Bank debt assignment and enforcement rights remain valid where no contractual bar limits transfer and recovery powers.

Assignment of a borrower's debt by one bank to another bank was treated as legally permissible under Section 130 of the Transfer of Property Act, 1882, absent any contractual prohibition. The court noted that inter se transfer of NPAs between banks forms part of banking business and is not barred by the Banking Regulation Act, 1949, so the possession notice was not vitiated by the assignment. It further held that the assignee bank stood in the shoes of the original creditor and could invoke recovery and enforcement powers against the borrower. The challenge to the assignee's competence therefore failed.

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Issues: (i) whether assignment of the borrower's debt by one bank to another bank was legally permissible and invalidated the possession notice; (ii) whether the respondent bank, having been assigned the debt, could invoke enforcement powers against the borrower.

Issue (i): Whether assignment of the borrower's debt by one bank to another bank was legally permissible and invalidated the possession notice.

Analysis: Assignment of debt is permitted under Section 130 of the Transfer of Property Act, 1882. The Court noted that no term in the loan documents prohibited such assignment, and that the respondent was a banking company registered with the Reserve Bank of India. It further relied on the Supreme Court's recognition that inter se transfer of NPAs between banks is permissible as part of banking business and that such transfer is not barred by the Banking Regulation Act, 1949. The contrary view relied upon by the petitioner was not accepted.

Conclusion: The assignment of debt was held to be lawful and the challenge based on alleged illegality of assignment failed.

Issue (ii): Whether the respondent bank, having been assigned the debt, could invoke enforcement powers against the borrower.

Analysis: Once the debt was assigned, the respondent stood in the shoes of the original creditor for recovery purposes. The Court found no contractual embargo preventing the respondent from acting in that capacity. The petitioner's own communication had treated the respondent as the lender and sought settlement from it. The contention that the respondent was merely an agent and therefore incompetent to proceed under the enforcement mechanism was rejected.

Conclusion: The respondent was held competent to take action under the enforcement provisions against the petitioner.

Final Conclusion: The writ petition failed on the merits because the debt assignment was valid and the respondent bank was entitled to proceed against the borrower for recovery.

Ratio Decidendi: A bank may validly assign its debt and underlying security to another bank, and the assignee bank may enforce recovery rights, where no contractual prohibition exists and the transfer is otherwise permissible under the governing banking and property law framework.

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