Non-transferability of a mere right to sue bars continuation of a company petition after assignment of interest.

A company petition under section 111 of the Companies Act could not continue after the original petitioner had transferred its interest in the bonds and the assignee failed to seek transposition or substitution. The Court treated the claim as, at best, a mere right to sue for registration on the basis of letters of allotment, which is not transferable. It also held that protective provisions relating to transfer of shares or debentures could not be used to support a claim founded only on letters of allotment. With the original petitioner having no subsisting interest and the assignee remaining absent from the proceedings, continuation of the lis was held to be futile and the dispute was brought to an end.

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Issues: Whether the company petition under section 111 of the Companies Act could be maintained and prosecuted after the original petitioner had transferred its interest and the assignee had not sought transposition or substitution; whether the alleged transfer amounted only to an assignment of a mere right to sue, so as to bar continuation of the proceedings by the assignee.

Analysis: The operative transaction left the original petitioner without any subsisting interest in the bonds, while the assignee did not move the Court for transposition or substitution despite ample opportunity. The right claimed in the proceedings was, at best, a right to seek registration on the basis of letters of allotment, and the Court held that such a mere right to sue is not transferable. The Court further held that the assignee could not invoke the protective provisions concerning transfer of shares or debentures to sustain a claim founded only on letters of allotment, and that the absence and abandonment of interest by the original petitioner made continuation of the lis futile. In these circumstances, the appellate Court exercised its power to bring the dispute to an end rather than remitting the parties to further proceedings before the Company Law Board.

Conclusion: The petition was held not to survive and could not be pursued by the assignee; the challenge to the maintainability objection succeeded.

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