The main legal point established in the judgment is the requirement for a prima facie inquiry to determine the entitlement of a successor to prosecute a suit under Order XXII Rule 10 of the Civil Procedure Code.

S. RAVINDRA BHAT, J.

1. The defendant in a pending suit, appeals against the order of a learned Single Judge in CS (OS) 675/1999 dated 29.01.2015 which allowed an application seeking substitution as plaintiff under Order XXII Rule 10 of the Civil Procedure Code (“CPC”).

Brief Facts

2. Bank Kreiss AG (the original plaintiff referred to by its name) instituted a suit bearing CS (OS) 675/99 on the file of this Court against the appellant, claiming amounts due, based on an ex-parte judgement passed by a German Court on 17.01.1995. The appellant was the defendant/judgment debtor No.1 in that suit. The Appellant contends that Bank Kreiss AG, on 30.12.1998, under a deed of assignment had conveyed its receivables (including claims under the said suit) to Cukurova Holdings, Turkey (hereafter “Cukurova”), who then by the same document irrevocably assigned the said receivables to C.H. Financial Investments Ltd. Jersey [CHFI Jersey]. Bank Kreiss AG was authorized to collect loan money on behalf of Cukurova, as its collecting agent or assignee and was authorised to represent the latter in Court as well as pursue law-suits. It is further contended that the existence of the assignment deed dated 30.12.1998 came to light for the first time in 2009 in an affidavit filed by CHFI Jersey pursuant to an order of this court dated 14.10.2009 in an appeal FAO (OS) 511/2007, which was preferred by Yapi Kredi Bank AG.

3. The appellants contend that in light of these circumstances, Bank Kreiss AG could not have filed the suit as principal claiming in its own right, and at best could have filed it as agent of Cukurova or CHFI, Jersey. They further claim that there was no disclosure of the assignment deed until 2009 and that on the date of institution of the suit, Bank Kreiss AG had no claim to enforce in its own right.

4. During the pendency of the suit, Bank Kreiss AG merged with one Yapi Kredi Bank AG on 27.08.2001. As a result of this, Yapi Kredi Bank AG took over all the assets and liabilities of Bank Kreiss AG on and from 09.10.2001. The appellants contend that since Bank Kreiss AG had through the deed of assignment transferred all its claims which are the subject matter of the suit to Cukurova, (which in turn assigned it to CHFI, Jersey), there was nothing left to transfer from Bank Kreiss AG to Yapi Kredi Bank AG during the alleged merger/amalgamation. The fourth appellant moved I.A. No. 8275/03 on 08.08.2003 for dismissal of suit on the ground that as a consequence of the merger, Bank Kreiss AG had suffered a corporate death and since no application was filed under Order XXII Rule 3 of CPC, the suit had abated. Yapi Kredi Bank AG, on 11.08.2003 moved I.A. No. 8670/2003 for substitution and continuing the suit as successor-in-interest under Order XXII Rule 10 of the CPC.

5. On 23.10.2007, a learned Single Judge of this Court while allowing I.A. No. 8275/03 dismissed I.A. No. 8670/2003 on the ground that the suit stood abated as on 07.01.2002. The learned Single Judge was of the opinion that when two companies merge, the legal effect of that is that the original company which merges with the transferee company, ceases to exist and suffers a corporate death; it loses its identity and unless an application is preferred by the concerned parties claiming to be legal representatives under Order XXII Rule 3 CPC, the suit abates. The learned Single Judge was also of the opinion that the transferee company after merger was not entitled to file application under Order XXII Rule 10 seeking substitution in place of the transferor company. Yapi Kredi Bank AG appealed the decision of the learned Single Judge (FAO (OS) 511/2007). During the pendency of the appeal a substitution application was made on behalf of CHFI Jersey on the basis of a deed of assignment dated 23.01.2008 through which claims were sold from Yapi Kredi Bank AG to CHFI Jersey for consideration. The Division Bench directed CHFI Jersey to disclose the consideration and it is here for the fir