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TMI Blog1957 (2) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... nies Act, 1913, in cases : ( i )where at least 90 per cent. of the issued share capital of the transferee company is in the beneficial ownership of the transferor company, or ( ii )where the transfer takes place between a parent company and a subsidiary company one of which is the beneficial owner of not less than 90 per cent. of the issued share capital of the other, or ( iii )where the transfer takes place between two subsidiary companies in each of which not less than 90 per cent. of the share capital is in the beneficial ownership of a common parent company : Provided that in each case a certificate is obtained by the parties from the officers appointed in this behalf by the Local Government concerned that the conditions abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 18,58,892-10-9. A part of the consideration was to be paid in cash, a part in the discharge of the debts and liabilities of the petitioners and the balance of the consideration by the allotment of shares of the aggregate value of ₹ 12,30,000. The transfer of the premises in Connaught Place was to take effect from the 1st July, 1952. In pursuance of this scheme the petitioners were allotted shares of the face value of ₹ 12,30,000 (out of the total issued share capital of ₹ 12,30,000) partly on the 31st May, 1952, and partly on the 14th October, 1952. After obtaining the consent of the Controller of Capital Issues the shares certificates thereof were duly issued to the petitioners and the latter were duly entered as sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the learned single Judge came to a correct determination in point of law. The notification of 1937 is designed to facilitate reconstruction of a company or amalgamation of two companies which are more or less under the same ownership so that they should be able to re-arrange their affairs without being saddled with liability for payment of stamp duties. A company wishing to claim relief from stamp duty under the provisions of this notification must satisfy the officers concerned (1) that the document evidences the transfer of property between companies limited by shares, and (2) that shares of the transferee company are in the beneficial ownership of the transferor company to the extent of 90 per cent. Shares must be in the benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubscriber a shareholder, for until the subscription is accepted, the subscription amounts to nothing more than an offer to take share. On allotment of shares and a communication of that allotment, the contract becomes complete and absolute and the subscriber becomes a shareholder. It has accordingly been held that an application for shares in a company does not constitute the applicant a shareholder until the shares are formally allotted to him and the notice of the allotment is formally given to him. It is only on the communication of the allotment that the title to the shares subscribed by him comes to vest in him and it is only on the receipt of this letter that he has a right to receive the certificate of shares and to be put on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of shares. Shares were allotted to them in due course and the allotment was communicated to them. There was thus an application, an allotment and a communication of that allotment. A valid and binding contract came into existence between the petitioners and Phelps and Co., a contract which could be enforced by an action under section 42 of the Specific Relief Act. A certificate of shares was later issued and the name of the petitioners was entered on the register of shareholders. It seems to me therefore that the petitioners acquired not only the beneficial but also the legal ownership of the shares. Prima facie therefore they are entitled to the exemption for which a provision has been made in the notification of 1937. But Mr. Bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for specific performance or to institute a suit for recovery of damages. If the contract is repudiated the injured party may either rescind the contract in toto or he may terminate the contract for purposes of further performance and hold the opposite party liable for damages sustained by reason of the repudiation. A failure of consideration is not a ground for treating shares as unpaid: In re Continental and Shipping Butter Co.: Mege and Angier's [1875] WN 208; although an application for shares made upon a condition precedent does not become binding on the applicant until it has been complied with or its performance waived. The agreement of the 21st March, 1952, between the petitioners on the one hand and Phelps and Co. on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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