2007 (4) TMI 781 - HC - Indian Laws

Summary

Issues Involved:
1. Whether the writ petitions should be dismissed due to the existence of an alternative remedy.
2. Whether the scheme of arrangement sanctioned by the court qualifies as an instrument and a conveyance under the UP Stamp Act.
3. Whether such a scheme is covered by Article 23 of Schedule 1-B of the UP Stamp Act.

Detailed Analysis:

Point 1: No Dismissal on Ground of Alternative Remedy
The court addressed whether the writ petitions should be dismissed due to the availability of an alternative remedy. In WP No. 41811 of 2006, the petitioner was not given a reasonable opportunity to present their case due to various procedural lapses, including strikes and lack of proper notice. The court held that the lack of reasonable opportunity made the alternative remedy an inadequate option. For other writ petitions, the court noted that the issue at hand was a common question of law regarding the applicability of stamp duty under Article 23 of Schedule 1-B of the UP Stamp Act, which justified not dismissing the petitions on the ground of alternative remedy.

Point 2: Scheme of Arrangement as a Conveyance
The court examined whether the scheme of arrangement, including demerger and merger, is an instrument and a conveyance under the UP Stamp Act. The petitioners argued that such schemes are orders of the court and not instruments or conveyances. They cited various legal precedents and definitions to support their claim. However, the court referred to the Supreme Court rulings in the Ruby Sales case and the Hindustan Lever case, which held that schemes of amalgamation are instruments and conveyances as they involve the transfer of property based on an agreement between companies, sanctioned by the court. The court concluded that the scheme of arrangement is indeed an instrument and a conveyance under section 2(10) of the UP Stamp Act.

Point 3: Duty Not Chargeable Under Article 23 Schedule 1-B
The court deliberated on whether the scheme of arrangement falls under Article 23 of Schedule 1-B of the UP Stamp Act, which pertains to conveyances of immovable and movable property. The petitioners contended that such schemes are not covered by this article and that no stamp duty should be charged unless explicitly provided for. The standing counsel argued that the scheme could be split into transfers of immovable and movable assets, each chargeable under Article 23(a) and 23(b) respectively. The court, however, held that the scheme of arrangement, which involves the transfer of a going concern including intangible rights and liabilities, cannot be split up as suggested. The court emphasized that such schemes are a class apart and do not fall under Article 23 of Schedule 1-B of the UP Stamp Act. The court noted the absence of any precedent for charging stamp duty on such schemes in the state and highlighted the need for legislative clarity on the matter.

Conclusion:
1. The writ petitions should not be dismissed on the ground of alternative remedy.
2. The scheme of arrangement sanctioned by the court is an instrument and conveyance within the meaning of section 2(10) of the UP Stamp Act.
3. The scheme of arrangement is not covered by Article 23 of Schedule 1-B of the UP Stamp Act.

Separate Opinion:
Hon'ble Ran Vijai Singh, J. agreed with the conclusions on points one and two but differed on point three, holding that the scheme of arrangement is covered by Article 23 of Schedule 1-B of the UP Stamp Act. The matter was referred to Hon'ble the Chief Justice for the nomination of a third judge due to the difference in opinion. The interim order was extended until further court orders.