TMI Blog1936 (11) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... at 20,000 fully paid up shares in the Madura Mills should be allotted to the Harveys in consideration of an allotment by the latter to the former of 1,000 fully paid up shares of Harveys as well as of an agreement to do ginning for the Madura Company at a specified rate for a period of ten years. It is stated that the original arrangement was only oral, but its substance has been embodied in resolutions recorded in the books of both the companies. Under Sec. 104 of the Indian Companies Act it is required that where a contract relating to the issue of shares fully paid up otherwise than in cash has not been reduced to writing, the company shall, within one month after the allotment, file with the Registrar the prescribed particulars of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises not with reference to the letter of allotment itself but as to the consideration for such allotment. When the allotment has been made as of shares fully paid up otherwise than 'in cash, Sec. 104 contemplates that the consideration for such allotment may be either a contract of sale or a contract for services or the consideration may be in other forms. The stamp duty payable will therefore vary according as the consideration consists of a sale of property or of an agreement of any other kind. The Collector who referred the matter to the Board for opinion was apparently inclined to think that the reciprocal allotment must be regarded as amounting to a sale and therefore the transaction was liable, to stamp duty as a conveyance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y that the shares are property in the hands of a shareholder ( e.g ., section 28 of the Companies Act), but, it is a wholly different position when the shares are being for the first time issued by the company itself. Alternatively, he contended that even if there should be any possibility of regarding this transaction as in the nature of a 'sale' of shares, it could not amount to a 'conveyance' unless property has passed thereunder, that according to the definition of 'goods', in the Sale of Goods Act, shares are 'goods', that under section 4 of the Sale of Goods Act a 'contract of sale' is nothing more than an 'agreement to. sell' until the property in the goods to-be sold passes, and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o regard the transaction as amounting to a transfer whether by way of exchange or conveyance: Cf, Coats v. Inland Revenue Commissioners (1897) 2 Q.B. 423. But when the company is for the first time issuing shares, it seems to us that there is no question of property already possessed by the company being thereby transferred to the allottee. Whatever may be the exact nature of the right which the allottee acquires between the date of allotment and the date of the entry of his name in the register it is difficult to regard the issue of the shares to him by allotment as amounting to a 'transfer of property' by the company to him. On this ground, we must hold that the contract of which the particulars were recorded in Form VII d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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