JUDGMENT - RADHAKRISHNAN S., J.:-The common point of law raised in both these petitions is whether stamp duty is chargeable on mere allotment of a convertible debenture without an instrument of debenture having been issued therefor, and the only instrument having been issued being a share certificate upon conversion of the debenture.

2. In Writ Petition No. 1347 of 1992, the petitioner, Greaves Cotton Company Ltd., a public limited company, had made a letter of offer on 12-4-1991 offering 12.5% Secured Fully Convertible Debentures of the face value of Rs. 40/- each for cash at part to the equity shareholders and employees of the petitioner. The relevant part of the said letter of offer reads as under:

“Each debenture of Rs. 40/- will be compulsorily and automatically applied towards the cost of one fully paid equity share of the company of the face value of Rs. 10/- each at a price of Rs. 40/- per share (including the premium of Rs. 30/- per share) without any payment in cash 12 months after the date of allotment of debentures.”

“Allotment letters for the debentures or letters of regret together with Refund Cheques or Pay Orders, if any, will be despatched at the applicants sole risk by Registered Post within six weeks from the last date stipulated for submission of application(s) or within such further time as may be extended by the Stock Exchange at Bombay.”

“The Debenture Certificates will be ready for delivery within three months from the date of allotment or such other extended time as may be permitted by the Company Law Board, exchange for allotment letters issued.”

It appears that the petitioner-company had received applications for 38,58,029 fully convertible in debentures aggregating to Rs. 15,43,21,160/- which included the over-subscription amount. Finally, on 1-7-1991 the petitioner-company issued letters of allotment for 38,58,029 fully convertible debentures. On 27-9-1991 the petitioner made an application to the Company Law Board for extension of time for issuing certificates in respect of the fully convertible debentures. On 3-4-1991 the Company Law Board extended the time upto 31-6-1992 for issuing certificates of fully convertible debentures. On 15-5-1992 the Board of directors passed a Resolution to issue equity share certificates to allottees of the fully convertible debentures. On the very same date, the petitioner had also made an application to respondent No. 2 proposing to pay consolidated stamp duty under section 10 of the Bombay Stamp Act, 1958 (hereinafter referred to as the “said Act”) in respect of equity shares to be issued to the allottees of the fully convertible debentures. Accordingly, on the very same date, the petitioner issued pay order in the sum of Rs. 15,43,211.60 in favour of respondent No. 2 by way of consolidated stamp duty in respect of the equity share certificates to be issued to the allottees of the fully convertible debentures. The aforesaid stamp duty was calculated at the rate of 1% ad valorem under Article 17 of Schedule I to the said Act. The petitioner also gave an undertaking not to despatch the equity share certificates until issuance of the notification under section 10 of the said Act in the Maharashtra Government Gazette.

3. Subsequent thereto on 2-6-1992 the inspector of stamp, Bombay, issued a notice to the petitioner demanding an additional stamp duty of Rs. 15,43,212/-. The contention of the respondents is that even though the petitioner has paid the entire consolidated stamp duty on the equity share certificates, they are still liable in law to pay the stamp duty on fully convertible debentures.

4. Mr. Toor, learned Counsel appearing on behalf of the petitioner, contended that, in fact, till date the company has not issued any debenture certificate with regard to the aforesaid Fully Convertible Debentures. The company has issued only equity shares and has issued share certificates in that behalf and has fully paid the stamp duty with regard to the said share certificate

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