The main legal point established in the judgment is that the legal effect of a merger results in the original company losing its identity and ceasing to exist. The judgment also emphasizes the applicability of Order 22 Rule 10, CPC to cases of transfer, devolution, merger, or scheme of amalgamation, and the entitlement of the successor-in-interest to the liabilities and assets of the transferor company.

S. RAVINDRA BHAT, J.

1. The appeal throws up an interesting question, i.e whether the amalgamation, of a company (which institutes a suit, that is pending) with another, results in its corporate death, and consequent abatement of the suit, or does the transferee company become entitled to claim itself to be the successor, and continue with the suit, in terms of provisions of Order 22 Rule 10, Civil Procedure Code (variously described as “the Code” and “CPC”). The present judgment disposes of a plaintiff’s appeal impugning the Order dated 23.10.2007 of a learned Single Judge in I.A. No. 8275/2003 and I.A. No. 8670/2003 in Suit No. 675/1999 (“the suit”). The impugned judgment held that the plaintiff’s failure to take steps under Order 22, Rule 3, Civil Procedure Code (variously described as “the Code” and “CPC”) resulted in abatement of its suit.

2. The plaintiff, in its suit, had claimed a money decree, based on alleged transactions which took place in Germany. The defendants had urged that the suit was time barred; their application for rejection of plaint was however, dismissed; that order was confirmed by the Division Bench, which had left the plea open for consideration after trial. During the pendency of the suit, the Plaintiff Bank Kriess, merged with the Yapi Kredi Bank. The merger was affected in terms of a Deed dated 27.08.2001 with effect from 09.10.2001. As a result Yapi Kredi Bank AG took over all the assets and liabilities of Bank Kreiss AG; on and from 09.10.2001, the Plaintiff bank ceased to exist. The fourth defendant filed an application (I.A. 8275/2003) for dismissal of suit on account of nonexistence of the plaintiff. The fourth defendant urged that as no application was made under Order XXII Rule 3 of the Code, the suit abated. Order XXII Rule 3, CPC requires that an application should be made for substituting the legal representatives of the ‘deceased’ plaintiff within a stipulated time, i.e. is 90 days from the death of the plaintiff. In this case, since the Plaintiff bank ceased to exist on and 09.10.2001, therefore, the application under the said provision should have been made by 07.01.2002. Yapi Kredi Bank, the appellant in these proceedings, on the other hand, filed an application (I.A. 8670/2003) for its substitution on the record, as successor of Bank Kriess under Order XXII Rule 10 for leave of the Court to continue the suit in its name. That application was filed on 11.08.2003. It was contended by Yapi Kredi that by virtue of merger, it had taken over all the assets and liabilities of the original Plaintiff and therefore became its successor-in-interest. Therefore, the applicant contended that it was competent to continue the suit in place of the Plaintiff.

3. The defendants resisted the plea of Yapi Kredi, contending that the merger of the original plaintiff resulted in its corporate demise, in that it legally ceased to exist. Therefore, an application for substitution under Order 22 Rule 3 was the proper remedy, for succeeding to the legal proceeding; the lapse of the period stipulated for presenting that application resulted in abatement of claims in the suit. It sought for dismissal of Yapi Kredi’s application, and also urged that no application under Order 22 Rule 10 could be filed, and that the consequence of abatement was that it stood absolved of defending the suit claims of Bank Kriess.

4. Learned Single Judge, on an appreciation of the facts and after considering the submissions, was of the opinion that the legal effect of a merger (i.e. amalgamation) of two companies was that the original company which merges into the transferee company, loses its identity and ceases to exist. Learned Judge was of the view that the company, therefore, dies and that unless an application is preferred by the concerned parties, claiming to be legal representatives under Order XXII Rule 3 CPC, the suit abates. The impugned judgment also proceeded to hold that a transferee company, after merger,