sudhi_kak,
Take andrewyipko's advice and upgrade to the latest service pack. I found this PR in the V17 service packs:
"PR 2055978: Fixes a problem with being able to locate an assembly reference plane in FlashFit"
Two things you might try. First, do not use Flash Fit mode when assembling. Instead us the acutal planar align relationship. Second, make sure Reduced Steps is turn off. I've attached an image showing where to turn off Reduced Steps.
David
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