Assignment of stressed loan assets upheld where borrower consent was unnecessary and no writ grounds were shown.

A stressed loan account may be assigned to an asset reconstruction company under the applicable RBI framework without the borrower's consent. The court noted that transfer of exposures classified as NPA or SMA is permitted, that prior intimation to the borrower was sufficient, and that allegations of breach of natural justice therefore failed. It also reiterated that assignment of debt is a commercial matter and writ interference lies only on proof of statutory breach, unfairness, or mala fides, none being shown. The claim based on the Emergency Credit Line Guarantee Scheme was rejected because the scheme did not create an enforceable right to compel disbursal in the manner sought.

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Issues: Whether the assignment of the borrower's loan account to the asset reconstruction company was liable to be interfered with on the grounds of absence of prior notice, want of NPA or stressed-asset classification, and alleged non-compliance with the RBI framework and the Emergency Credit Line Guarantee Scheme.

Analysis: The loan account was treated as a stressed account under the applicable RBI framework governing resolution and transfer of stressed loans. The Court noted that the governing circulars permitted transfer of loan exposures classified as NPA or SMA, and that the borrower's consent was not a precondition for assignment of the lender's asset. It further held that the borrower had been intimated about the transfer, so the plea of violation of natural justice was untenable. The Court also applied the settled principle that lending decisions and assignment of debt are commercial matters, and writ interference is confined to cases of statutory breach, unfairness, or mala fides, none of which was established. The claim relating to the ECLGS was also rejected, as the scheme did not create an enforceable right to compel disbursal in the manner sought.

Conclusion: The challenge to the assignment failed and the writ appeal was held against the appellants.

Final Conclusion: The impugned order dismissing the writ petition was upheld, and the appellate challenge to the transfer of the loan account was rejected.

Ratio Decidendi: A lender may assign a stressed loan asset in accordance with the applicable regulatory framework without obtaining the borrower's consent, and such commercial assignment is not amenable to writ interference absent a clear statutory infraction or other recognised ground for judicial review.

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