STATE OF MAHARASHTRA & ANR. versus NATIONAL ORGANIC CHEMICAL INDUSTRIES LTD.

Citation: [2024] 4 S.C.R. 340 · Decided: 05-04-2024 · Supreme Court of India · Bench: SUDHANSHU DHULIA · Disposal: Dismissed

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Judgment (excerpt)

* Author
[2024] 4 S.C.R. 340 : 2024 INSC 270
State of Maharashtra & Anr. 
v. 
National Organic Chemical Industries Ltd.
(Civil Appeal No. 8821 of 2011)
05 April 2024
[Sudhanshu Dhulia* and Prasanna B. Varale, JJ.]
Issue for Consideration
Whether the notice sent to the Registrar in Form No.5 is an 
“instrument” as defined u/s.2(l), Bombay Stamp Act, 1958; whether 
the maximum cap on stamp duty is applicable every time there 
is an increase in the share capital or is it a one-time measure.
Headnotes
Bombay Stamp Act, 1958 – s.2(l), Article 10 of Schedule-I – 
“instrument” – Companies Act, 1956 – ss.97, 31(2) – Articles 
of Association, an instrument within the meaning of s.2(l), 
Stamp Act and mentioned in Article 10 of Schedule-I, where 
stamp duty is to be charged on increase in the share capital 
of a company subject to the maximum cap – Respondent 
increased its share capital to Rs.600 crores and paid stamp 
duty as per Article 10 of Schedule-I, Stamp Act – Article 10 
was amended and a maximum cap of Rs.25 lakhs on stamp 
duty was introduced – Respondent subsequently increased 
its share capital to Rs.1200 crores and paid Rs.25 lakhs as 
stamp duty when it filed Notice in Form No.5, pursuant to 
s.97, Companies Act – However, later it sought refund of 
the same – Denial by appellant no.2 – High Court directed 
appellants to refund Stamp Duty of Rs.25 lakhs with interest 
– Correctness:
Held: Filing of Form No. 5 is only a method prescribed, whereby 
“notice” of increase in share capital or of members of a company 
has to be sent to the Registrar, within 30 days of passing of such 
resolution – Registrar then has to record such increase in share 
capital or members, and carry out the necessary alterations in 
the articles – Stamp Duty is affixed on Form No. 5 as a matter 
of practical convenience because a company itself cannot carry 
out the alterations and record the increase in share capital in 
[2024] 4 S.C.R. 
341
State of Maharashtra & Anr. v.  
National Organic Chemical Industries Ltd.
its Articles of Association – It is only the articles which are an 
instrument within the meaning of s.2(l) of the Stamp Act and 
accordingly mentioned in Article 10 of Schedule-I of the Stamp 
Act – Legislature has specifically mentioned Articles of Association 
in Article 10 of Schedule-I of the Stamp Act, where stamp duty 
is to be charged inter alia on increase in the share capital of 
a company – Thus, in spite of s.31(2) of the Companies Act, 
stamp duty will be payable on increased share capital – This 
is however subject to the maximum, i.e., Rs. 25 lakhs – If 
there is no specific provision for charging the increase, then no 
stamp duty is payable for any increase in the share capital of a 
company – Ceiling of Rs. 25 lakhs is applicable on Articles of 
Association and the increased share capital therein, not on every 
increase individually – In case stamp duty equivalent to or more 
than the cap has already been paid, no further stamp duty can 
be levied – Further, argument of the appellant that stamp duty 
paid before the 2015 amendment cannot be taken into account, 
not agreed with – It is true that the amendment does not have 
retrospective effect, however since the instrument ‘Articles of 
Association’ remained the same and the increase was initiated 
by the respondent after the cap was introduced, the duty already 
paid on the same very instrument will have to be considered – It 
is not a fresh instrument which had been brought to be stamped, 
but only the increase in share capital in the original document, 
which was specifically made chargeable by the Legislation – 
Impugned order upheld – Maharashtra Stamp (Amendment) Act, 
2015. [Paras 9, 13, 15, 18, 19]
Bombay Stamp Act, 1958 – s.14A – Companies Act, 1956 – 
s.31(2) – Relying on s.14A of the Stamp Act, the appellant 
contended that any material or substantial alteration in 
the character of an instrument requires a fresh stamp duty 
according to its altered character:
Held: s.31(2) was introduced with the intention to confer validity 
on any alterations to the articles as if they were originally 
contained therein – Therefore, any increase in the share capital 
of the company also shall be valid as if it were originally there 
when the Articles of Association were first stamped – There is 
no concept of a company having new Articles of Association – 
Thus, s.14A of the Stamp Act would not be of any help to the 
appellants. [Para 12]
342
[2024] 4 S.C.R.
Di

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