INFRASTRUCTURE LEASING AND FINANCIAL SERVICES LTD versus HDFC BANK LTD. & ANR.

INFRASTRUCTURE LEASING AND FINANCIAL SERVICES LTD versus HDFC BANK LTD. & ANR.

Reading all contemporaneous documents together, the court found the parties intended an absolute assignment of receivables (lease rentals) to HDFC (an LRD arrangement) rather than merely creation of a security/pledge; rents payable by tenants are actionable claims under the Transfer of Property Act, 1882 and capable of transfer; therefore the assigned receivables vested in HDFC and were outside the scope of the NCLAT asset and security freeze order; the NCLAT's conclusions were upheld.

Parties
Appellant/borrower: Infrastructure Leasing and Financial Services Ltd; Respondent/lender: HDFC Bank Ltd. & Anr.
Jurisdiction
India
Judgment Date
19 October 2023
Procedural Posture
Civil Appeal (civil Appeal No. 4708 of 2022) / Appeal From National Company Law Appellate Tribunal Order Dated 13.05.2022
Outcome
Appeal dismissed
Legal Topics
Assignment of Receivables, Actionable Claim, Escrow Agreement, Lease Rental Discounting, Security Interest Vs Assignment, Interpretation of Deeds, NCLAT Asset and Security Freeze Order
Property Law Contract Law Company Law Banking and Finance Assignment of Receivables Actionable Claim Escrow Agreement Lease Rental Discounting +3 more

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Parties

Infrastructure Leasing and Financial Services Ltd

Appellant/borrower

HDFC Bank Ltd. & Anr.

Respondent/lender

Procedural Posture

Civil Appeal (civil Appeal No. 4708 of 2022) / Appeal From National Company Law Appellate Tribunal Order Dated 13.05.2022

Legal Issues

  1. 1 Whether documents by which rents were made over to the lender constituted an assignment rather than a mere security interest/pledge
  2. 2 Whether future rents/receivables are 'actionable claims' under the Transfer of Property Act, 1882 and therefore transferable
  3. 3 Whether assigned receivables fell outside the scope of the NCLAT freeze order of 15.10.2018

Ratio Decidendi

Reading all contemporaneous documents together, the court found the parties intended an absolute assignment of receivables (lease rentals) to HDFC (an LRD arrangement) rather than merely creation of a security/pledge; rents payable by tenants are actionable claims under the Transfer of Property Act, 1882 and capable of transfer; therefore the assigned receivables vested in HDFC and were outside the scope of the NCLAT asset and security freeze order; the NCLAT's conclusions were upheld.

Court Disposition

Appeal dismissed

Orders

  • Appeal dismissed
  • No order as to costs