Corporate devolution in pending suit: successor-in-interest may continue proceedings, with abatement rules for natural persons held inapplicable.

On devolution of a corporate plaintiff's interest during pendency of a suit, Order XXII Rule 10 CPC was applied rather than the provisions governing death of a natural person, so the suit did not abate and the applicant could continue it with leave of the Court. The Court held that the alleged extinction of the cause of action could not be finally decided on affidavits in interlocutory proceedings, and the plaint could not then be rejected under Order VII Rule 11 CPC. Existing interim restraint was continued with modification on a prima facie case and balance of convenience, without granting a broader fresh injunction.

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Issues: (i) Whether the suit had abated on the dissolution of the original corporate plaintiffs and whether the applicant could be substituted in their place on devolution of interest; (ii) whether the original cause of action had become dead or extinguished so as to defeat the applicant's right to continue the suit; (iii) whether further interim protection ought to be granted, continued, or modified pending trial.

Issue (i): Whether the suit had abated on the dissolution of the original corporate plaintiffs and whether the applicant could be substituted in their place on devolution of interest.

Analysis: The distinction between death of a natural person and devolution of interest by dissolution of a company was treated as decisive. Order XXII Rules 1 to 5 of the Code of Civil Procedure, 1908 were held inapplicable to a dissolved company in the same manner as they apply to a deceased natural person. Devolution of the company's interest in the subject matter of the suit was held to fall within Order XXII Rule 10 of the Code of Civil Procedure, 1908, under which continuation of the suit depends on leave of the Court and not on substitution on the footing of legal representation. The admitted schemes sanctioned by the competent High Courts showed that the rights and liabilities of the original plaintiffs vested in the applicant.

Conclusion: There was no abatement, and leave to continue the suit in the applicant's name was justified.

Issue (ii): Whether the original cause of action had become dead or extinguished so as to defeat the applicant's right to continue the suit.

Analysis: The Court held that the alleged extinction of the cause of action could not be determined finally on affidavits in interlocutory proceedings. The settlement between corporate controllers did not, by itself, establish that the corporate plaintiffs had abandoned or waived their claims. The schemes of merger and demerger were treated as transactions between corporate bodies, and no clause was shown to have expressly extinguished the suit claim. Whether the controller groups were alter egos of the respective companies was a matter for trial, not summary adjudication. The plaint also could not be rejected on the material then before the Court under Order VII Rule 11 of the Code of Civil Procedure, 1908.

Conclusion: The cause of action was not held to be dead at that stage.

Issue (iii): Whether further interim protection ought to be granted, continued, or modified pending trial.

Analysis: The Court found a prima facie basis to preserve the position that existed under the earlier interim order, but declined to grant any broader fresh injunction. It held that the existing restraint should continue with modification, so that the first defendant should not lose control of the company and its Aurangabad distillery without leave of the Court till disposal of the suit. The order was supported by the prima facie case and balance of convenience.

Conclusion: No further interim order was granted, but the earlier interim order was continued with modification.

Final Conclusion: The applicant was permitted to step into the suit as successor-in-interest, the suit was held not to have abated, and the matter was allowed to proceed with only limited continuing interim protection.

Ratio Decidendi: On devolution of a corporate plaintiff's interest during pendency of a suit, Order XXII Rule 10 of the Code of Civil Procedure, 1908 applies rather than the rules governing death of a natural person, and the successor may continue the suit with leave of the Court if the devolution is established.

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