In Re: The Kondoli Tea Co. Ltd

Quick Summary

Eight owners moved a tea estate into a company that they themselves fully owned. They argued this was not a real transfer, so no ad valorem stamp duty. The Court said a company is a separate legal person. A transfer to the company is a true conveyance. Duty under Article 21 of Schedule I applies.

• PRIMARY_KEYWORDS: separate legal entity, conveyance
• SECONDARY_KEYWORDS: Stamp Act, Article 21, ad valorem duty
• PUBLISH_DATE: 23-10-2025
• AUTHOR_NAME: Gulzar Hashmi
• LOCATION: India

Issues

1. Is the instrument a “conveyance” under Section 3(9) and Article 21 of Schedule I of the Stamp Act?
2. Does transfer to a company fully owned by the transferors avoid ad valorem duty?

Rules

• Stamp Act, 1899 — Article 21 (Schedule I): Ad valorem duty is payable on a conveyance based on the consideration stated.
• Company as Separate Person: A company is a distinct legal entity from its shareholders; transfer to it is not self-transfer.

Facts (Timeline)

Before transfer: A tea estate is owned by eight individuals.

Company formed: Those eight persons also become the only shareholders of the transferee company.

Instrument executed: Estate conveyed to the company for $43,320 as consideration, payable in shares and debentures at par.

Dispute: Transferors claim this is not a “sale”; merely property under a new name; refuse ad valorem duty.

Reference: Question raised under the Stamp Act whether duty under Article 21 applies.

Decision: Court holds it is a conveyance; duty payable on stated consideration.

Arguments

Judgment

Held: The instrument is a conveyance. Kondoli Tea Co. Ltd is a legal person separate from its members and can hold property in its own name. Duty under Article 21 of Schedule I is payable on the amount of consideration stated in the instrument.

Ratio (Key Rule)

A company is distinct from its shareholders. A transfer of property by individuals to their company is a true conveyance attracting ad valorem stamp duty (Art. 21, Sch. I, Stamp Act).

Why It Matters

• Early Indian affirmation of separate corporate personality.
• Clarifies stamp duty on business transfers to companies.
• Guides structuring of incorporations and asset transfers.

Key Takeaways

• Company ≠ shareholders.
• Transfers to a company are conveyances in law.
• Stamp duty is ad valorem on consideration stated.
• Consideration in shares/debentures still counts.

Mnemonic + 3-Step Hook

Mnemonic: “NEW PERSON, NEW STAMP.”

1. New Person: Company is separate.
2. Real Transfer: Property moved to that person.
3. Ad Valorem: Pay duty on consideration.

IRAC Outline

Glossary

Conveyance

An instrument that transfers property from one person to another.

Ad Valorem Duty

Stamp duty calculated on the value of the consideration stated.

Separate Legal Entity

The company has its own legal personality, distinct from its members.

FAQs

Related Cases