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CS Professional · Corporate Restructuring, Valuation and Insolvency · Documentation - Merger and Amalgamation

Ravi Menon was the officer in default of Lotus Pharma Ltd, which failed to file a statutory return in 2022 in breach of the Companies Act, 2013. Lotus Pharma was amalgamated into Sagar Pharma Ltd in 2024. Under Section 240, Ravi's liability for the 2022 default is best described as:

Ravi's liability continues after the amalgamation. Section 240 preserves the liability of officers in default of the transferor company for offences under the Act committed before the merger, whether or not he joins the transferee or the scheme transfers liabilities.

  1. AExtinguished, since the scheme transferred all liabilities to Sagar Pharma Ltd
  2. BContinuing after the amalgamation, as the offence was committed prior to itCorrect
  3. CContinuing only if he becomes a director of Sagar Pharma Ltd
  4. DConverted into a civil debt recoverable only from Sagar Pharma Ltd

Explanation

The default occurred before the amalgamation and was committed under the Act by an officer in default of the transferor company. Section 240 keeps that liability alive after the merger. Becoming a director of the transferee is irrelevant, and transfer of liabilities in the scheme does not remove the officer's personal liability.

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