Assignment of debt with security permits bank substitution, while stamping and liquidation issues remain open for fresh adjudication.

Valid assignment of debt with underlying security allows the assignee bank to step into the assignor's shoes and seek substitution in pending proceedings, because the borrower becomes the borrower of the assignee for enforcement purposes. The Gujarat High Court upheld substitution of the assignee bank in place of the original lender. It also held that issues left open by the Supreme Court remand, including registration, stamping, and the effect of assignment in liquidation proceedings under Section 529A of the Companies Act, 1956, must be decided afresh by the Company Judge. Prior broader observations inconsistent with that limited remand were quashed to that extent.

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Issues: (i) Whether the assignee bank was entitled to be substituted in place of the original lender after assignment of the debt and underlying security. (ii) Whether the remaining issues relating to registration, stamping, and the effect of assignment in liquidation proceedings were to be kept open for decision by the Company Judge.

Issue (i): Whether the assignee bank was entitled to be substituted in place of the original lender after assignment of the debt and underlying security.

Analysis: The earlier remand by the Supreme Court had confined further consideration to issues other than the permissibility of assignment of debts under the banking law. The Supreme Court had already indicated that once the debt with underlying security is transferred, the borrower ceases to be the borrower of the assignor bank and becomes the borrower of the assignee bank. In that light, the assignee acquired the right to pursue the claim and seek substitution in the pending proceedings.

Conclusion: The substitution of the assignee bank in place of the original lender was upheld.

Issue (ii): Whether the remaining issues relating to registration, stamping, and the effect of assignment in liquidation proceedings were to be kept open for decision by the Company Judge.

Analysis: The remand from the Supreme Court left other controversies open for fresh adjudication. Those issues included the legal effect of the deeds of assignment, compliance with registration and stamping requirements, and the consequence of assignment in the context of company liquidation, including the claim under Section 529A of the Companies Act, 1956. The Court therefore directed that those issues could be raised before the Company Judge for decision afresh, while also correcting the earlier observations that were inconsistent with that limited remand.

Conclusion: The remaining issues were remanded for fresh consideration, and the prior broader observations were quashed to that extent.

Final Conclusion: The appeal succeeded only to the extent of affirming substitution of the assignee banks, while preserving the parties' rights on the other issues for adjudication before the Company Judge.

Ratio Decidendi: Upon valid assignment of a debt with its underlying security, the assignee steps into the shoes of the assignor bank for the purpose of pursuing the claim and seeking substitution, while unrelated issues expressly left open on remand must be independently adjudicated.

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