Vesting order transfers accrued right to sue tied to an undertaking, allowing the transferee company to continue pending suit.

A vesting order under the Companies Act transfers property and liabilities of the transferor, including accrued rights to sue that appertain to the transferred undertaking, thereby permitting the transferee to continue pending contractual proceedings; purely "bare" rights of action remain non assignable, but rights incidental to or forming part of a business or undertaking pass with the vesting order and vest in the successor, enabling enforcement of contractual remedies by the transferee.

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Issues: Whether a vesting order under section 153A of the Indian Companies Act, 1913 transfers to the transferee company an accrued right to sue for damages for breach of contract appertaining to the transferor company's undertaking, thereby entitling the transferee to continue a pending suit.

Analysis: Section 153A(4) defines "property" to include rights of every description and section 153A(1)(c) authorises continuation of legal proceedings by or against the transferee. The vesting order operates to transfer property and liabilities by virtue of the court order without requiring a separate conveyance. A "mere" or "bare" right to sue is prohibited from assignment under section 6(e) of the Transfer of Property Act, but a right to sue that is incidental to and appertains to an undertaking or business forms part of the transferred property. English authorities distinguishing bare rights of action from rights incidental to property/business were treated as persuasive guides; Nokes v. Doncaster Amalgamated Collieries Ltd. does not decide that an accrued right to sue appertaining to a business cannot be transferred by a vesting order. Sections 23(g) and 27(d) of the Specific Relief Act corroborate that contracts and related rights may be enforceable by the successor company arising from amalgamation where appropriate.

Conclusion: The vesting order under section 153A of the Indian Companies Act, 1913 transfers the accrued right to sue for damages appertaining to the transferor company's undertaking to the transferee company, and the transferee is entitled to continue the pending suit.

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