Transferor’s unfulfilled advance license obligations persist post-merger, does not extinguish Liabilities in Customs Duty: Madras HC

The Madras High Court ruled that unfulfilled advance license obligations of a transferor company persist even after a merger. In this case, a company that merged with another had not fulfilled its export obligations under the Advance License Scheme, which allowed it to import raw materials duty-free. Post-merger, the transferee company argued that it should not be held liable for the customs duty as the merger extinguished the transferor’s obligations. The court rejected this, emphasizing that the merger does not absolve the transferee from the predecessor's legal liabilities. The court's decision highlights that any obligations, including customs duty liabilities arising from schemes like Advance License, are transferred in a merger, reinforcing corporate due diligence requirements in mergers and acquisitions.