Departmental clarification on Allotment of Shares

Department Clarification - I Department Letter NO. 8/4/69-CL-V dated 18-11-1969)
If consideration for allotment of shares is actual cash, then only the allotment would be for cash. " Cash" is actual money or instruments e.g. cheques which are generally used and accepted in money. If consideration of a genuine debt or outstanding bills, for goods sold ad delivered, marketable securities, time deposits in banks, then allotment cannot be treated as for cash.
Clarification -II Further clarification given by the Department of Company Affairs is as follows. " I am directed to refer to this Department's Circular Letter No. 8/4/69 dated 18-11-1969 and to say that the views conveyed therein have since been reexamined. The Department is now of the view that the allotment of shares by a company to a person in lieu of a genuine debt due to him is in perfect compliance of the provisions of Section 75 (1) of the Companies Act, 1956. In this connection, it is clarified that the act of handing over cash to the allottee in turn returning the same cash as payment for the shares allotted to him is not necessary for treating the shares as have been alloted for cash\. What is required is to ensure that the genuine debt payable by a company is liquidated to the extent of the value of the shares. ( Circular No.8/32/(75)-CL V dated 13th March 1978.