The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, allows for the assignment of securities without notice under Section 5, Section 13(2), and Section 13(4), influencing the court's decision in favor of the appellant.

Chitra Venkataraman, J.

This writ appeal is against the order of the learned single Judge in W.P.M.P.No.44088 of 2005 in W.P.No.41049 of 2005 dated 13. 2007, granting an order of stay in favour of the writ petitioner on the ground that there was no notice to the writ petitioner herein before the transfer and assignment of the book debt with the securities of the first respondent to the second respondent by the appellant herein, namely, the State Bank of India.

2. The writ petitioner, the first respondent herein, availed financial facility of a sum of Rs.64 lakhs in the form of term loan, working capital finance and cash credit facility from the appellant herein in the year 1982. It is stated that the first respondent was engaged in the manufacture of railway wagons and allied products. Due to various problems, the writ petitioner suffered setbacks in his business activities. It is also stated that the squeezing of credit limits by the appellant also had its impact on the functioning of the first respondent company.

3. The first respondent owed a sum of Rs.77.80 lakhs as on 212. 1990. The liability of the writ petitioner/first respondents closely held company M/s.Llaser Flow Controls Pvt. Ltd., was Rs.72.77 lakhs. The appellant instituted a civil suit in O.S.No.72 of 1991 on the file of the Sub Court, Coimbatore, on 2. 1991 for the recovery of the amount due from the first respondent and its associate company. The said suit was transferred to the file of the Debts Recovery Tribunal, Coimbatore, in T.A.No.2038 of 2002.

.4. By order dated 23. 2001 in A.A.I.F.R. Case No.409 of 2000, the Associate Company, namely, M/s.Llaser Flow Controls Pvt. Ltd., was recommended for winding up. The assets of the said associate Company was hypothecated by way of second charge to the appellant herein. In view of the action taken by T.I.I.C. against the associate company for recovery of the amount due from it, the appellant herein took steps to delete the associate company M/s.Llaser Flow Controls Pvt. Ltd.

5. It is stated that the first respondent approached the appellant herein for a one-time settlement. Based on the discussion, the first respondent agreed to discharge its liability as well as that of the associate company, to the tune of Rs.50 lakhs. To that end, the first respondent had remitted a sum of Rs.2.50 lakhs to show their bona fides.

6. It is stated by the first respondent that in spite of the agreement, the appellant did not pass the resolution for settlement. It is further stated that the appellant herein sent a letter dated 18. 2005, calling upon the first respondent debtor company to improve his one-time settlement of Rs.50 lakhs towards the resolution of the dispute. Accordingly, the first respondent improved his one-time settlement offer to Rs.54 lakhs as against the original offer of Rs.50 lakhs, under letters dated 9. 2005 and 11. 2005. When the matter stood thus, the appellant rejected the same by letter dated 111. 2005 and returned the advance amount of Rs.2.50 lakhs to the first respondent herein. It is stated by the first respondent herein that by resolution dated 12. 2005, passed by the Executive Committee of the Central Board of State Bank of India, under Ref.No.35/2005-2006, the appellant resolved to assign and transfer the book debt of the first respondent and the Associate company M/s.Llaser Flow Controls Pvt. Ltd. together with collateral securities attached thereto, to M/s.Asset Reconstruction Company (India) Ltd., the second respondent herein, for a sale consideration of Rs.40 lakhs.

.7. The contention of the first respondent is that when they have offered to discharge their liability and that of M/s.Llaser Flow Controls Pvt. Ltd. at Rs.54 lakhs to the appellant herein, the appellant was not justified in their transferring and assigning the said liability together with the attached security to the second respondent at Rs.40 lakhs without notice and giving an opportunity to the first respondent to