Substitution in recovery proceedings denied where a later assignment arrangement for the same debt remained operative and inconsistent with the claim.

A securitisation or reconstruction company that had taken an earlier assignment of a debt could not seek substitution in pending recovery proceedings while a later arrangement to assign the same dues to a third party remained operative. The Court held that the petitioner could not suppress the subsequent arrangement and simultaneously rely on the earlier assignment to continue proceedings under the statutory scheme. Because the later arrangement was inconsistent with the asserted right, the claim for substitution was not maintainable. The writ petition challenging the recovery fora's orders therefore failed and was dismissed.

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Issues: (i) Whether the petitioner, after entering into a further arrangement to assign the same debt to a third party, could seek substitution in the pending recovery proceedings in place of the original assigning banks; (ii) whether the petitioner could rely on the earlier assignment from the banks and ignore the later arrangement while seeking continuation of proceedings under the statutory scheme.

Issue (i): Whether the petitioner, after entering into a further arrangement to assign the same debt to a third party, could seek substitution in the pending recovery proceedings in place of the original assigning banks.

Analysis: The statutory scheme permits a securitisation or reconstruction company to acquire financial assets and continue pending proceedings by virtue of the transfer. However, the materials showed that the petitioner had subsequently entered into an arrangement with a third party for assignment of the very same dues. At the time the substitution application was pending, that later arrangement remained in force. In such circumstances, the petitioner could not suppress the subsequent arrangement and still seek to step into the shoes of the original banks in the pending proceedings.

Conclusion: The claim for substitution was not maintainable, and the finding was against the petitioner.

Issue (ii): Whether the petitioner could rely on the earlier assignment from the banks and ignore the later arrangement while seeking continuation of proceedings under the statutory scheme.

Analysis: The Court treated the later arrangement as inconsistent with the petitioner's stand. A party cannot pursue rights under the earlier assignment while simultaneously acting upon a later arrangement covering the same financial assets, and then revert to the earlier position when the later arrangement does not fructify. The statutory right to continue proceedings under the transfer of financial assets could not be invoked in that manner.

Conclusion: The petitioner could not rely on the earlier assignment after the later arrangement, and the finding was against the petitioner.

Final Conclusion: The challenge to the orders of the recovery fora failed, and the writ petition was dismissed.

Ratio Decidendi: A securitisation or reconstruction company that has entered into a subsequent arrangement to assign the same financial asset to a third party cannot, while that arrangement remains operative, seek substitution in pending recovery proceedings on the basis of the earlier assignment, especially where the later arrangement is suppressed or inconsistent with the asserted right.

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