Amalgamation and pending suits: merger does not cause abatement; successor-in-interest may seek continuation on devolution of rights.

Amalgamation of a plaintiff company does not automatically cause abatement of a pending suit under Order XXII Rule 3 CPC, because merger is a case of devolution of interest rather than the death of a party. Where rights and liabilities pass to the transferee company during litigation, the proper course is to consider continuation of the suit under Order XXII Rule 10 CPC. The successor's entitlement must be examined on a prima facie basis through inquiry into devolution, and procedural rules should not be applied to defeat substantive justice. The impugned order was set aside and the matter remitted for determination of the person entitled to continue the suit as successor-in-interest.

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Issues: (i) Whether amalgamation of a plaintiff company with another company results in abatement of a pending suit under Order XXII Rule 3 of the Code of Civil Procedure, 1908. (ii) Whether the transferee company or other successor can seek continuation of the suit under Order XXII Rule 10 of the Code of Civil Procedure, 1908.

Issue (i): Whether amalgamation of a plaintiff company with another company results in abatement of a pending suit under Order XXII Rule 3 of the Code of Civil Procedure, 1908.

Analysis: The distinction between dissolution after winding up and amalgamation was material. In a winding-up situation, the corporate end follows a structured liquidation process, but amalgamation operates through a scheme under which rights and liabilities devolve on the transferee company. The legal effect of amalgamation is that the transferor company ceases to exist as a separate entity, but that consequence does not automatically answer the fate of pending litigation. The Court treated the abatement logic applicable to a deceased natural person as inapt for every case of corporate amalgamation.

Conclusion: The suit did not abate under Order XXII Rule 3 merely because the plaintiff company merged with another company.

Issue (ii): Whether the transferee company or other successor can seek continuation of the suit under Order XXII Rule 10 of the Code of Civil Procedure, 1908.

Analysis: Order XXII Rule 10 was treated as the governing provision where interest devolves during the pendency of a suit. The Court relied on the principle that pending proceedings should continue against or by the person upon whom interest has devolved, subject to a prima facie inquiry into succession. The purpose of procedural law is to advance substantial justice, and a textual approach that forecloses inquiry into the successor's claim was rejected. The Court held that the successor's entitlement must be examined on the merits of devolution.

Conclusion: Order XXII Rule 10 applies, and the successor's claim to continue the suit must be inquired into.

Final Conclusion: The impugned order was set aside and the matter was remitted for inquiry into the person entitled to continue the suit as successor-in-interest.

Ratio Decidendi: In the case of amalgamation or merger of a company during pending litigation, the proper provision is Order XXII Rule 10 of the Code of Civil Procedure, 1908, because the matter involves devolution of interest and not abatement under Order XXII Rule 3.

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