PLA balance transfer on merger upheld as an asset passing to the successor manufacturing unit.

On merger of two manufacturing units, the unutilised balance in the Personal Ledger Account of the erstwhile unit was treated as transferable to the successor unit because the merged entity inherited the assets and liabilities of the earlier unit. The PLA balance was regarded as cash belonging to the company and, therefore, an asset passing with the merger. The absence of a specific procedural provision for PLA transfer did not prevent transfer, since a refund route was impracticable after the earlier unit had ceased to exist and only the successor remained in law. The contrary demand was therefore unsustainable.

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Issues: Whether, on merger of two manufacturing units, the unutilised balance lying in the Personal Ledger Account (PLA) of the erstwhile unit could be transferred to the new merged unit.

Analysis: On merger, the assets and liabilities of the erstwhile unit vested in the new entity. The PLA balance was treated as cash belonging to the company and, therefore, part of the assets that would follow the merger. The absence of a specific procedural provision for PLA transfer did not justify treating the balance as incapable of transfer, because a refund route was also impracticable once the earlier unit had ceased to exist and the successor unit was the only surviving legal entity.

Conclusion: The PLA balance was held transferable to the merged unit, and the demand raised on the contrary was unsustainable.

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