2019 (5) TMI 608 - HC - Companies Law

Liability of Stamp Duty - scheme of amalgamation between the transferor and the transferee companies - interpretation of statute - It is the contention of the parties that, the words whichever is higher used in the two sub-clauses in the column of proper stamp duty leviable, is causing problems, both for the person seeking to register the order sanctioning the scheme as also for the registering authority. HELD THAT - The words whichever is higher used in those two sub-clauses cannot be read to mean that, the highest stamp duty of six per cent as prescribed in Article 23 is payable in respect of the four scenarios noted in Article 23A. Giving such an interpretation will render the entirety of Article 23A where it prescribes proper stamp duty as otiose, surplusage and redundant. An interpretation which does not allow such an eventuality to happen should be preferred to that which renders words used in a statute as otiose, surplusage and of no consequence. In the facts of the present case, Article 23A by itself is unambiguous. The quantum of stamp duty payable in the specific scenarios enumerated in Article 23A is not governed by the highest stamp duty payable in respect of Article 23. The authorities have adjudicated the stamp duty payable in respect of the scheme of amalgamation, by the impugned writing dated February 8, 2018, at ₹ 17,65,500/-. The authorities have arrived at a figure, after calculating the value paid by the transferee company to be at ₹ 2,94,25,000/-. The authorities have applied 6 per cent rate on the sum of ₹ 2,94,25,000/- to arrive at the figure of ₹ 17,65,500/-. In view of the discussions above, the rate applicable would be half per cent on the value paid by the transferee company. Petition disposed off.

Issues Involved:

1. Validity of the impugned order dated February 8, 2018, issued by the Collector of Stamp Revenue, Kolkata.
2. Interpretation and application of Article 23A of the Indian Stamp Act, 1899.
3. Determination of the proper stamp duty payable by the transferee company in a scheme of amalgamation.
4. The legal effect of the words "whichever is higher" in Article 23A.
5. Relevance of previous judicial pronouncements on the registration and stamp duty of schemes of amalgamation.

Detailed Analysis:

1. Validity of the Impugned Order:

The petitioner challenged the impugned order dated February 8, 2018, issued by the Collector of Stamp Revenue, Kolkata, which adjudicated the stamp duty payable concerning an order dated February 26, 2016, sanctioning a scheme of amalgamation between two companies. The petitioner contended that the impugned order incorrectly applied Article 23A of the Indian Stamp Act, 1899, and that the transferee company was not liable to pay stamp duty for the conveyance of immovable property.

2. Interpretation and Application of Article 23A:

The petitioner argued that Article 23A prescribes a stamp duty of half per centum of the value of the issued, paid-up, and subscribed share capital of the transferee company. The petitioner maintained that the impugned order misinterpreted Article 23A by applying a higher rate. The court examined the provisions of Article 23A, which treats an order sanctioning a scheme of amalgamation or reconstruction as a conveyance and specifies the stamp duty payable.

3. Determination of Proper Stamp Duty:

The court analyzed the two eventualities under Article 23A for calculating stamp duty: the value of immovable property in West Bengal and the value of consideration for the transfer. The court clarified that the transferee company must pay the higher of the two calculated amounts. In this case, the transferor company did not have any immovable property in West Bengal, and the issued share capital of the transferee company was ?13,75,00,000, with the value paid being ?2,94,25,000. Thus, the stamp duty payable would be half per cent of ?2,94,25,000.

4. Legal Effect of the Words "Whichever is Higher":

The court addressed the contention regarding the words "whichever is higher" in Article 23A, explaining that these words refer to the two sub-clauses within Article 23A itself and not to the highest rate prescribed under Article 23. The court emphasized that interpreting "whichever is higher" to mean the highest rate under Article 23 would render Article 23A redundant and otiose.

5. Relevance of Previous Judicial Pronouncements:

The court referenced previous judgments, including Hindustan Ideal Insurance Co. Ltd. v. Life Insurance Corporation of India, Gemini Silk Ltd., Hindustan Lever v. State of Maharashtra, and Emami Biotech Limited & Anr., to support its interpretation. These judgments established that schemes of amalgamation involving the transfer of immovable property are registrable and subject to stamp duty, reinforcing the applicability of Article 23A.

Conclusion:

The court quashed the impugned order dated February 8, 2018, and directed the registering authority to allow the petitioner to present the document with stamp duty payable at the rate of half per cent on ?2,94,25,000. The court clarified that the highest stamp duty of six per cent prescribed in Article 23 does not apply to the specific scenarios under Article 23A. The petition was disposed of accordingly, with no order as to costs.

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