Assignment of receivables
Section 7 of the Factoring Regulation Act, 2011 deals with assignment of receivables. Any assignor may, by an agreement in writing, assign any receivable due and payable to him by any debtor, to any factor, being the assignee, for a consideration as may be agreed between the assignor and the assignee and the assignor shall at the time of such assignment, disclose to the assignee any The Act came into force on 02 Apr 2012.
(1) Any assignor may, by an agreement in writing, assign any receivable due and payable to him by any debtor, to any factor, being the assignee, for a consideration as may be agreed between the assignor and the assignee and the assignor shall at the time of such assignment, disclose to the assignee any defences and right of set off that may be available to the debtor:
Provided that if the debtor liable to pay the receivable or the business of factor is situated or established outside India, any assignment of receivable shall be subject to the provisions of the Foreign Exchange Management Act, 1999 (42 of 1999).
(2) On execution of agreement in writing for assignment of receivables, all the rights, remedies and any security interest created over any property exclusively to secure the due payment of receivable shall vest in the assignee and the assignee shall have an absolute right to recover such receivable and exercise all the rights and remedies of the assignor whether by way of damages or otherwise, or whether notice of assignment as provided in section 8 is given or not.
(3) Any assignment of receivables which constitute security for repayment of any loan advanced by any Bank or other creditor and if the assignor has given notice of such encumbrance to the assignee, then on accepting assignment of such receivable, the assignee shall pay the consideration for such assignment to the Bank or the creditor, as the case may be.
Section 7, The Factoring Regulation Act, 2011 (Act 12 of 2012).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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M/s Vedavaag Systems Ltd. & Anr. v. Ricoh India Ltd.
Court's Decision & Legal Precedent
Where receivables under a purchase order were assigned to a bank under a receivable purchases agreement (Factoring Regulation Act 2011 invoked by the accused) and later remitted back, whether the NI Act s.138 complaint by the original creditor remains maintainable after assignment is a triable issue; High Court under s.482 will not quash at the threshold on Factoring Act/assignment pleas that require evidence.
On this section: s.7 assignment of receivables was the statutory hook for the accused's Factoring Act argument that Citibank (assignee) alone could complain; left as a triable issue.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 7
What have the courts held on Section 7 of the Factoring Regulation Act?
M/s Vedavaag Systems Ltd. & Anr. v. Ricoh India Ltd. (03 Mar 2020) is the leading judgment on this section among those set out below: s.7 assignment of receivables was the statutory hook for the accused's Factoring Act argument that Citibank (assignee) alone could complain; left as a triable issue.
How do I find court cases under Section 7 of the Factoring Regulation Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Factoring Regulation Act 7, section 7 Factoring Regulation Act, section 7 of the Factoring Regulation Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with M/s Vedavaag Systems Ltd. & Anr. v. Ricoh India Ltd. (03 Mar 2020).
What should I read with Section 7 of the Factoring Regulation Act, and has it changed?
Its own text turns on section 8 (Notice to debtor and discharge of obligation of such debtor), so none of them can safely be read on its own.
When did Section 7 of the Factoring Regulation Act come into force?
Section 7 of the Factoring Regulation Act, cited as Factoring Regulation Act 7, came into force on 02 Apr 2012, having been enacted on 22 Jan 2012. It is in force as at the date shown on this page.
Other sections of this Act
- 2. Definitions1098 words
- 19. Registration of certain assignments of receivables transactions307 words
- 31. Provisions of this Act not to apply or affect in certain cases298 words
- 22. Penalties for non-compliance of direction of Reserve Bank296 words
- 25. Offences by factors226 words
- 31A. Power to make regulations213 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 16 Oct 2026. This page is not a substitute for legal advice.