Amalgamation vesting order can transfer accrued contractual damage claims with business assets, allowing the transferee to continue suit.
On an amalgamation sanctioned by vesting order under section 153A of the Indian Companies Act, 1913, the transfer of the undertaking, property and liabilities of the transferor company is wide enough to include an accrued contractual claim for damages connected with the business. Such a claim is treated as an incidental asset passing with the undertaking, not as a mere right to sue. The vesting order itself effects the transfer, and section 6(e) of the Transfer of Property Act does not apply because it restricts only transfer of a bare right to sue. The transferee company may therefore continue the pending proceeding in place of the transferor.
Issues: Whether, on a vesting order sanctioning amalgamation under section 153A of the Indian Companies Act, 1913, a right to sue for damages for breach of contract appertaining to the transferor company's business passes to the transferee company so as to entitle it to continue the pending suit.
Analysis: Section 153A authorises transfer of the undertaking, property and liabilities of the transferor company, and the statutory definition of property is wide enough to include rights and powers of every description. A claim for damages arising out of a contract connected with the business is not a mere or bare right to sue when it passes with the undertaking as an incidental asset. Such a transfer is effected by the court's vesting order itself and is not defeated by section 6(e) of the Transfer of Property Act, because that provision strikes only at the transfer of a mere right to sue. The reasoning in the English amalgamation case concerning personal service contracts does not govern an accrued claim for damages attached to business assets, and the transferee is therefore entitled to continue the pending proceeding.
Conclusion: The right to sue for damages vested in the appellant, and the appellant was entitled to be substituted and to continue the suit.
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