Assignment :

Assignment is a type of charge on certain securities offered to a creditor. It is transfer of right, for a property or debt. Two persons are involved, the person who transfer his right is called the assignor and the beneficiary is called assignee. For example when a bank gives loan to a borrower against his book debts (future receivables), two parties involved are (i) the borrower (debtor) and the banker (creditor). The borrower/debtor, who is called the assignor, transfers his rights of receiving the funds from his customers.. The banker (lender/creditor) to whom the rights are transferred is called as the assignee.

Assignment – important features:

1. Section 130 of the Transfer of Property Act, states that the transfer of an actionable claim can be effected only by the execution of an instrument in writing signed by the transferor or by his duly authorized agent.

2. An actionable claim is defined as a claim to any debt other than a debt secured by {(i) mortgage of immovable property or (ii) hypothecation or (iii) pledge of movable property or (iv) any beneficial interest in any movable property} not in the possession of the claimant.

3. A borrower may assign any of the following items to secure a loan viz., (i) book debts (ii) life insurance policies (iii) money due from Government department.

4. An assignment can be absolute or by way of security

5. An assignment may be a legal or equitable assignment

6. As regards of book debts, the assignor informs his debtor, in writing, about the details of the assignee’s full communication details like name address e mail and telephone numbers etc., to enable him to pay the amount to the assignee directly until further instructions from his client.

(i) In the case of a life insurance policy, is assigned by an endorsement on the back of the policy or by a special deed of assignment. Notice of such assignment must be given to the insurer by the assignor or assignee, to enable the life insurance company to register the assignment in the records of the company records and act as per instructions.