7. Assignment of receivables.—(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.
8. Notice to debtor and discharge of obligation of such debtor.—Any assignee of a receivable
shall not be entitled to demand payment of the receivable from the debtor in respect of such receivables
unless notice of such assignment is given to the debtor by the assignor or the assignee along with express
authority in its favors granted by the assignor.
9. Discharge of liability of debtor on payment to assignee.—Where a notice of assignment of
receivable is given by the assignor or the assignee, as the case may be, under section 8 the debtor on
receipt of such notice, shall make payment to the assignee and payment made to such assignee in
discharge of any obligation in relation to the receivables specified in the notice shall fully discharge the
debtor making the payment, from corresponding liability in respect of such payment.
10. Payment made by debtor to assignor to be held in trust for benefit of assignee in certain
cases.—Where no notice of assignment of receivables is given by the assignor or under his authority by
the assignee, any payment made by the debtor in respect of such receivables to the assignor shall be held
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in trust for the benefit of the assignee which shall be forthwith be paid over to such assignee, as the case
may be, or its agent duly authorised in this behalf.