sale under section 13 of the SARFAESI Act read with rules 8 and 9 of the Security Interest Enforcement Rules, provided the process remains transparent, the Official Liquidator is associated, and sale remains subject to Company Court supervision and approval to secure the best value. Objections by shareholders and guarantors to the assignment agreement and alleged underpricing were rejected, and no restraint on sale was granted.

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Issues: (i) Whether the assignee of a secured creditor could be substituted in place of the assignor as secured creditor in the winding up proceedings. (ii) Whether the assignee, after assignment of the debt, could take possession of the assets of the company in liquidation and proceed to sell them in association with the Official Liquidator and under the supervision of the Company Court. (iii) Whether the shareholders and guarantors could restrain the sale on the ground that the assignment agreement was bad or that the assets might be sold at an inadequate price.

Issue (i): Whether the assignee of a secured creditor could be substituted in place of the assignor as secured creditor in the winding up proceedings.

Analysis: The debt owed by the company in liquidation had been assigned by IFCI to the applicant under an assignment agreement. On that basis, the applicant asserted the status of secured creditor in place of the original creditor. The legal effect of such assignment is that the assignee steps into the shoes of the secured creditor for the purpose of enforcement and related proceedings.

Conclusion: The substitution of the assignee in place of IFCI as secured creditor was allowed.

Issue (ii): Whether the assignee, after assignment of the debt, could take possession of the assets of the company in liquidation and proceed to sell them in association with the Official Liquidator and under the supervision of the Company Court.

Analysis: The Court applied the settled position that an assignee secured creditor under section 5(1)(b) of the SARFAESI Act, 2002 may stand outside the winding up proceedings and enforce the security interest under section 13 of that Act read with rules 8 and 9 of the Security Interest Enforcement Rules, 2002. The process must remain transparent, the Official Liquidator must be associated, and the sale must remain subject to approval of the Company Court to secure the best value of the assets.

Conclusion: The assignee was permitted to take possession and proceed with sale of the secured assets in association with the Official Liquidator and under court supervision.

Issue (iii): Whether the shareholders and guarantors could restrain the sale on the ground that the assignment agreement was bad or that the assets might be sold at an inadequate price.

Analysis: The objection to the assignment agreement was rejected because no legal basis was shown for challenging its validity before the Company Court. The apprehension of sale at a throwaway price was addressed by safeguards requiring association of the Official Liquidator, disclosure of sale steps, and confirmation of sale by the Company Court, with liberty to intervene if a better buyer was available.

Conclusion: The challenge by the shareholders and guarantors was rejected and no restraint on sale was granted.

Final Conclusion: The assignee secured creditor was recognised and allowed to enforce and sell the secured assets under the SARFAESI framework, while the liquidation process was protected through supervision of the Official Liquidator and the Company Court.

Ratio Decidendi: An assignee of a secured creditor under the SARFAESI Act steps into the creditor's shoes and may enforce the security interest in a winding up situation, provided the sale process remains transparent and subject to the supervision and approval of the Company Court.

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