In Brief
IL&FS borrowed ₹400 crores from HDFC Bank, executing several contemporaneous documents including a Master Facility Agreement, Assignment Agreement, Escrow Agreement, and Power of Attorney. The central issue was whether these documents constituted an absolute assignment of lease rental receivables to HDFC or merely pledged them as security. NCLAT concluded the rents were absolutely assigned to HDFC and thus fell outside an asset freeze order imposed during insolvency proceedings. The Supreme Court upheld this, holding that reading the documents together—as required by contract interpretation principles—shows the parties intended absolute assignment of the receivables (to the extent needed for repayment). The Court confirmed that lease rents constitute actionable claims under the Transfer of Property Act, 1882, and are capable of legal assignment. IL&FS's appeal was dismissed.
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