Amalgamation orders as conveyances attract stamp duty, with valuation based on scheme consideration rather than separate asset valuation.

An amalgamation order sanctioned under section 394 of the Companies Act, 1956 is treated as an instrument and conveyance for stamp duty purposes because it effects transfer of the transferor company's undertaking, property and liabilities to the transferee company. The State Legislature was competent to levy stamp duty on such an instrument, and the levy was not repugnant to the Companies Act, 1956 since duty is imposed on the document, with property value used only as the measure. For valuation, duty is to be computed on the consideration reflected in the scheme, ordinarily the shares allotted or other consideration, not by separately valuing assets and liabilities.

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Issues: (i) Whether an order of amalgamation sanctioned under section 394 of the Companies Act, 1956 is an "instrument" and a "conveyance" chargeable to stamp duty under the Bombay Stamp Act, 1958. (ii) Whether the State Legislature had competence to levy stamp duty on such an amalgamation order and whether section 2(g)(iv) of the Bombay Stamp Act, 1958 was repugnant to the Companies Act, 1956. (iii) Whether the value for stamp duty on an amalgamation order should be determined by separately valuing the assets and liabilities of the transferor company or on the basis of the consideration represented by the shares allotted under the scheme.

Issue (i): Whether an order of amalgamation sanctioned under section 394 of the Companies Act, 1956 is an "instrument" and a "conveyance" chargeable to stamp duty under the Bombay Stamp Act, 1958.

Analysis: The definition of "conveyance" in section 2(g) of the Bombay Stamp Act, 1958 is wide enough to include an order by which property is transferred or vested in another person. An amalgamation order under section 394 is founded on a compromise or arrangement between companies and operates to transfer the undertaking, property and liabilities of the transferor company to the transferee company. The definition of "instrument" in section 2(l) is likewise broad and covers documents by which rights or liabilities are transferred or recorded. On that basis, the amalgamation order is not merely a judicial approval in the abstract, but a document effecting transfer of property and rights.

Conclusion: Yes. An amalgamation order under section 394 of the Companies Act, 1956 is an instrument and a conveyance chargeable to stamp duty.

Issue (ii): Whether the State Legislature had competence to levy stamp duty on such an amalgamation order and whether section 2(g)(iv) of the Bombay Stamp Act, 1958 was repugnant to the Companies Act, 1956.

Analysis: The levy is on the instrument, while the value of the property transferred may be used only as the measure of duty. That does not change the essential character of the levy or convert it into a tax on transfer of property or on amalgamation as such. The State Legislature was competent under the constitutional scheme to prescribe stamp duty on such instruments. Section 2(g)(iv) and section 34 do not invalidate the amalgamation order or interfere with the court's jurisdiction under the Companies Act; they only require proper stamping and affect admissibility in evidence if the instrument is not duly stamped.

Conclusion: No. The levy was within legislative competence and there was no repugnancy to the Companies Act, 1956.

Issue (iii): Whether the value for stamp duty on an amalgamation order should be determined by separately valuing the assets and liabilities of the transferor company or on the basis of the consideration represented by the shares allotted under the scheme.

Analysis: A scheme of amalgamation transfers the business as a going concern and does not involve separate transfer of assets and liabilities as distinct components for stamp valuation. The proper basis is the value reflected in the consideration for the scheme, ordinarily the shares allotted by the transferee company or other consideration actually paid. Separate valuation of assets and liabilities would not reflect the true nature of the instrument covered by article 25 of Schedule I.

Conclusion: The duty is to be computed on the basis of the consideration represented by the shares allotted or other consideration, and not by separately valuing assets and liabilities.

Final Conclusion: The constitutional challenge failed, the levy of stamp duty on amalgamation orders was upheld, and only the valuation methodology was accepted in the limited sense that separate valuation of assets and liabilities was impermissible.

Ratio Decidendi: An amalgamation order under a compromise or arrangement that transfers property is an instrument chargeable to stamp duty, and the value of the transferred interest may be used as the measure of duty without converting the levy into a tax on the transfer itself.

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