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Issues: (i) Whether an assignee of a financial asset under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 can continue a pending complaint under the Negotiable Instruments Act. (ii) Whether the assignee can be substituted as complainant and treated as a holder in due course for the dishonoured cheques.
Issue (i): Whether an assignee of a financial asset under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 can continue a pending complaint under the Negotiable Instruments Act.
Analysis: Section 5 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 permits a reconstruction company to acquire financial assets and vests in it all rights of the bank in relation to those assets. The provision further preserves pending proceedings of whatever nature relating to the financial asset and allows them to be continued by or against the assignee. The pending complaint arose out of recovery of the assigned loan liability and was therefore covered by the statutory transfer.
Conclusion: The assignee was entitled to continue the pending complaint; the objection to continuation failed.
Issue (ii): Whether the assignee can be substituted as complainant and treated as a holder in due course for the dishonoured cheques.
Analysis: The assignment deed transferred the underlying loan claims, securities, and rights connected with the cheques issued towards discharge of the liability. On that basis, the assignee stepped into the shoes of the original complainant and acquired the legal interest necessary to prosecute the complaint. The Court treated the assignee as a holder in due course for the purposes of maintaining the proceedings.
Conclusion: Substitution of the assignee as complainant was valid and the challenge to its locus was rejected.
Final Conclusion: The challenge to the orders of the courts below failed, and the criminal petition was held to be without merit.
Ratio Decidendi: An assignee of a bank's financial asset under Section 5 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 acquires the bank's rights in relation to that asset and may continue pending proceedings connected with it, including a complaint under the Negotiable Instruments Act.
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