Stamp duty on sale agreement: a contract to transfer later is not a conveyance, and future share allotment filing does not change that.

An agreement to sell business undertakings, assets and goodwill was treated as a contract to be completed later, not as an instrument that itself transferred property, so it was not chargeable with stamp duty as a conveyance. The immovable properties were conveyed only under a separate deed, movable properties could pass by delivery, and goodwill was not transferred by the agreement itself. Section 104 of the Indian Companies Act, dealing with filing of agreements for future share allotment, did not alter the instrument's character under the Stamp Act or require conveyance duty. The agreement was therefore treated as duly stamped as an agreement, not as a deed of transfer.

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Issues: (i) Whether the agreement for sale of the business undertakings, assets and goodwill amounted to a conveyance chargeable with stamp duty as a deed of transfer; (ii) Whether section 104 of the Indian Companies Act required levy of conveyance duty on the agreement relating to future allotment of shares.

Issue (i): Whether the agreement for sale of the business undertakings, assets and goodwill amounted to a conveyance chargeable with stamp duty as a deed of transfer.

Analysis: The instrument was, in substance, only a contract to sell, to be completed later, and did not itself operate as an instrument of conveyance. The immovable properties were later conveyed by a separate deed, movable properties could pass by delivery, and the goodwill was not transferred by an instrument of conveyance. A mere agreement to sell, even if specifically enforceable, does not attract the higher stamp duty payable on a conveyance unless the instrument itself effects the transfer.

Conclusion: The agreement was not a deed of conveyance and was not chargeable with duty as such; the duty already paid as an agreement was sufficient.

Issue (ii): Whether section 104 of the Indian Companies Act required levy of conveyance duty on the agreement relating to future allotment of shares.

Analysis: The reference to section 104 concerned the filing of the agreement with the Registrar after the share allotments were to be made. Nothing in that provision required an agreement for future allotment of shares to bear stamp duty as though it were a conveyance. The statutory treatment of the agreement under company law did not alter its character under the Stamp Act.

Conclusion: Section 104 did not require the agreement to be stamped as a conveyance.

Final Conclusion: The reference was answered against the Crown and in favour of the applicant, holding that the instrument was only an agreement duly stamped and not a conveyance attracting additional duty.

Ratio Decidendi: An instrument that merely records an agreement to sell, and does not itself operate to transfer property, is not chargeable as a conveyance for stamp duty purposes, even if it contemplates a later transfer or future corporate allotment.

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