diff --git a/grade/tests/edittreelib_test.php b/grade/tests/edittreelib_test.php
index 07c59e70a26..f3d768c22db 100644
--- a/grade/tests/edittreelib_test.php
+++ b/grade/tests/edittreelib_test.php
@@ -99,9 +99,14 @@ class core_grade_edittreelib_testcase extends advanced_testcase {
         $this->assertEquals($scale->id, $gradeitem->scaleid);
         $this->assertEquals($scalestring, $cell->text, "Grade text matches scale");
 
-        // Now change it to no grade.
+        // Now change it to no grade with gradebook feedback enabled.
+        $adminconfig = $assign->get_admin_config();
+        $gradebookplugin = $adminconfig->feedback_plugin_for_gradebook;
+        $gradebookplugin .= '_enabled';
+
         $instance = $assign->get_instance();
         $instance->grade = 0;
+        $instance->$gradebookplugin = 1;
         $instance->instance = $instance->id;
         $assign->update_instance($instance);
 
@@ -111,6 +116,19 @@ class core_grade_edittreelib_testcase extends advanced_testcase {
         $this->assertEquals(GRADE_TYPE_TEXT, $gradeitem->gradetype);
         $this->assertEquals(null, $gradeitem->scaleid);
         $this->assertEquals(' - ', $cell->text, 'Grade text matches empty value of " - "');
+
+        // Now change it to no grade with gradebook feedback disabled.
+        $instance = $assign->get_instance();
+        $instance->grade = 0;
+        $instance->$gradebookplugin = 0;
+        $instance->instance = $instance->id;
+        $assign->update_instance($instance);
+
+        $gradeitem = grade_item::fetch($gradeitemparams);
+        $cell = $column->get_item_cell($gradeitem, array());
+
+        $this->assertEquals(GRADE_TYPE_NONE, $gradeitem->gradetype);
+        $this->assertEquals(null, $gradeitem->scaleid);
     }
 }
 
diff --git a/mod/assign/lib.php b/mod/assign/lib.php
index 67b2ffd3c60..136c45aac77 100644
--- a/mod/assign/lib.php
+++ b/mod/assign/lib.php
@@ -912,6 +912,19 @@ function assign_grade_item_update($assign, $grades=null) {
 
     $params = array('itemname'=>$assign->name, 'idnumber'=>$assign->cmidnumber);
 
+    // Check if feedback plugin for gradebook is enabled, if yes then
+    // gradetype = GRADE_TYPE_TEXT else GRADE_TYPE_NONE.
+    $gradefeedbackenabled = false;
+
+    if (isset($assign->gradefeedbackenabled)) {
+        $gradefeedbackenabled = $assign->gradefeedbackenabled;
+    } else if ($assign->grade == 0) { // Grade feedback is needed only when grade == 0.
+        $mod = get_coursemodule_from_instance('assign', $assign->id, $assign->courseid);
+        $cm = context_module::instance($mod->id);
+        $assignment = new assign($cm, null, null);
+        $gradefeedbackenabled = $assignment->is_gradebook_feedback_enabled();
+    }
+
     if ($assign->grade > 0) {
         $params['gradetype'] = GRADE_TYPE_VALUE;
         $params['grademax']  = $assign->grade;
@@ -921,9 +934,12 @@ function assign_grade_item_update($assign, $grades=null) {
         $params['gradetype'] = GRADE_TYPE_SCALE;
         $params['scaleid']   = -$assign->grade;
 
-    } else {
-        // Allow text comments only.
+    } else if ($gradefeedbackenabled) {
+        // $assign->grade == 0 and feedback enabled.
         $params['gradetype'] = GRADE_TYPE_TEXT;
+    } else {
+        // $assign->grade == 0 and no feedback enabled.
+        $params['gradetype'] = GRADE_TYPE_NONE;
     }
 
     if ($grades  === 'reset') {
diff --git a/mod/assign/locallib.php b/mod/assign/locallib.php
index c3667df5ebe..3218e16da79 100644
--- a/mod/assign/locallib.php
+++ b/mod/assign/locallib.php
@@ -788,6 +788,10 @@ class assign {
         require_once($CFG->dirroot.'/mod/assign/lib.php');
         $assign = clone $this->get_instance();
         $assign->cmidnumber = $coursemoduleid;
+
+        // Set assign gradebook feedback plugin status (enabled and visible).
+        $assign->gradefeedbackenabled = $this->is_gradebook_feedback_enabled();
+
         $param = null;
         if ($reset) {
             $param = 'reset';
@@ -3999,7 +4003,8 @@ class assign {
         }
         $assign = clone $this->get_instance();
         $assign->cmidnumber = $this->get_course_module()->idnumber;
-
+        // Set assign gradebook feedback plugin status (enabled and visible).
+        $assign->gradefeedbackenabled = $this->is_gradebook_feedback_enabled();
         return assign_grade_item_update($assign, $gradebookgrade);
     }
 
@@ -5958,6 +5963,8 @@ class assign {
                     // Update Gradebook.
                     $assign = clone $this->get_instance();
                     $assign->cmidnumber = $this->get_course_module()->idnumber;
+                    // Set assign gradebook feedback plugin status.
+                    $assign->gradefeedbackenabled = $this->is_gradebook_feedback_enabled();
                     assign_update_grades($assign, $userid);
                 }
 
@@ -6779,6 +6786,28 @@ class assign {
         }
         return !in_array($userid, $this->susers);
     }
+
+    /**
+     * Returns true if gradebook feedback plugin is enabled
+     *
+     * @return bool true if gradebook feedback plugin is enabled and visible else false.
+     */
+    public function is_gradebook_feedback_enabled() {
+        // Get default grade book feedback plugin.
+        $adminconfig = $this->get_admin_config();
+        $gradebookplugin = $adminconfig->feedback_plugin_for_gradebook;
+        $gradebookplugin = str_replace('assignfeedback_', '', $gradebookplugin);
+
+        // Check if default gradebook feedback is visible and enabled.
+        $gradebookfeedbackplugin = $this->get_feedback_plugin_by_type($gradebookplugin);
+
+        if ($gradebookfeedbackplugin->is_visible() && $gradebookfeedbackplugin->is_enabled()) {
+            return true;
+        }
+
+        // Gradebook feedback plugin is either not visible/enabled.
+        return false;
+    }
 }
 
 /**
diff --git a/mod/assign/tests/locallib_test.php b/mod/assign/tests/locallib_test.php
index 766f8514668..7cc74951af4 100644
--- a/mod/assign/tests/locallib_test.php
+++ b/mod/assign/tests/locallib_test.php
@@ -1582,5 +1582,27 @@ Anchor link 2:<a title=\"bananas\" href=\"../logo-240x60.gif\">Link text</a>
         $plugin = $assign->get_feedback_plugin_by_type('comments');
         $this->assertEquals(1, $plugin->is_enabled('enabled'));
     }
+
+    /**
+     * Testing if gradebook feedback plugin is enabled.
+     */
+    public function test_is_gradebook_feedback_enabled() {
+        $adminconfig = get_config('assign');
+        $gradebookplugin = $adminconfig->feedback_plugin_for_gradebook;
+
+        // Create assignment with gradebook feedback enabled and grade = 0.
+        $assign = $this->create_instance(array($gradebookplugin . '_enabled' => 1, 'grades' => 0));
+
+        // Get gradebook feedback plugin.
+        $gradebookplugintype = str_replace('assignfeedback_', '', $gradebookplugin);
+        $plugin = $assign->get_feedback_plugin_by_type($gradebookplugintype);
+        $this->assertEquals(1, $plugin->is_enabled('enabled'));
+        $this->assertEquals(1, $assign->is_gradebook_feedback_enabled());
+
+        // Create assignment with gradebook feedback disabled and grade = 0.
+        $assign = $this->create_instance(array($gradebookplugin . '_enabled' => 0, 'grades' => 0));
+        $plugin = $assign->get_feedback_plugin_by_type($gradebookplugintype);
+        $this->assertEquals(0, $plugin->is_enabled('enabled'));
+    }
 }
 
diff --git a/mod/assign/version.php b/mod/assign/version.php
index 1e8f15b436f..47ed041344c 100644
--- a/mod/assign/version.php
+++ b/mod/assign/version.php
@@ -25,7 +25,7 @@
 defined('MOODLE_INTERNAL') || die();
 
 $module->component = 'mod_assign'; // Full name of the plugin (used for diagnostics).
-$module->version  = 2013110501;    // The current module version (Date: YYYYMMDDXX).
+$module->version  = 2013110502;    // The current module version (Date: YYYYMMDDXX).
 $module->requires = 2013110500;    // Requires this Moodle version.
 $module->cron     = 60;