Duly stamped share transfer deeds are mandatory before registration; courts cannot compel companies to act contrary to stamp law.

A company cannot be compelled to register a share transfer or rectify its share register if the transfer deed is not duly stamped. Section 108 of the Companies Act, 1956 requires delivery of a proper instrument of transfer duly stamped before registration, and section 12 of the Indian Stamp Act, 1899 treats an adhesive stamp as unstamped if it is not cancelled on execution. Read together, these provisions make proper stamping a mandatory precondition to registration, and a court cannot direct a company to act contrary to that statutory requirement. The question of succession certificate was not finally decided.

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Issues: Whether a company can be directed under section 155 of the Companies Act, 1956 to register a share transfer and rectify the share register when the transfer deed bears adhesive stamps that were not cancelled in the manner required by section 12 of the Indian Stamp Act, 1899, and therefore is not duly stamped under section 108 of the Companies Act, 1956.

Analysis: Section 108 of the Companies Act, 1956 makes delivery of a proper instrument of transfer duly stamped a mandatory requirement before transfer can be registered. Under section 12 of the Indian Stamp Act, 1899, adhesive stamps must be cancelled at the time of execution so that they cannot be reused, and an instrument bearing an uncancelled adhesive stamp is deemed to be unstamped. Reading the two provisions together, the transfer deed in question could not be treated as duly stamped. A court cannot compel a company to register a transfer or rectify its register on the basis of an instrument that would require the company to act in contravention of the statute. The question of succession certificate was not decided finally.

Conclusion: The company was not bound to register the transfer or rectify the share register on the basis of the unstamped instrument, and the appeal succeeded.

Ratio Decidendi: A transfer of shares cannot be ordered to be registered under the Companies Act unless the instrument of transfer is duly stamped in compliance with the Stamp Act, and a court cannot direct an act that would contravene that mandatory statutory requirement.

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