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Section 370: Continuation of pending legal proceedings

Companies Act • Official Statutory Text & Practice Guide

Statutory Regulation
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Act 2013
Section 369 All 470 Sections of Companies Act Section 371
Statutory Defined Terms in this Section: (Click any term for official legal definition)
Company Sec 2(20) Director Sec 2(34) Tribunal Sec 2(90)

Legal Commentary & Landmark Judgments: Section 370

Section 370 of the Companies Act, 2013 provides that all suits, arbitrations, and legal proceedings pending by or against the converted entity at the date of registration continue unabated, protecting litigants from procedural discontinuance.

  • Unabated Legal Proceedings: All suits and legal proceedings commenced by or against the entity or any of its members prior to registration continue in the same manner as if registration had not taken place.
  • Prohibition of Execution Against Members: Execution shall not issue against the property of any individual member upon any decree obtained in such proceedings for a corporate debt without leave of the court.
  • Winding-Up Remedy on Insufficiency: If corporate property is insufficient to satisfy the decree, the creditor may petition the Tribunal for an order winding up the company to enforce collective recovery.
Key Landmark Precedents:
  • Ganesh Trading Co. v. Moji Ram, (1978) 2 SCC 91: The Supreme Court held that changes in the constitution or status of a business firm do not destroy the cause of action; procedural amendments of the cause title to reflect the corporate persona must be allowed.
  • Industrial Development Corporation of Orissa Ltd. v. Indian Charge Chrome Ltd., (1996) 87 Comp Cas 575 (Ori): The High Court held that pending arbitration proceedings continue seamlessly upon registration under Part IX, as the corporate entity succeeds to all procedural and substantive rights.
  • L.V. Apte v. Union of India, AIR 1963 SC 1198: The Supreme Court recognized that statutory continuity provisions protect litigants from technical procedural abatements during corporate transformations.
Courtroom Practice & Strategic Litigation Guidance:

In ongoing suits where a partnership defendant converts into a company under Section 366, file an application under Order XXII Rule 10 of the Code of Civil Procedure (CPC) to amend the cause title. State that under Section 370, proceedings continue unabated by statutory devolution of interest.

Section 369 All 470 Sections of Companies Act Section 371