2012 (2) TMI 312 - HC - Companies Law

Whether stamp duty is payable on the transfer of properties pursuant to the sanction of any scheme of amalgamation or demerger under the Companies Act, 1956 - Held that - Order sanctioning a scheme of amalgamation or demerger u/s 394 of the Companies Act, 1956 would amount to an instrument and conveyance within the meaning of the Stamp Act applicable in this State and is, accordingly, exigible to stamp duty. No property transferred pursuant to any scheme of amalgamation of merger or demerger in this State would be effective unless appropriate stamp duty thereon has been paid.

Issues Involved:
1. Stamp duty on the transfer of properties pursuant to schemes of amalgamation or demerger under the Companies Act.
2. Applicability of the 1937 notification providing remission of stamp duty.
3. Binding nature of Supreme Court judgments on lower courts.
4. Interpretation of "instrument" and "conveyance" under the Stamp Act.

Issue-wise Detailed Analysis:

1. Stamp Duty on Transfers Pursuant to Schemes of Amalgamation or Demerger:
The judgment unequivocally holds that stamp duty is payable on transfers effected pursuant to any scheme of amalgamation or demerger under the Companies Act, 1956. This conclusion is based on the Supreme Court's recognition in Hindustan Lever v. State of Maharashtra [(2004) 9 SCC 438], which stated that such transfers have all the trappings of a sale and are thus chargeable under the Stamp Act. The judgment also references the historical context, noting that the Calcutta High Court had previously held in Gemini Silk Ltd that such transfers attract stamp duty, a position that was temporarily set aside in Madhu Intra Ltd v. Registrar of Companies but reaffirmed by the Supreme Court.

2. Applicability of the 1937 Notification Providing Remission of Stamp Duty:
The petitioners argued that the 1937 notification, which provided for the remission of stamp duty under Article 23 of Schedule I to the Indian Stamp Act, 1899, should still apply. However, the court clarified that Article 23 now falls under Schedule IA to the Stamp Act as applicable in West Bengal, and thus the benefit under the 1937 notification is no longer available. The State Legislature's overt act of including Article 23 in Schedule IA effectively removed it from the purview of the 1937 notification.

3. Binding Nature of Supreme Court Judgments:
The judgment emphasizes the binding nature of the Supreme Court's pronouncements, noting that even an obiter dictum from the Supreme Court is binding unless revisited and corrected by the Court itself. The judgment in Hindustan Lever is cited as the authoritative pronouncement that orders sanctioning schemes of amalgamation or demerger are instruments chargeable with stamp duty. Consequently, the judgment in Madhu Intra, which did not consider the Supreme Court's decision, does not hold good.

4. Interpretation of "Instrument" and "Conveyance" under the Stamp Act:
The judgment delves into the definitions of "instrument" and "conveyance" under the Stamp Act, noting that the definitions in the relevant statutes in Maharashtra and West Bengal are identical. An order sanctioning a scheme under Section 394 of the Companies Act is considered both an instrument and a conveyance. The court cites several Supreme Court cases, including Haji Sk. Subhan v. Madhorao and Ruby Sales and Services (P) Ltd v. State of Maharashtra, to support this interpretation. The judgment concludes that such orders are exigible to stamp duty under Section 3 of the Indian Stamp Act, 1899, and the corresponding provisions in the West Bengal Stamp Act.

Conclusion:
The court concludes that an order sanctioning a scheme of amalgamation or demerger under Section 394 of the Companies Act is an instrument and conveyance within the meaning of the Stamp Act applicable in West Bengal and is thus subject to stamp duty. The 1937 notification providing remission of stamp duty does not apply to these transfers. The judgment directs the appropriate authorities to work out the procedure for implementing this obligation and states that no property transferred under such schemes will be effective unless the appropriate stamp duty has been paid.

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