Substance over form in stamp duty: transfer deeds under a scheme were treated as conveyances, not composition deeds.

For stamp duty purposes, the character of an instrument depends on its substance and operative effect, not merely on the scheme under which it is executed. Two transfer deeds executed pursuant to a sanctioned scheme were held to be conveyances because they went beyond implementation of the court-approved arrangement and themselves embodied contractual covenants and consideration, effecting transfer of property inter vivos. They did not satisfy the requirements of composition deeds, as the debtors were not parties and the instruments were not of the kind covered by that article. The deeds were therefore chargeable under Article 23 of Schedule I of the Indian Stamp Act, with assessment of duty and penalty left to the Collector.

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Issues: Whether the two transfer deeds executed pursuant to the scheme of arrangement were chargeable as composition deeds or as conveyances under the Stamp Act.

Analysis: The scheme sanctioned by the Court under the Companies Act enabled transfer of assets and liabilities, but the liability to stamp duty depended on the character of the instruments actually executed. Both deeds went beyond a mere implementation of the Court's order and embodied contractual covenants and consideration between the parties. On their substance, they effected transfer of movable property inter vivos and therefore answered the statutory definition of conveyance. The elements necessary to treat them as composition deeds were absent, since the debtors were not parties and the instruments were not arrangements of the kind contemplated by that article.

Conclusion: The deeds were chargeable under Article 23 of Schedule I of the Indian Stamp Act as conveyances and not under Article 22 as composition deeds.

Final Conclusion: The reference was answered by holding that both instruments attracted stamp duty as conveyances, leaving assessment of the exact duty and penalty to the Collector under the Stamp Act.

Ratio Decidendi: For stamp duty purposes, the true nature of an instrument is determined by its substance and operative effect, and an instrument that itself transfers property inter vivos for consideration is a conveyance unless it is specifically covered elsewhere.

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