Statutory vesting on firm-to-LLP conversion means no separate transfer deed, and no stamp duty for revenue mutation.

Conversion of a registered partnership firm into an LLP, under the statutory scheme, results in automatic vesting of the firm's tangible and intangible property, rights, liabilities and undertaking in the LLP by operation of law, without any separate conveyance or transfer instrument. On that basis, the article notes that stamp duty and registration fee are generally not attracted because they apply to instruments, and conversion does not involve execution of a registrable document transferring immovable property. The discussion also states that a mutation or revenue-record entry based only on the change in legal identity cannot be conditioned on payment of such charges.

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Issues: (i) Whether conversion of a registered partnership firm into a limited liability partnership results in automatic vesting of all assets in the LLP without any separate conveyance or instrument. (ii) Whether stamp duty and registration fee can be levied on such conversion and made a condition for updating the revenue record.

Issue (i): Whether conversion of a registered partnership firm into a limited liability partnership results in automatic vesting of all assets in the LLP without any separate conveyance or instrument.

Analysis: On conversion under the Limited Liability Partnership Act, the statutory scheme provides that, from the date of registration, the LLP comes into existence in the new name and all tangible and intangible property, rights, liabilities, obligations, and the undertaking of the firm vest in the LLP without further assurance, act or deed. The conversion is therefore by operation of law and not by a bilateral transfer. The firm is deemed to be dissolved after conversion, and the transfer of assets is statutory rather than contractual or conveyancing in nature.

Conclusion: The conversion entails automatic statutory vesting of the firm's assets in the LLP, and no separate conveyance or instrument of transfer is required.

Issue (ii): Whether stamp duty and registration fee can be levied on such conversion and made a condition for updating the revenue record.

Analysis: Stamp duty under Section 3 of the Indian Stamp Act is chargeable on instruments, and registration fee follows only where there is a registrable instrument. Since conversion of the firm into LLP does not involve execution of any instrument transferring immovable property, neither stamp duty nor registration fee is attracted. The change is only in the identity/name of the legal entity, not a transfer of assets or a change in constitution warranting levy. Consequently, the condition imposed while permitting mutation in the revenue record could not be sustained.

Conclusion: Stamp duty and registration fee were not leviable on the conversion, and the condition requiring their deposit for effecting the revenue entry was invalid.

Final Conclusion: The writ petition succeeded, the impugned orders were set aside to the extent they imposed fiscal liability on the conversion, and the respondents were directed to record the LLP name in the revenue record.

Ratio Decidendi: Where conversion of a partnership firm into an LLP results in statutory vesting of property by operation of law without execution of any transfer instrument, stamp duty and registration fee cannot be levied merely for recording the changed name in the revenue record.

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