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TMI Blog2004 (1) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... in view of the provisions of sub-section (2) of section 394 of the aforesaid Act, and apart from complying with the provisions of sub-section (2) of section 394, nothing further was required to be done in order to complete the transfer of liabilities and assets from the transferor company to the transferee company. The entire exercise appears to have been influenced by the decision of the Supreme Court in the case of Ruby Sales Services Pvt. Ltd. [ 1993 (10) TMI 348 - SUPREME COURT] and that of the Bombay High Court in the case of Li Taka Pharmaceutical Ltd. [ 1996 (2) TMI 369 - HIGH COURT OF BOMBAY] referred to and relied upon by the learned Company Judge in answering the question referred to hereinabove. The entire fabric of the judgment of the learned Company Judge has been woven around the said two decisions and the concept of the order u/s 394 being a conveyance and an instrument was tailored to fit the said two decisions. In our view, the moot question which falls for consideration in these appeals is not whether an order u/s 394 is a conveyance or an instrument , but as to whether in view of the provisions of sub-section (2) of section 394 an order under sub-section (1) san ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered in the case of Gemini Silk Limited v. Gemini Overseas Limited , the parties will be entitled to apply for and to obtain refund of such stamp duty in accordance with law. The appeals are accordingly allowed. There will, however, be no order as to costs. - ALTAMAS KABIR AND ALOK KUMAR BASU, JJ. S.N. Mukherjee and Ratnanko Banerjee for the Petitioner. Balai Chandra Ray, Debashis Kar Gupta, Somnath Dey, R.N. Bag, Mrinal Kanti Kundu, Asis Kumar Das for the Respondent. Arindya Mitra, Pratap Chatterjee, Sanjoy Basu, Ranjan Deb and Manju Bhutoria for the Appellant. JUDGMENT Altamas Kabir, J. - These three appeals have been taken up together for hearing and disposal as they involve a common question as to whether an order passed by the Company Court under section 394(1) of the Companies Act, 1956, is a conveyance and an instrument under the Indian Stamp Act, and therefore, liable to stamp-duty. 2. As will appear from the materials on record, an application was filed by Gemini Silk Limited Anr. before the learned Company Judge, being company petition No. 74 of 2002, praying for sanction of a Scheme of Re-construction and/or Amalgamation pursuant to sections 391, 392, 393 and 394 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xecution of any further document and had sub-section (2) of section 394 not been in the statute book the transferee company would have had to execute documents of transfer pertaining to the immovable property sought to be transferred by the scheme. Mr. Mitra submitted that in such an eventuality, the question of payment of stamp-duty may have arisen. However, when the transfer is effected by operation of law the properties and the liabilities of the transferor company vests in the transferee company by virtue of the order under section 394(1) in which case the question of payment of stamp-duty cannot or does not arise. 8. Mr. Mitra pointed out that the order sanctioning the scheme becomes effective upon a certified copy thereof being filed with the Registrar of Companies under sub-section (3) of section 394 of the above Act. 9. Mr. Mitra submitted that an order of sanction under section 394(1) provides for transfer of assets and liabilities. In terms of the sanctioned scheme, transfer and vesting take place by reason of the extraordinary provision of law contained in sub-section (2) of section 394 as a case of transfer by operation of law and not by any instrument of convey- ance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Comp. Cas. 693 (Cal.), wherein in addition to other issues the provisions of section 394 of the Companies Act, 1956 were also considered and it was held that an order under section 394(2) of the Companies Act will include all the properties of the transferor company and, any property, to which it is proved that the transferor company had title at the time the order was made, should be deemed to have been transferred to the transferee company. 14. Mr. Mitra submitted that in none of the aforesaid cases was the scheme of amalgamation and/or the order sanctioning such scheme required to be stamped as has now been directed under the impugned judgment of the learned Company Judge. 15. Mr. Mitra submitted that mere right to sue cannot be transferred under section 6 of the Transfer of Property Act, but under section 394 of the Companies Act, 1956 even liability and the right to sue could be transferred which would take such an order out of the purview of the Transfer of Property Act, 1882. 16. Mr. Mitra then submitted that both section 394 of the Companies Act, 1956 and the provisions of the Transfer of Property Act could be construed harmoniously and there is no reason to assume that se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fically provides that the final order of Court for partition is an instrument under the Indian Stamp Act. In other words, it is not the intention of the Legislature to treat all orders or decrees of the Court as instrument under the Indian Stamp Act. Mr. Mitra urged that the basis of the judgment passed by the learned Company Judge is that an order under section 394 of the Companies Act, is covered by the definition of the words conveyance and instrument under the Indian Stamp Act, but nothing has been indicated in the judgment as to why an order and decree of the Court which is not specifically required to be stamped under the Indian Stamp Act, such as a partition decree, is to be treated as a conveyance or instrument inter vivos for the purposes of the Indian Stamp Act. Mr. Mitra urged that the learned Single Judge had not dealt with the expression inter vivos occurring in section 2(10) of the Indian Stamp Act, nor had the aspect relating to transfer by operation of law been dealt with. 21. Mr. Mitra concluded his submissions on the note that the judgment and order of the learned Single Judge has the effect of modifying statutory Form No. 42 referred to in Rule 84 of the Companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statutory form provided for in Form No. 42 framed in accordance with the Rule 84 of the Companies (Court) Rules, 1959. Mr. Mukherjee urged that nothing further was, in fact, required to be done to complete such transfer. 25. It was urged that in the case of Gemini Silk Limited v. Gemini Overseas Limited the question as to whether an order under section 394(1) of the Companies Act was to be treated as a conveyance and/or instrument came to be considered having regard to the decision of the Supreme Court in the case of Ruby Sales Services v. State of Maharashtra [1994] 1 SCC 531, wherein it was held that a consent decree is also an instrument under which title passed to the appellants/plaintiffs. Drawing a parallel between such decree and an order under section 394 of the Companies Act, the learned Company Judge came to hold that such an order was also based on an agreement between the transferor and the transferee companies. 26. Mr. Mukherjee submitted that such a parallel had been erroneously drawn mainly because the decision in the case of Ruby Sales Services ( supra ) was based on the provisions of the Bombay Stamp Act, 1958, where under the expression conveyance had been amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t decree there could be no manner of doubt that the parties to the transaction in the suit had agreed that the consent decree itself was to operate as a conveyance from the defendants in favour of the plaintiffs in respect of the suit property particularly described in Exhibit A to the plaint. 28. Mr. Mukherjee then urged that the learned Company Judge had also erroneously relied on the Single Bench decision of this Court in the case of Albion Jute Mills Co. Ltd. v. Rivers Steam Navigation Co. 100 CLJ 17, wherein it had been observed that "it should be remembered that a vesting order as is contemplated by sections 153 and 153A of the Indian Companies Act is made in order to facilitate the amalgamation, or in other words, in aid of amalgamation or the scheme of arrangement, but the actual transfer is effected by the act of parties, that is by the transferor company to the transferee company. The Court merely accords its sanction to the agreement entered into between the transferor company and the transferee company." 29. Mr. Mukherjee submitted that the said decision had been subsequently overruled by the Division Bench in New Central Jute Mills v. Rivers Steam Navigation Co. Ltd. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 394(1) of the Companies Act, 1956, amounted to transfer by operation of law and not merely by voluntary act of the parties, Mr. Mukherjee submitted that the learned Company Judge apparently mixed up the two concepts relating to transfers in general within the meaning of the Transfer of Property Act and other related Acts and transfer by operation of law. 33. Mr. Mukherjee then urged that the learned Company Judge had also allowed himself to be prejudiced and/or influenced by another question as to whether a transfer effected by virtue of an order under section 394 of the Companies Act amounted to sale or not. Mr. Mukherjee submitted that in answering the said question the learned Company Judge relied on an observation made by Lord Lindley, Master of the Rolls, in Wall v. London Northern Assets Corpn. , LR 1892(2) Ch. 464, to the following effect: "I do not see how a company as a business transaction can practically amalgamate with persons or companies carrying on business unless the company in some way or the other sells its assets as a whole not for money, for that would be a simple sale - but for shares in the purchasing company." 34. Mr. Mukherjee submitted that in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was under consideration and the same was held to be an "instrument". 37. While not directly on the subject, the case of Li Taka Pharmaceutical Ltd. v. State of Maharashtra AIR 1992 Bom. 7, was also referred to by the learned Company Judge who recorded that the question whether an order under section 394 of the Companies Act is an instrument and, therefore, liable to be stamped, had pointedly arisen in the said case. Of course, it was also noticed that the case was distinguishable because the State of Maharashtra had brought an amendment to the Indian Stamp Act where under an order passed under section 394 was specifically brought within the meaning of the word conveyance . 38. Mr. Mukherjee pointed out that on a consideration of the statutory provisions and the judicial pronouncements relied upon, the learned Company Judge came to the conclusion that an order sanctioning a Scheme of Reconstruction or Amalgamation is an instrument by which the transfer of properties and liabilities of the transferor company to the transferee company is effected and the same, therefore, must lead to the irresistible conclusion that the order which is an instrument is a conveyance which is required t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drell ( supra ) referred to and relied upon by Mr. Anindya Mitra, in support of the proposition that an order of Court cannot be said to be an instrument inter vivos and/or a conveyance so as to attract the provisions of the Indian Stamp Act. 43. Mr. Mukherjee concluded his submissions on the note that the decisions relied upon by the learned Company Judge in arriving at the conclusion that an order under section 394(1) of the Companies Act, 1956 was an instrument and a conveyance , were on the basis of the provisions of the Bombay Stamp Act, 1958, which were different from the provisions of the Indian Stamp Act, in their application to West Bengal. Mr. Mukherjee submitted that no comparison could, therefore, be drawn between the two provisions unless the provisions of the Indian Stamp Act, in their relation to West Bengal, were also similarly amended to include orders under section 394(1) of the Companies Act, 1956, to be conveyances for the purposes of transfer of the assets of the transferor company to the transferee company. Mr. Mukherjee urged that the order of the learned Company Judge was not sustainable in law and was liable to be set aside. 44. As will appear from the open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of stamp duty, arose in an application filed before the learned Company Judge for sanction of a Scheme of Amalgamation. As will appear from the trend of decisions cited by Mr. S.N. Mukherjee, the consistent view of this Court has been that the transfer of assets and liabilities of the transferor company to the transferee company was by operation of law in view of the provisions of sub-section (2) of section 394 of the aforesaid Act, and apart from complying with the provisions of sub-section (2) of section 394, nothing further was required to be done in order to complete the transfer of liabilities and assets from the transferor company to the transferee company. The entire exercise appears to have been influenced by the decision of the Supreme Court in the case of Ruby Sales Services Pvt. Ltd. ( supra ) and that of the Bombay High Court in the case of Li Taka Pharmaceutical Ltd. ( supra ) referred to and relied upon by the learned Company Judge in answering the question referred to hereinabove. The entire fabric of the judgment of the learned Company Judge has been woven around the said two decisions and the concept of the order under section 394 being a conveyance and an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included within the meaning of the expression conveyance every order made by the High Court under section 394 of the Companies Act in respect of amalgamation of companies by which property, whether movable or immovable or any estate or interest in any property is transferred to, or vest in, any person, inter vivos , and which is not otherwise specifically provided for by Schedule I. The facts of both the two aforesaid cases are completely distinguishable from the facts of matters generally relating to orders under section 394(1) of the Companies Act, 1956. Even if the order under section 394(1) is to be taken to be a conveyance or an instrument the transfer of assets and liabilities effected thereby is purely by operation of law which on account of section 2( d ) of the Transfer of Property Act also excludes the operation of section 6( e ) thereto. Notwithstanding the definition of the expression instrument in section 2(14) of the Indian Stamp Act, the unamended provisions of the Indian Stamp Act in relation to such definition and the definition of conveyance and/or instrument does not apply to an order under section 394(1) of the Companies Act for the purpose of stamp duty. We ag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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