Industrial Development Bank Of India V. Thapar Agro Mills Ltd (2011)

1. No decree can create a charge on the assets of the Company unless it is registered  under Section 125 of the Companies Act, 1956


Decided on – 17-03-2011

The Appellant advanced loan to the Company which is in liquidation against allotment of NonConvertible Debentures which involves appointment of trustees and creation of security. On failure to create a security, the appellant obtained a decree under Recovery of Debts Due to Banks and Financial Institutions Act, 1933. However, the Official Liquidator rejected the appellant’s claim as secured creditor on the ground that the appellant’s charge was not registered under Section 125 of the Companies Act, 1956.

2. In the absence of any specific provisions that permits the levy of stamp duty on the increase in authorised share capital, the ROC cannot demand the payment of stamp duty


Decided on – 21-04-2011

The Petitioner questioned the authority and competence of the Registrar of Companies (ROC) and the Collector of Stamps, Government of National Capital Territory of Delhi (GNCTD) to levy and collect stamp duty on the increased authorized share capital.

The Petitioner, a public limited company, increased its authorized share capital from Rs. 8.50 crore to Rs. 125 crore and filed e-Form  – 5. In particular GNCTD was requested to clarify whether as per Article 10 of the Schedule IA of the Indian Stamp (Delhi Amendment) Act, 2007 any additional stamp duty on increase in the authorized capital was payable. The ROC informed the Petitioner that in terms of Regulation 17 of the Companies Regulations 1956, the Form 5 filed by the Petitioner had been examined and kept pending on the ground that the company had not paid the stamp duty on the Form 5. With reference to the increased authorized capital, the Petitioner was directed to file complete Form 67 in all respects.

The Petitioner paid a sum of Rs. 58,25,000/- to the ROC as fees. The Petitioner was directed to pay the stamp duty on increase in the authorized share capital within a specified date  failing which the e-Form 5 would be treated as invalid and would not be taken on record in terms of Regulation 17 of the Companies Regulations 1956. The Petitioner then wrote to the ROC stating that there is no provision in the Delhi Stamp Act to pay the stamp duty on increase in the authorized share capital. However, the ROC insisted that the Petitioner should file Form-67 in all respects and clarified that if the stamp duty is not paid by the Petitioner, the amount of Rs. 58,25,000/- deposited with the ROC will stand forfeited.

As per Article 10 (a) and (b) of Schedule 1A of the Indian Stamp Act, 1899, stamp duty chargeable on the authorized capital of the company is 0.15% of the authorized share capital with a monetary ceiling of Rs. 25 Lakhs. Thus, the stamp duty chargeable on the authorized share capital of Rs. 125 crore comes to Rs. 18,75,000/-. In case, the stamp duty on authorized share capital of Rs. 8.50 crore i.e., Rs. 1,27,500/- is already paid, the balance amount of stamp duty is to be paid to the ofoffice of the Registrar of Companies as usual.

The Articles of Association and the Memorandum of Association of a company are required to be submitted at the time of registration of the company. At that stage, stamp duty is payable in terms of either Article 10 or Article 39 of the Schedule IA to the Act. Neither Article 10 nor Article 39 refers to increase in the authorized share capital as a basis for levy of stamp duty. In the absence of a specific provision that permits the levy of stamp duty on the increase in authorized share capital, it would not be open to the Respondents to insist upon the Petitioner having to pay stamp duty for the increased authorized share capital. The fact that the Petitioner earlier paid stamp duty when the authorized share capital was increased to Rs. 8.5 crore cannot act as an estoppel against the Petitioner. Also, the mere fact that the website of the ROC indicates that stamp duty shall be 0.15% of amount on increase in the authorized share capital does not lend a legal basis for such levy, in the absence of any amendment to the Act to that effect.

The ROC was directed to accept the Petitioners Form 5 and record the increased authorized share capital without insisting on the Petitioner paying stamp duty thereon. This will however not enable the Petitioner to claim refund of any stamp duty paid earlier by it for increase in authorized share capital.


3.  Passing off & dilution of Registered Trade Mark is not permitted  under the Trade Marks Act, 1999.Case Law :


Decided on – 03-03-2011

The Respondent  is engaged in the business of publishing a Newspaper in telugu entitled as ‘Eenadu’ which is a Registered Trademark of Ushodaya Enterprises.  The Appelant is the sole proprietor of a firm carrying on business inter alia as manufacturers of and delars in incense sticks (agarbathis) by adopting the mark ‘Ashika’s Eenadu’.

The Respondent Company filed a suit for infringement of Copyrights and Passing off Trademark in the year 1999 against an appellant for using  ‘Ashika’s Eenadu’ on incense sticks (Agarbathis) which is in consonance of Respondents Trademark. The Trial Court partially decreed the suit of the Respondent Company & the Appellant was injuncted from using the words ‘Eenadu’ in the State of Andhra Pradesh only.  On an Appeal by the Appellant, the Supreme Court upheld the same dispossing the appeal.

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