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TMI Blog2012 (2) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... y in support of the continuing practice in this State for veritable sales and transfers of immovable properties to be concluded without offering any stamp duty to the State. Equally, this apparently cash-starved State is to blame for not being alive to its interest and insisting on the payment of stamp duty on the transfer of properties pursuant to the sanction of any scheme of amalgamation or demerger under the Companies Act, 1956. There can be no suspense as to how the question should be answered and the more conventional form needs to be eschewed to pronounce, at the outset, that stamp duty would be payable on transfers effected pursuant to any scheme of amalgamation or demerger under the Companies Act since that is the law of the land as recognised by the Supreme Court in the year 2003. There is a history to the matter which requires narration. It was in 2002 that the company Judge of this court took a view that the transfer of property pursuant to any scheme of amalgamation or demerger would attract stamp duty as in any other ordinary case of transfer effected without the intervention of court. It was the court, and not the State, that took up the issue which culminated in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Stamp Act in that State, the Supreme Court opined in the clearest terms that the transfer of any property upon the sanction of a scheme of amalgamation or demerger had all the trappings of a sale. The matter should have ended there and the issue taken as concluded for even an obiter of the Supreme Court would be binding. In any event, and without taking lazy refuge in the principle that any obiter dictum of the Supreme Court would conclude a legal issue unless revisited and corrected by that court itself, it is evident that the relevant question arose in that matter and the Supreme Court held that even without the special provision in the applicable Stamp Act relating to stamp duty being payable on orders sanctioning schemes of amalgamation or demerger, such orders would, in any event, be instruments within the meaning of the Stamp Act that would attract stamp duty. The ratio decidendi in the Hindustan Lever judgment, which is what is binding on all courts in the country and is the law of the land under Article 141 of the Constitution of India, implied that even in the absence of any special provision requiring stamp duty to be paid on orders sanctioning schemes under the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitions (Hero Motors Ltd v. The State of U.P.; CMWP No. 41811 of 2006) that an order sanctioning a scheme of arrangement of merger or demerger is both an instrument and a conveyance within the meaning of the applicable Stamp Act. The Madras High Court also read Hindustan Lever to have held that an order sanctioning a scheme under the Companies Act would be an instrument within the meaning of the definition relating thereto in the Stamp Act. The judgment, reported at (2010) 2 MLJ 553 [In re: Automac (Madras) Pvt. Ltd], found that it was premature at the time of sanctioning a scheme of arrangement to hold as to whether the order would be exigible to stamp duty, but observed that nothing in the order should be construed as exempting the concerned company from the liability to pay stamp duty, if applicable. The petitioners canvass two principal points in support of their contention that an order sanctioning a scheme under the Companies Act would be exempted from stamp duty in this State. They contend that in view of the clear pronouncement of a Division Bench of this court in Madhu Intra, that stamp duty would not be payable on orders sanctioning schemes under the Companies Act, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion".- "Instrument of partition" means any instrument whereby co-owners of any property divide or agree to divide such property in severalty, and includes- (i) a final order for effecting a partition passed by any revenue authority or any Civil Court; (ii) an award by an arbitrator directing a partition; and (iii) when any partition is effected without executing any such instrument, any instrument signed by the co-owners and recording, whether by way of declaration of such partition or otherwise, the terms of such partition amongst the co-owners." Since Section 2(14) of the Stamp Act applicable in the State of Maharashtra is the same as the definition of an instrument as relevant under the applicable law in this State, it is next necessary to discover as to what is liable to be charged with stamp duty under the statute. Section 3 of the Stamp Act, as amended in various States, is the charging provision in the statute. The operative words in such provision are "the following instruments shall be chargeable with duty " The word "instrument" in the Stamp Act is the genus of which, inter alia, conveyance, lease, mortgage-deed and the like as defined in Section 2 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as merely clarificatory and did not imply that consent decrees passed prior to the amendment coming into effect were not liable to be assessed for stamp duty. Again, Gemini Silk Ltd took sustenance from the opinion in Ruby Sales and Services (P) Ltd to hold that orders sanctioning schemes of merger and demerger in this State would be exigible to stamp duty notwithstanding the clarificatory provision in the Bombay Stamp Act being absent in the statute applicable in this State. In Hindustan Lever, the judgment in Ruby Sales and Services (P) Ltd has been referred to in support of the conclusion that an order sanctioning a scheme "is based upon the compromise between two or more companies (and) is an instrument which transfers the properties " Nothing in the Stamp Act applicable in this State is at variance with the corresponding provisions of the Bombay Stamp Act for the principle as recognised in Hindustan Lever to not be applicable in this State. In Madhu Intra the primary question which fell for consideration is stated at paragraph 49 of the report: "In our view, the moot question which falls for consideration in these appeals, is not whether an order under section 394 is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be regarded as movables. The State is justified in its assertion, in such context, that the Stamp Act applicable in Uttar Pradesh makes a distinction between movables and immovables and nothing in Article 23 under Schedule IA to the Stamp Act applicable in this State makes such distinction. The State is also correct in its submission that the court is not concerned today with the manner of assessment since that is a post-sanction exercise. The Allahabad High Court was called upon to look into the manner of assessment since the orders of assessment were challenged before the Division Bench. It is true that when a bundle of properties passes from one company to another under an order sanctioning a scheme of amalgamation or demerger, the assets (or the positive value) pass along with certain liabilities (the negative value). But that is no different from, say, an immovable property being conveyed in favour of the vendee along with the liabilities (outstanding municipal rates and taxes, for example). By virtue of Article 31 of Schedule IA to the Stamp Act applicable in this State, the stamp duty on the exchange of property would be the same as a conveyance in Article 23 thereof and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act applicable in this State. Indeed, Article 23 which is relevant for the present purpose, falls under Schedule IA to the Stamp Act as relevant in this State. There can be no manner of doubt that in Article 23 no longer forming a part of Schedule I to the Stamp Act as applicable in this State and being included in Schedule IA thereto, the benefit under the 1937 notification is no longer available as the State Legislature by an overt act has taken it outside the purview of Schedule I without the State Government having extended the remission under the 1937 notification. The judgment in Delhi Towers Ltd is of no assistance to the petitioners in the present context. In fact, the judgment recognised that the Central Government, the successor-in-interest of the Governor General-in-Council, has the legislative competence to legislate on the issue of stamp duty and there is no legislation by the State Government in Delhi in respect of orders sanctioning schemes of merger or demerger, whether or not they involve principal and holding companies. An order sanctioning a scheme of amalgamation or demerger under Section 394 of the Companies Act, therefore, answers to the description of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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