Stories
Can a Merger Wipe Out Legal Liabilities? What NCLT Ruled in Lentra AI Case
- •An NCLT Mumbai Bench order clarified that approving a corporate merger does not erase the pending legal obligations or liabilities of the dissolved company.
- •The Tribunal approved the amalgamation of Tharavu Technologies into Lentra AI while ruling that regulatory authorities can still investigate past matters.
- •All pending complaints, inspections, tax liabilities, and litigations involving Tharavu will automatically continue against Lentra AI.
- •The Registrar of Companies and the Income Tax Department retain full powers to examine and take action for any prior statutory violations.
Key Questions Answered
No, an NCLT Mumbai Bench order ruled that the approval of a merger does not erase or wipe out the legal obligations, liabilities, or pending cases of the company being merged. Regulatory authorities and the Registrar of Companies can continue to examine violations and take action against the surviving company.
Under Section 232 of the Companies Act, 2013, all properties, rights, duties, and liabilities of Tharavu transfer to Lentra AI without any further act or deed. Any pending complaints, litigation, or regulatory proceedings involving Tharavu will continue with or against Lentra.
The NCLT order explicitly preserves the powers of authorities like the Income Tax Department, allowing them to freely examine tax liabilities relating to Tharavu including future assessment proceedings. Lentra AI has undertaken to provide all documents and information requested by the tax authorities.
