26. Provisions of this Act to override other laws.—The provisions of this Act shall have effect,
notwithstanding anything inconsistent therewith contained in any other law for the time being in force or
any instrument having effect by virtue of any such law.
27. Application of other laws not barred.—The provisions of this Act or the rules made thereunder
shall be in addition to and not in derogation of the Negotiable Instruments Act, 1881 (26 of 1881), the
Transfer of Property Act, 1882 (4 of 1882), the Reserve Bank of India Act, 1934 (2 of 1934), the Banking
Regulation Act, 1949 (10 of 1949), the Companies Act, 1956 (1 of 1956), the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), the
Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006) or any other law for the time
being in force.
28. Limitation.—No assignee of any receivable shall be entitled to take any measures for recovery of
any assigned receivable, through any court or Tribunal unless his claim in respect of the receivable is
made within the period of limitation specified under the Limitation Act, 1963 (36 of 1963).
29. Confidentiality of information.—Save as otherwise provided in this Act, or unless required to
do so by an order passed by any Court or Tribunal or any other statutory authority under any provision of
law for the time being in force or for the purpose of recovery of the receivable, a factor shall maintain
confidentiality and shall not disclose to any person information obtained by it from, any assignor, its
present and future customers, its commercial and business activities and the terms of sale between the
assignor and any debtor and other detail about the assignor.
30. Power to exempt.—(1) The Central Government may, by notification in the public interest, direct
that any of the provisions of this Act,
(a) shall not apply to such class or classes of banks or a company or a factor; or
11
(b) shall apply to the such class or classes of banks or a company or a factor with such exceptions,
modifications and adaptations as may be specified in the notification.
(2) A copy of every notification issued under sub-section (1), shall be laid before each House of
Parliament, while it is in session, for a total period of thirty days which may be comprised in one session
or in two or more successive sessions, and if, before the expiry of the session immediately following the
session or the successive sessions aforesaid, both Houses agree in making any modification in the
notification or both the Houses agree that the notification shall not be issued or, the notification shall have
effect only in such modified form or be of no effect, as the case may be; so, however, that any such
modification or annulment shall be without prejudice to the validity of anything previously done under
the notification.
31. Provisions of this Act not to apply or affect in certain cases.—(1) The provisions of this Act
shall not apply to any assignment of receivables arising under or from the following transactions,
namely:—
(a) any merger, acquisition or amalgamation of business activities or sale or change in the
ownership or legal status of the business;
(b) transactions on any stock exchange or commodities exchange regulated by the Securities and
Exchange Board of India constituted under the provisions of the Securities and Exchange Board of
India Act, 1992(15 of 1992) or by the Forward Markets Commission under the Forward Contracts
(Regulation) Act, 1952 (74 of 1952), respectively;
(c) financial contracts governed by netting agreements, except a receivable owed on the
termination of all outstanding transactions;
(d) foreign exchange transactions except receivables in any foreign currency;
(e) inter-bank payment systems, inter-bank payment agreements or clearance and settlement
systems relating to securities or other financial assets or instruments;
(f) bank deposits;
(g) a letter of credit or independent guarantee;
(h) rights and obligations of any person under the law governing negotiable instruments,
negotiable warehouse receipts under the Warehousing (Development and Regulation) Act, 2007
(37 of 2007) or to instruments which are for the time being, by law or custom negotiable or any
mercantile document of title to goods;
(i) sale of goods or services for any personal, family or household use;
(j) any assignment of loan receivables by a bank or non-banking financial company to another
bank or non-banking financial company;
(k) securitisation transactions (including assignment of receivables to special purpose vehicles or
trusts that issue securities against such receivables, bought from a single debtor or single group of
debtors).
(2) Nothing contained in this Act shall affect the rights and obligations of a consumer, manufacturer,
trader or service provider under the provisions of the Consumer Protection Act, 1986 (68 of 1986).
1
[31A. Power to make regulations.—(1) The Reserve Bank may, by notification, make regulations
consistent with this Act to carry out the provisions of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may
provide for all or any of the following matters, namely:-
(a) the manner of granting certificate of registration under sub-section (4) of section 3;
(b) the manner of filling of particulars of transactions with the Central Registry on behalf of
factors under sub-section (1A) of section 19;
1. Ins. by Act 21 of 2021, s. 5 (w.e.f. 23-8-2021).
12
(c) any other matter which is required to be, or may be, specified by regulations.
(3) Every regulation shall, as soon as may be after it is made by the Reserve Bank, be forwarded to
the Central Government and 1
[that Government] shall cause a copy of the same to be laid before each
House of Parliament, while it is in session, for a total period of thirty days which may be comprised in
one session or in two or more successive sessions, and if, before the expiry of the session immediately
following the session or the successive sessions aforesaid, both Houses agree in making any modification
in the regulation, or both Houses agree that the regulation should not be made, the regulation shall,
thereafter, have effect only in such modified form or be of no effect, as the case may be; so, however, that
any such modification or annulment shall be without prejudice to the validity of anything previously done
under that regulation.]
32. Power of Central Government to make rules.—(1) The Central Government may, in
consultation with the Reserve Bank, by notification and in the Electronic Gazette as defined in clause (5)
of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000) make rules for
carrying out the provisions of this Act.
(2) In particular and without prejudice to the generality of the foregoing power such rules may
provide for all or any of the following matters, namely:—
(a) 2
[the time within which, the form and manner] in which the transactions of assignment of
receivables in favour of a factor shall be filed and the fee for filing such transaction under sub-section
(1) of section 19;
(b) the form and manner in which the satisfaction of assignment of receivable or settlement of the
claim shall be registered and the fee for filing such transactions under sub-section (3) of section 19;
(c) fee for inspecting the Central Register under section 20; and
(d) any other matter which is required to be or may be prescribed, in respect of which provision is
to be made or may be made by rules.
33. Laying of rules.—Every rule made under this Act shall be laid, as soon as may be after it is
made, before each House of Parliament, while it is in session, for a total period of thirty days which may
be comprised in one session or in two or more successive sessions, and if, before the expiry of the session
immediately following the session or the successive sessions aforesaid, both Houses agree in making any
modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter
have effect only in such modified form or be of no effect, as the case may be; so, however, that any such
modification or annulment shall be without prejudice to the validity of anything previously done under
that rule.
34. Power to remove difficulties.—-(1) If any difficulty arises in giving effect to the provisions of
this Act, the Central Government may, by order published in Official Gazette, make such provisions not
inconsistent with the provisions of this Act, as may appear to be necessary for removing the difficulty:
Provided that no order shall be made under this section after the expiry of a period of two years from
the commencement of this Act.
(2) Every order made under this section shall be laid, as soon as may be, after it is made, before each
House of Parliament.
35. Amendments to certain enactments.—The enactments specified in the Schedule shall be
amended in the manner specified therein.