JAGDISH MILLS LTD Vs. STATE OF MAHARASHTRA
LAWS(BOM)-1954-2-16
HIGH COURT OF BOMBAY
Decided on February 08,1954

IN RE: JAGDISH MILLS LTD Appellant
VERSUS
STATE Respondents


Cited Judgements :-

BABULAL CHOUKHANI VS. WESTERN INDIA THEATRES LTD [LAWS(CAL)-1956-12-28] [REFERRED TO]
NUDDEA TEA CO LTD VS. ASOK KUMAR SAHA [LAWS(CAL)-1986-2-35] [REFERRED TO]
SHANTI TEXTILE MILLS PVT LTD VS. SIDDHARTH N SHAH [LAWS(BOM)-2005-3-117] [REFERRED TO]
RAJENDRA PRASAD RUNGTA VS. AMBER COMMERCIAL (P.) LTD. [LAWS(CL)-2011-8-5] [REFERRED TO]


JUDGEMENT

- (1.)A rather interesting question arises as to the liability of a company to pay stamp duty in respect of a transfer of shares not duly stamped, and the question arises in the following way. The Jagdish Mills Ltd. is a public limited company which was incorporated in Baroda under the Baroda State Companies Act of Samvat year 1975. It appears that between 1942 and April 1, 1949, various transfer deeds were sent to the company duly executed from outside the Baroda State, and inasmuch as the transferor or the transferee did not have the necessary Baroda stamps they used to send moneys to the company and the practice was that the company used to buy the requisite Baroda stamps, affix them to the transfer deeds and get them registered. It was found subsequently that two employees of the company had misappropriated these moneys and had not stamped the transfer deeds as required by law. The company coming to know of this, very honestly and properly drew the attention of the revenue authorities on May 3, 1950, to the position then obtaining and pointed out that a large number of transfer deeds had not been duly stamped. The revenue authorities took the view that in respect of these transfer deeds the company was not only liable to pay the Baroda stamp duty plus the penalty, but also the Indian stamp duty plus the penalty. The company was prepared to pay the Baroda stamp duty and the penalty, but objected to paying the Indian stamp duty and penalty, and the question that arises on this reference is whether the company is liable to pay the Indian stamp duty in respect of these transfer deeds.
(2.)NOW, one sample transfer deed has been selected for the purpose of the question under reference and that sample transfer deed was executed on August 15, 1945. The transferor is the Ambica Mills Ltd. in Ahmedabad and the transferee is the Industrial and Prudential Assurance Co. Ltd. , a company having its head office in Bombay. Therefore, both the seller and the purchaser were in British India. The contention of the revenue authorities is that inasmuch as this transfer deed was executed in British India, as it then was, there is a liability to pay stamp duty under article 61 (a ). When the transfer deed was executed Baroda was an independent State, and the contention put forward by the company was that the only liability was to pay the stamp duty of the Baroda State inasmuch as the company was registered in Baroda, and the question that has been raised is, what is the effect of the merger which took place in 1949 upon the liability of the company ? The revenue authorities took the view that inasmuch as the question of fixing the liability with regard to stamp duty as well. In out opinion, however interesting the question may be, it does not strictly arise on the facts of the case and it is possible to dispose of this reference on a much narrower ground.
(3.)NOW, before we decide whether there is a liability to pay Indian stamp duty, we must decide whether there is any liability at all upon the company to pay any duty. For that purpose the first provision of the law to which attention might be drawn is Section 34 (3) of the Indian Companies Act. That sub-section provides :
"it shall not be lawful for the company to register a transfer of shares in or debentures of the company unless the proper instrument of transfer duly stamped and executed by the transferor and the transferee has been delivered to the company along with the scrip. "



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