Amalgamation sanction orders are not stampable as conveyances where transfer occurs by operation of law.

An order sanctioning an amalgamation or arrangement under section 394 of the Companies Act, 1956 transfers property and liabilities by operation of law, because the vesting takes effect through the court order itself without any further act or deed. On that reasoning, such an order is outside the ordinary mode of transfer under the Transfer of Property Act. The article concludes that, under the unamended West Bengal Stamp Act definitions of conveyance and instrument, a section 394 sanction order is not chargeable to stamp duty as a conveyance or instrument. Authorities based on special statutory amendments or consent decrees were treated as distinguishable.

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Issues: Whether an order sanctioning a scheme of amalgamation under section 394 of the Companies Act, 1956 is liable to stamp duty as a conveyance or instrument under the Indian Stamp Act.

Analysis: Section 394(2) provides that where an order under section 394 sanctions transfer of property or liabilities, the transfer takes effect by virtue of the order itself and the property vests in the transferee company without any further act or deed. The transfer is thus one by operation of law, outside the ordinary mode of transfer contemplated by the Transfer of Property Act. The definitions of conveyance and instrument in the Indian Stamp Act were not intended, in their unamended form applicable in West Bengal, to bring such an order within the charging provisions for stamp duty. The decisions relied on by the learned Company Judge were distinguishable because they either turned on special statutory amendments or on consent decrees expressly intended to operate as conveyances.

Conclusion: An order under section 394(1) of the Companies Act, 1956 sanctioning amalgamation or arrangement is not liable to stamp duty as a conveyance or instrument under the Indian Stamp Act.

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