Companies Act • Official Statutory Text & Practice Guide
Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 2013
Section 368 of Companies Act: Corporate Governance & Statutory Compliance
Official Bare Act Text
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All property, movable and immovable (including actionable claims), belonging to or vested in a company at the date of its registration in pursuance of this Part, shall, on such registration, pass to and vest in the company as incorporated under this Act for all the estate and interest of the company therein.
Statutory Defined Terms in this Section:(Click any term for official legal definition)
Section 368 of the Companies Act, 2013 enacts that all movable and immovable properties, actionable claims, and rights belonging to an entity registering under Chapter XXI vest automatically in the incorporated company by operation of law.
Automatic Statutory Vesting: All property, movable and immovable (including actionable claims, rights, and interests), belonging to or vested in the applicant entity at the date of registration, passes to and vests in the company as incorporated.
Absence of Inter Vivos Conveyance: Vesting occurs by operation of law without requiring a separate deed of conveyance, assignment, or instrument of transfer under the Transfer of Property Act, 1882.
Identical Estate and Interest: The property vests in the registered company for all the estate and interest that the erstwhile unincorporated entity held, preserving all covenants, easements, and encumbrances.
Key Landmark Precedents:
Vali Pattabhirama Rao v. Sri Ramanuja Ginning and Rice Factory (P) Ltd., AIR 1984 AP 176: The Division Bench held that vesting of properties under Section 575 of the 1956 Act (now Section 368) is statutory and automatic; no registered deed of conveyance or stamp duty is required to convey immovable property from the partnership to the company.
CIT v. Texspin Engg. & Mfg. Works, (2003) 263 ITR 345 (Bom): The High Court reaffirmed that statutory vesting under company law does not involve an inter vivos transfer or conveyance, precluding capital gains tax liability under Section 45 of the Income Tax Act.
Rita Textiles (P) Ltd. v. CIT, (2012) 344 ITR 470 (Guj): The Division Bench held that statutory succession under Section 575 (Section 368) vests title in the company by operation of law, requiring municipal authorities to mutate title on production of the certificate of incorporation.
Courtroom Practice & Strategic Litigation Guidance:
In municipal or revenue mutation proceedings, resist demands by stamp duty authorities for conveyance stamp duty. Cite Vali Pattabhirama Rao and Texspin to establish that Section 368 operates ex proprio vigore by statute, requiring revenue authorities to update land records based solely on the Certificate of Incorporation without a conveyance deed.
Legal Commentary & Landmark Judgments: Section 368
Section 368 of the Companies Act, 2013 enacts that all movable and immovable properties, actionable claims, and rights belonging to an entity registering under Chapter XXI vest automatically in the incorporated company by operation of law.
In municipal or revenue mutation proceedings, resist demands by stamp duty authorities for conveyance stamp duty. Cite Vali Pattabhirama Rao and Texspin to establish that Section 368 operates ex proprio vigore by statute, requiring revenue authorities to update land records based solely on the Certificate of Incorporation without a conveyance deed.