Report No. 67

Chapter 41

Articles 36-45

41.1. Article 36-Allotment of shares.- Article 36 levies a duty on a letter of, allotment of shares, and needs no change.

41.2. Article 37-Letter of credit.-

Article 37 levies a duty on a letter of credit, and needs no change. Certain points relating to letters of credit have been discussed while dealing with the definition of "bill of exchange payable on demand".1

1. See discussion as to section 2(12)(c)-"bill of exchange payable on demand".

41.3. Article 38-Letter of licence.-

Article 38 levies a duty on a letter of licence. Certain points relevant to this article have been discussed earlier under "Composition".1 The article itself needs no change.

1. see discussion as to Article 22-compositation-deed

41.4. Article 39-Memorandum of association.-

Article 39 levies duty on a Memorandum of Association of a Company. The duty is fifteen rupees if the Memorandum is accompanied by articles of association under section 37 of the Indian Companies Act, 1882. The duty is forty rupees, if it is not so accompanied. The exemption exempts a "Memorandum of any association not formed for profit and registered under section 26 of the Indian Companies Act, 1882."

We recommend substitution of reference to the relevant sections1 of the Companies Act, 1956, in this article.

1. Sections 26 and 28, Companies Act, 1956.

41.5. Article 40-Mortgage deed.-

Article 40 levies duty on a mortgage-deed, not being an agreement relating to deposit of title-deeds, pawn or pledge (No. 6), Bottomry Bond (No. 16), Mortgage of a crop (No. 41), Respondentia Bond (No. 56), or Security Bond (No. 57). Under clause (a), the duty is linked up with the duty on a conveyance where possession of the property or any part of the property comprised in such a deed is given by the mortgagor or agreed to be given. When possession is not given or agreed to be given as aforesaid, the duty is linked up with the duty on a bond. This is provided in clause (b).

However, when the mortgage deed constitutes a collateral or auxiliary or additional or substituted security, or is executed by way of further assurance for the above-mentioned purpose, and the principal or primary security is duly stamped, the stamp duty is levied at a much lesser rate, under clause (c).

Under an Explanation below the article, a mortgagor who gives to the mortgagee a power-of-attorney to collect rents or a lease of the property mortgaged or part thereof, is deemed to give possession within the meaning of the article.

41.6. Change recommended in exemption.- There are two exemptions below the article, which exempt from duty-

(1) instruments, executed by persons taking advances under the Land Improvement Loans Act, 1883, or the Agriculturists' Loans Act, 1884, or by their sureties as security for the repayment of such advances;

(2) a letter of hypothecation accompanying a bill of exchange.

The second exemption relating to a letter of hypothecation should now be transferred to Article 6, in view of the amendment proposed in Article 6 (pawn or pledge), where we have recommended that that article should be applied to instruments of hypothecation also.

41.7. Article 41-Mortgage of crop.-

Article 41 levies duty on the mortgage of a crop, including any instrument evidencing an agreement to secure the repayment of a loan made upon any mortgage of a crop, whether the crop is or is not in existence at the time of the mortgage. It needs no change.