Bombay High Court
The Chief Controlling Revenue ... vs M/S. Reliance Industries Limited ... on 31 March, 2016
Bench: S.C. Dharmadhikari
1 CIVILREFERENCE 1.07
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
CIVIL REFERENCE NO.1 OF 2007
IN
WRIT PETITION NO.1293 OF 2007
IN
REFERENCE APPLICATION NO.8 OF 2005
1. The Chief Controlling Revenue )
Authority, Maharashtra State, Pune )
2. Superintendent of Stamp (Headquarters)
Mumbai. )..Applicants
V/s.
1. M/s.Reliance Industries Limited )
Mumbai )
2. M/s.Reliance Petroleum Limited )
Gujarat )..Respondents
----
Mr.A.A.Kumbhakoni, Sr.Advocate and Special Counsel with
Mr.A.B.Vagyani, Govt. Pleader with Mr.Shardul Singh.
Mr.V.N.Sagare AGP & Ms.Tintina Hazarika i/by Shri Sunil Y.Kale,
Law officer for the petitioner in Civil Reference No.1/2007 and for
respondents in WP No.5533 of 2008.
Dr.Milind Sathe, Senior Advocate with Ms.Melane D'souza i/by
Junnarkar and Associates for respondents in Civil Reference No.1 of
2007 and for petitioners in WP No.5533 of 2008.
----
CORAM :S.C.DHARMADHIKARI,J
K.R.SHRIRAM,J
B.P.COLABAWALLA,J
RESERVED ON : 5.2.2016
PRONOUNCED ON : 31.3.2016
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JUDGMENT :- ( Per : K.R.SHRIRAM,J)
1 The Reliance Industries Limited (respondent no.1) and
Reliance Petroleum Limited, Jamnagar Gujarat (respondent no.2)
entered into a scheme of amalgamation under Sections 391 & 394 of
the Companies Act 1956. The provisions of section 391 r/w 394 of
the Companies Act required obtaining of an order from the High
Court in whose jurisdiction these companies are registered,
sanctioning the Amalgamation Scheme filed by both, the transferor,
as also the transferee company. The purpose and the object as to
why both, the transferor and the transferee company had to obtain
order from the court sanctioning the Scheme of Amalgamation is
that, such a scheme of amalgamation must bind the dissenting
members, as also, all the creditors of both the companies. As per the
Scheme, from the appointed date, the assets/undertakings of the
transferor company, viz., respondent no.2 was to, without any further
Act, instrument or deed, stand transferred to and vested in or
deemed to have been transferred to and vested in the transferee
(respondent no.1) company, pursuant to the provisions of Sections
391 to 394 of the Companies Act so as to become the properties and
assets of the transferee company.
Accordingly, on 10th April 2002, the respondent no.1-
transferee company filed a Company Petition No.391 of 2002 and
Company Application No.133 of 2002 in this court for sanctioning the
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arrangement in the Scheme of Amalgamation. Similarly, respondent
no.2, the transferor company on 16 th April 2002, filed the Company
Petition No.75 of 2002 and Company Application No.76 of 2002 in
Gujarat High Court for sanctioning the arrangement in the Scheme of
Amalgamation.
This court passed an order under Section 394 of the
Companies Act 1956 on 7.6.2002 sanctioning the scheme and the
Gujarat High Court passed an order on 13.9.2002 sanctioning the
scheme.
2 On 16.10.2002, Respondent no.1 submitted the order
dated 7.6.2002 passed by this court along with the order dated
13.9.2002 passed by the Gujarat High Court for adjudication of
stamp duty in the office of Superintendent of Stamp, Mumbai (the
applicant no.2) now known as Superintendent of Stamp (Head
quarters) Mumbai. Respondent no.1 requested the applicant no.2 to
adjudicate the stamp duty, if any, payable on the order dated
7.6.2002 passed by the Bombay High Court. The respondent no.1
had paid stamp duty of Rs.10 crores in the State of Gujarat on the
order dated 13.9.2002 passed by the Gujarat High Court.
3 During the hearing of the adjudication proceedings, the
respondent no.1 had urged that the maximum stamp duty payable
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under Article 25 (da) of schedule-1 of Bombay Stamp Act 1958 for
order sanctioning the Scheme of Amalgamation in the State of
Maharashtra was Rs.25 crores and since respondent no.1 had
already paid stamp duty of Rs.10 crores in the State of Gujarat on
the order of sanction of scheme passed by the Gujarat High Court,
the respondent no.1 was entitled to remission/deduction/set off in the
payment of stamp duty thereon to the extent of Rs.10 crores and
therefore, the respondent no.1 was liable to pay only Rs.15 crores as
stamp duty. The applicant no.2 rejected the submissions of
respondent no.1 and direct respondent no.1 to pay the entire amount
of Rs.25 crores as stamp duty.
4 The respondent no.1 appealed against this order of
adjudication under Section 53(1A) of the Bombay Stamp Act 1958
before the Chief Controlling Revenue Authority, Maharashtra State
who while dismissing the appeal upheld the order of applicant no.2.
Against this order the respondent no.1 filed an application to the
applicant no.1 to refer the case to Bombay High Court for opinion
under Section 54 of the Bombay Stamp Act 1958 as it involved a
serious and a substantial question of law. This application was
rejected. Against this order, the respondent no.1 filed a Writ petition
being Writ Petition No.591 of 2006 before this Court. By an order
dated 22.2.2006 this court remitted the matter back to the applicant
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no.1 to decide the reference application afresh after hearing the
parties. The applicant no.1 once again rejected the reference
application against which the respondent no.1 filed a fresh writ
petition bearing No.1293 of 2007.
5 By an order dated 1.3.2007, this court directed the
respondent no.1 to deposit the balance amount of deficit stamp duty
of Rs.10 crores in the office of the applicant no.2 within two weeks
thereof and directed the applicant no.1 to make reference to this
court under Section 54(2) of the Bombay Stamp Act 1958 within 4
weeks from the date of deposit of the balance amount of deficit
stamp duty by respondent no.1.
6 The following questions therefore, have been referred to
this court under Section 54 of the Bombay Stamp Act 1958 :-
1. Whether a scheme sanctioned between the two
companies under Section 391 and 394 of the
Companies Act is one and same document chargeable
to stamp duty regardless of the fact that order
sanctioning the scheme may have been passed by two
different High Courts by virtue of the fact that the
Registered Offices of the two Companies are situated in
two different states ?
2. Whether the instrument in respect of amalgamation
or compromise or scheme between the two companies
is such a scheme, compromise or arrangement and the
orders sanctioning the same are incidental as the
computation of stamp duty and valuation is solely based
on the scheme and scheme alone ?
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3. Whether in a scheme, compromise or arrangement
sanctioned under Section 391 and 394 of the
Companies Act where registered office of the two
companies are situated in two different States, the
Company in state of Maharashtra is entitled for rebate
under Section 19 in respect of the stamp duty paid on
the said scheme in another State ?
4. Whether for the purpose of Section 19 of the Act the
scheme/compromise/arrangement between the two
Companies must be construed as document executed
outside the state on which the stamp duty is legally
levied, demanded and paid in another State ?
This being the background of the matter, let us proceed to
answer the four questions of law.
8 Under Entry 44 of List III of VII Schedule to the
Constitution of India, the power to levy stamp duty other than duties
or fees collected by means of judicial stamps, but not including rates
of stamp duty, on all documents is concurrent. Consequently,
charging provisions as to levy of stamp duty can be enacted by both,
the Parliament and the State Legislature, subject to Article 254 of the
Constitution of India. But the power to prescribe the rate of such levy
is excluded from this Entry 44. This power to prescribe the rate of
such levy is divided between the Parliament and the State
Legislature. The rates of stamp duty can be prescribed by the
Parliament under Entry 91 of List I and by the State Legislature
under Entry 63 of List II of the VII Schedule.
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Entry 91 of List I covers rates of stamp duty in respect of
Bills of Exchange, Cheques, Promissory Notes, Bills of Lading,
Letters of Credit, Policies of Insurance, Transfer of Shares,
Debentures, Proxies and Receipts. Whereas, Entry 63 of List II
covers rates of stamp duty in respect of documents other than those
specified in the provisions of List I with regard to rates of stamp duty.
This aspect has been considered by the Hon'ble Supreme Court in
the case of Bar Council Vs. State of U.P. 1 Paragraphs-11 & 12
read as under :-
"11. Now Entries 77 and 78 in List I in the Seventh
Schedule to the Constitution are as follows Constitution,
organisation, jurisdiction and powers of the Supreme Court
(including contempt of such Court), and the fees taken therein;
person entitled to practice before the Supreme Court.
78 Constitution and organisation (including vacations) of the
High Courts except provisions as to officers and servants of
High Courts; persons entitled to practice before High Courts".
Entry 91 relates to rates of stamp duty in respect of certain
instruments which do not cover an instrument or a document
with which we are concerned, namely, certificate of enrollment
is-sued under s. 22 of the Act. Entry 96 in the same list relates
to fees in respect of any of the matters in the List but not
including the fee 'taken in any court. Entry 63 in List II relates
to rates of stamp duty in respect of documents other than
those specified in List I i.e. Entry 91. In the same List Entry 66
relates to fees in respect of any of he matters in that List but
not including fee taken in any court. The following Entries in
List III may be reproduced :
"26. Legal, medical and other professions". "44. Stamp duties
other than duties or fees collected by means of judicial stamp,
but not including rates of stamp duty".
There is no dispute that the Act was enacted under Entries 77
and 78 in List 1. It is equally clear that the words "persons
entitled to practice" would include determining or prescribing
the qualifications and conditions that a person should possess
and satisfy before becoming entitled to practice as an
advocate before, the Supreme Court or the High Courts. So far
1 AIR 1973 SC 231
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as persons entitled to practice before these courts are
concerned "the power to legislative regard to them is carved
out from the general power relating to the provision in Entry 26
in List III and is made the exclusive field for Parliament". In
other words the power to legislate in regard to persons entitled
to practice before the Supreme Court and the High Courts is
altogether excluded from Entry 26 in List II. (See 6. N.
Mohindroo v.- The Bar Council of Delhi & Others(1). From the
entries the following scheme with regard to persons entitled to
practice will appear to emerge; (1) The Parliament has the
exclusive power under Entry 77 and Entry 78 in List I to
prescribe, inter alia, the qualifications and conditions on the
fulfillment of which persons would be entitled to practice before
the Supreme Court or the High Courts. Any fee which may be
payable by such persons before they can claim to be entitled
to practice would fall under Entry 96 of that List; (2) Entry 44 of
List III enables legislation with regard to its levy but the rates of
the stamp duty can be prescribed by the Parliament only with
regard to instruments falling within Entry 96 of List I and by the
State Legislature under Entry 63 of List II.
12. The main question on which the controversy has
centered is whether the levy of stamp duty on the certificate of
enrollment of an advocate is a purely taxation measure or
whether it is a part of the conditions prescribed by s. 24 of the
Act which an advocate must satisfy before he becomes entitled
to practice If the requirement of the payment of such a duty is
a condition precedent to the conferment on a person of the
privilege of audience and representing suitors before the
Supreme Court and the High Courts any legislation relating to
it would be within the competence of the Parliament. If,
however,, it is purely a taxation measure then it would fall
within Entry 44 of the Concurrent List in which event both the
Parliament and the State Legislature would be competent to
enact legislation for the levy of the duty although it is only
under Entry 63 of List II that rates can be prescribed by the
State Legislature. In other words, the charging provisions can
be enacted by both the Parliament and the State Legislatures
subject to the provisions of Art. 254 of the Constitution. It is
well settled that the scheme of the Entries in the various Lists
is that taxation is not intended to be comprised in the main
subject in which "it might on an extended construction be
regarded as included but is treated as a distinct matter for the
purpose of legislative competence". Even under the residually
power a. legislation conferred by Art. 248 the Parliament can
only impose that tax which is not mentioned in either List III or
List II.
Thus, it is the State Legislature, which has legislative power to
impose stamp duty, as also, prescribe the rates of stamp duty
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inasmuch as the instrument that deals with `Amalgamation of
Companies'.
9 The questions referred to this court as mentioned above
are required to be adjudicated in the context of the provisions of the
Bombay Stamp Act 1958. The provisions of Bombay Stamp Act,
1958 which we need to consider for the purpose of adjudication of
this matter are reproduced below :-
Section 2(d) :
"Chargeable" means, as applied to an
instrument, executed or first executed after the commencement
of this Act, chargeable under this Act, and as applied to any
other instruments, chargeable under the law in force in the
State when such instrument was executed or, where several
persons executed the instrument at different times, first
executed.
"Section 2(g) : "Conveyance" includes -
(i) a conveyance on sale,
(ii) every instrument,
(iii) every decree or final order of any Civil Court,
(iv) every order made by the High Court under Section 394 of
the Companies Act, 1956 (in respect of amalgamation or
reconstruction of companies, and every order made by the
Reserve Bank of India under Section 44A of the Banking
Regulation Act, 1949 in respect of amalgamation or
reconstruction of Banking Companies);
By which property, whether movable or immovable, or any
estate or interest in any property is transferred to, or vested in,
any other person, inter vivos, and which is not otherwise
specifically provided for by Schedule I,"
NOTE : sub section 2(g)(iv) was introduced by Maharashtra Act
17 of 1993 with effect from 1.4.1003
Section 2(i) : "executed" and "execution" used with reference to
instruments mean "signed" and "signature",
[Explanation "- The terms "signed" and "signature" also include
attribution of electronic record as per section 11 of the
Information Technology Act, 2000]
Section 2(l) : "instrument" includes every document by which
any right or liability is, or purports to be created, transferred,
limited, extended, extinguished or recorded, but does not
include a bill of exchange, cheque, promissory note, bill of
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lading, letter of credit, policy of insurance, transfer of share,
debenture proxy and receipt.
Section 2(t) : "settlement" means any non-testamentary
disposition in writing of movable or immovable property made, -
(i) in consideration of marriage ,
(ii) for the purpose of distributing property of the settler among
his family or those for whom he desires to provide, or for the
purpose of providing for some person dependent on him, or
(iii) for any religious or charitable purpose and
Includes an agreement in writing to make such a disposition
and where any such disposition has not been made in writing
any instrument recording whether by way of declaration of trust
or otherwise, the terms of any such disposition.
Section 3 : Instrument chargeable with duty
"subject to the provisions of this Act and the exemptions
contained in Schedule I, the following instruments shall be
chargeable with duty of the amount indicated in Schedule I as
the proper duty therefore respectively, that is to say -
(a) every instrument mentioned in Schedule I, which not having
been previously executed by any person, is executed in the
State on or after the date of commencement of this Act ;
(b) every instrument mentioned in Schedule I, which not having
been previously executed by any person, is executed out of the
State on or after the said date, relates to any property situate,
or to any matter or thing done or to be done in this State and is
received in this State :
[Provided that a copy or extract, whether certified to be a true
copy or not and whether a facsimile image or otherwise of the
original instrument on which stamp duty is chargeable under
the provisions of this section, shall be chargeable with full
stamp duty indicated in the Schedule I if the proper duty
payable on such original instrument is not paid ]
[Provided further that] no duty shall be chargeable in respect of
-
(1) any instrument executed by or on behalf of, or in favour of,
the Government in cases, where, but for this exemption, the
Government would be liable to pay the duty chargeable in
respect of such instrument [or where the Government has
undertaken to bear the expenses towards the payment of the
duty ];
(2) any instrument for the sale, transfer or other disposition,
either absolutely or by way of mortgage or otherwise, of any
ship or vessel, or any part, interest, share or property of or in
any ship or vessel registered under the Bombay Coasting
Vessels Act, 1838, or [Merchant Shipping Act, 1958].
Section 4 : Several Instruments used in single transaction of
(development agreement) sale, mortgage or settlement
(1) Where, in the case of any development agreement, sale,
mortgage or settlement, several instruments are employed for
completing the transaction, the principal instrument only shall
be chargeable with the duty prescribed in Schedule-I for the
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conveyance, (development agreement) mortgage or settlement,
and each of the other instruments shall be chargeable with a
duty of (one hundred rupees) instead of the duty (if any)
prescribed for it in that Schedule.
(2) The parties may determine for themselves which of the
instruments so employed shall, for the purpose of sub-section
(1) be deemed to be the principal instrument.
(3) If the parties fail to determine the principal instrument
between themselves, then the officer before whom the
instrument is produced may, for the purposes of this section,
determine the principal instrument.
Provided that the duty chargeable on the instrument so
determined shall be the highest duty which would be
chargeable in respect of any of the said instruments employed.
Section 17 : Instruments executed in the State -
All instruments chargeable with duty and executed by any
person in this State shall be stamped before or at the time of
execution [or immediately thereafter ] [ or on the next working
day following the day of execution ] :
[Provided that, the clearance list described in Articles 19, 20,
21, 22 or 23 of Schedule I may be stamped by an officer
authorised by the State Government by rules made under this
Act, if such clearance list is submitted for stamping by the
clearing house of an Association in accordance with its rules
and bye-laws with the requisite amount of stamp duty, within
two months from the date of its execution.]
Section 19 : Payment of duty on certain instruments [or copies
thereof] liable to increased duty in [Maharashtra State]
Where any instrument of the nature described in
any article in Schedule-I and relating to any property situate or
to any matter or thing done or to be done in this State is
executed out of the State and subsequently [such instrument or
a copy of the instrument is ] received in the State -
(a) the amount of duty chargeable on such instrument [or a
copy of the instrument] shall be the amount of duty chargeable
under Schedule-I on a document of the like description
executed in this State less the amount of duty, if any, already
paid under any law in force in India excluding the State of
Jammu and Kashmir on such instrument when it was executed ;
(b) and in addition to the stamps, if any, already affixed thereto
such instrument [or a copy of the instrument] shall be stamped
with the stamps necessary for the payment of the duty
chargeable on it under clause (a) of this section, in the same
manner and at the same time and by the same persons as
though such instrument [or a copy of the instrument] were an
instrument received in this State for the first time at the time
when it became chargeable with the higher duty ; and
(c) the provisions contained in clause (b) of the proviso to sub-
section (3) of section 32 shall apply to such instrument [or a
copy of such instrument] as if such were an instrument
executed or first executed out of this State and first received in
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this State when it became chargeable to the higher duty
aforesaid, but the provisions contained in clause (a) of the said
proviso shall not apply thereto.
Article 25 : CONVEYANCE (not being a transfer charged or
exempted under Article 59)
On the [true market value] of the property which is
the subject matter of the Conveyance-
[(da) if relating to the order of high court in respect of the
amalgamation or reconstruction of companies under section
394 of the Companies Act, 1956 or under of the Reserve Bank
of India under Section 44A of the Banking Regulation Act, 1949.
The provisions of the Companies Act, 1956,
necessary to consider for this matter are reproduced below :
COMPANIES ACT, 1956 :
Section 390. In sections 391 and 393-
(a) the expression "company" means any company liable to be
wound up under this Act ;
(b) the expression "arrangement" includes a reorganization of
the share capital of the company by the consolidated of shares
of different classes, or by the division of shares into shares of
different classes or, by both those methods ; and
(c) unsecured creditors who may have filed suits or obtained
decrees shall be deemed to be of the same class as other
unsecured creditors.
Section 391 (1) Where a compromise or arrangement is
proposed -
(a) between a company and its creditors or any class of them ;
or
(b) between a company and its members or any class of them ;
the court may, on the application of the company or of any
creditor or member of the company, or, in the case of a
company which is being wound up, of the liquidator, order a
meeting of the creditors or class of creditors, or of the members
or class of members, as the case may be, to be called, held and
conducted in such manner as the court directs.
(2) If a majority in number representing three-fourth in value of
the creditors, or class of creditors, or members, or class of
members, as the case may be present and voting either in
person or where proxies are allowed [under the rules made
under section 643], by proxy, at the meeting, agree to any
compromise or arrangement, the compromise or arrangement
shall, if sanctioned by the court, be binding on all the creditors,
all the creditors of the class, all the members, or all the
members of the class, as the case may be, and also on the
company, or in the case of a company which is being wound
up, on the liquidator and contributories of the company ;
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[Provided that no order sanctioning any compromise or
arrangement shall be made by the court unless the court is
satisfied that the company or any other person by whom an
application has been made under sub-section (1) has disclosed
to the court, by affidavit or otherwise, all material facts relating
to the company such as the latest financial position of the
company, the latest auditor's report on the accounts of the
company, the pendency of any investigation proceedings in
relation to the company under sections 235 to 251, and the like]
(3) An order made by the court under sub-section (2) shall
have no effect until a certified copy of the order has been filed
with the Registrar.
(4) A copy of every such order shall be annexed to every copy
of the memorandum of the company issued after the certified
copy of the order has been filed as aforesaid, or in the case of a
company not having a memorandum, to every copy so issued
of the instrument constituting or defining the constitution of the
company.
If default is made in complying with sub-section (4), the
company, and every officer of the company who is in default,
shall be punishable with fine which may extend to [one
hundred] rupees for each copy in respect of which default is
made.
The court may, at any time after an application has been made
to it under this section, stay the commencement or continuation
of any suit or proceeding against the company on such terms
as the court thinks fit, until the application is finally disposed of
Section 394. (1) Where an application is made to the court
under section 391 for the sanctioning of a compromise or
arrangement proposed between a company and any such
persons as are mentioned in that section, and it is shown to the
court-
(a) that the compromise or arrangement has been proposed
for the purposes of, or in connection with, a scheme for the
reconstruction of any company or companies, or the
amalgamation of any two or more companies, and
(b) that under the Scheme the whole or any part of the
undertaking, property or liabilities of any company concerned in
the scheme (in this section referred to as a "transferor
company") is to be transferred to another company (in this
section referred to as "the transferee company") ;
The court may, either by the order sanctioning the compromise
or arrangement or by a subsequent order, make provision for
allot any of the following matters :
(i) the transfer to the transferee company of the whole or any
part of the undertaking property or liabilities of any transferor
company ;
(ii) the allotment or appropriation by the transferee company of
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any shares, debentures, policies, or other like interests in that
company which, under the compromise or arrangement are to
be allotted or appropriated by that company to or for any
person ;
(iii) the continuation by or against the transferee company of
any legal proceedings pending by or against any transferor
company ;
(iv) the dissolution, without winding up, of any transferor
company ;
(v) the provision to be made for any persons who, within such
time and in such manner as the court directs, dissent from the
compromise or arrangement; and
(vi) such incidental, consequential and supplemental matters
as are necessary to secure that the reconstruction or
amalgamation shall be fully and effectively carried out :
[Provided that no compromise or arrangement proposed for
the purposes of or in connection with, a scheme for the
amalgamation of a company, which is being wound up, with
any other company or companies, shall be sanctioned by the
court unless the court has received a report from the Registrar
that the affairs of the company have not been conducted in a
manner prejudicial to the interests of its members or to public
interest.
Provided further that no order for dissolution of any transferor
company under clause (iv) shall be made by the court unless
the Official Liquidator has, on scrutiny of the books and papers
of the company, made a report to the court that the affairs of
the company have not been conducted in a manner prejudicial
to the interests of its members or to public interest.]
(2) Where an order under this section provides for the transfer
of any property or liabilities, then, by virtue of the order, that
property shall be transferred to and vest in, and those liabilities
shall be transferred to and become the liabilities of the
transferee company; and in the case of any property, if the
order so directs, freed from any charge which is, by virtue of the
compromise or arrangement, to cease to have effect.
(3) Within [thirty] days after the making of an order under this
section, every company in relation to which the order is made
shall cause a certified copy thereof to be filed with the Registrar
for registration.
If default is made in complying with this sub-section, the
company, and every officer of the company who is in default
shall be punishable with fine which may extend to [five
hundred] rupees.
(4) In this section -
(a) "property" includes property, rights and powers of every
description, and "liabilities" includes duties of every description ;
and "transferee company" does not include any company other
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than a company within the meaning of this Act; but "transferor
company" includes any body corporate, whether a company
within the meaning of this Act or not."
10 It was submitted on behalf of the respondents as under :-
(i) Under section 2(l), only a document which creates right or
obligations constitutes an "instrument".
(ii) Moreover an "instrument" could be chargeable to duty as a
"Conveyance" under sec.2(g), only if it is a document by which
property, whether movable or immovable, or any estate or interest in
any property is transferred to, or vested in, any other person.
(iii) In respect of a Scheme of Amalgamation such as the present,
the Scheme becomes effective/operative and the undertaking/
assets/property are transferred to the transferee company, only
when both the Application/Petition filed by the Transferor company
AND the Transferee Company have resulted in the Scheme being
sanctioned by the Courts.
(iv) In the case of Hindustan Lever Vs. State of Maharashtra
(reported in (2004) BCR 767), the Hon'ble Supreme Court has held
in the context of sec.2(g)(iv) that "Thus the amalgamation scheme
sanctioned by the court would be an instrument within the meaning
of section 2(i). By the said "instrument" the properties are transferred
from the transferor co. to the transferee company........." The Court
in that judgment also referred to the English judgment in Sun
Alliance Insurance's case : (1971) 1 All ER 135 and observed "It was
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further held that the order of the court was liable to stamp duty as it
resulted in transferring the property and that the order of the court
which results in transfer of the property would be an instrument as it
includes every document." In Litaka Pharma's case (Reported in
(1996) 4 BCR 100) this Hon'ble Court had also earlier held that "the
amalgamation Scheme sanctioned by the Court would be an
instrument within the meaning of sec 2(l)".
(v) Having regard to the legal requirement of both the transferor and
the transferee company having to secure sanction separately, as
also the provision of the Scheme itself, the Scheme as also the first
order of this Hon'ble Court sanctioning the Scheme on the
Transferee Company's Application, would not constitute an
instrument or a conveyance, unless and until the Gujarat High Court
had sanctioned the Scheme on the Transferor Company's
Application. This is because the Scheme would become effective &
operative and the property would stand transferred and vested from
the transferor to the transferee, only on the Gujarat High Court
making the second order sanctioning the Scheme. In fact if the
second High Court had not sanctioned the Scheme, the same would
not have become operative and there would be no transfer or
vesting of property in the transferee company. Accordingly on such
sanction being granted by the Gujarat High Court, the parties were
liable to pay stamp duty on the sanctioned scheme (read with the
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17 CIVILREFERENCE 1.07
two orders) in Gujarat and then to pay stamp duty in Maharashtra
subject to a rebate under sec.19 for duty already paid in Gujarat.
Therefore, it is the scheme that is the instrument and not the orders.
(vi) Alternatively if pursuant to sanction by the Gujarat High Court,
both court orders are treated as multiple instruments for giving effect
to the same transfer/transaction, the last order/the order passed in
the case of the transferor company would be the principal instrument
in relation to which stamp duty had to be computed. In any event in
such a circumstance sec.4(2) entitles the parties to determine for
themselves which of the instruments shall be deemed to be the
principal instrument. The parties were accordingly entitled in law to
treat the Gujarat High Court order as the Principal instrument and
offer to pay the highest duty thereon subject to rebate under sec.19
for duty already paid thereon in Gujarat.
(vii) In this context with question No.2 referred to above following
issue also may be answered :
"Whether in the case of amalgamation of two
companies where registered offices of transferor and
transferee company are situated in two different
states, the transaction of amalgamation is a single
transaction contained in several instruments and
transferee company is entitled to determine as to
which of those instruments be deemed to be the
principle instrument ?
(viii) In fact the Revenue had in previous Inter state amalgamation
levied stamp duty only on the order of the transferor company.
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18 CIVILREFERENCE 1.07
(ix) Moreover in Intra State amalgamations the revenue had always
levied stamp duty on only one of the orders as the principal
instrument.
11 In the reference application, it is alleged on behalf of the
applicants that all instruments as per the scheme of Bombay Stamp
Act 1958, covered under schedule-1 thereof are chargeable with
stamp duty. In the present case, instrument in question is the order
dated 7.6.2002 passed by this court and accordingly as provided
under Section 2g(iv), the order dated 7.6.2002 was liable to duty
under Article 25(da) of schedule-1 of the Bombay Stamp Act 1958.
The applicants also submitted that as per section 17 of the Bombay
Stamp Act every document chargeable with duty under the Act is
required to be charged with duty at the time of execution and
therefore, the order dated 7.6.2002 is required to be stamped with
duty as per the situation and circumstances on the day of its
execution as per the Stamp Act. It was also submitted that the stamp
duty payable was on the instrument and not on the underlying
transaction.
12 On the stand of the respondent no.1 that they are entitled
to a rebate on the stamp duty paid in Gujarat as mentioned in section
19, it is the case of the applicants that section 19 applies only when
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19 CIVILREFERENCE 1.07
an instrument chargeable under stamp duty in schedule-I and
relating to any property situate or to any in matter or thing done or to
be done in this State is executed out of the State and subsequently
such instrument or a copy of the instrument is received in this State.
As the instrument submitted for adjudication in this State is the order
dated 7.6.2002 and which has been executed in the State prior to
payment of stamp duty of Rs.10 crores in Gujarat, the question of
taking benefit of section 19 does not arise. It was also submitted that
section 19 provides for contingency in which instrument is executed
outside the State and then brought into the State. In this case as the
instrument is the order dated 7.6.2002 passed by this court within the
State of Maharashtra, the question of being brought into the State
did not arise. Hence, section 19 is not applicable at all.
13 The issue in short is whether the scheme of arrangement
between the parties which has been sanctioned by the court is the
instrument or the order of the court sanctioning the scheme is the
instrument as parties are ad-idem that stamp duty is payable on an
instrument. The respondents state the former is correct whereas the
applicants state the latter is correct.
14 The Hon'ble Supreme Court, in Hindustan Lever Vs.
State of Maharashtra2 in the context of Section 2(g)(iv) has held
2 (2004) 9 SCC 438
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20 CIVILREFERENCE 1.07
that the transfer is effected by an order of the Court and the order of
the Court sanctioning the scheme of amalgamation is an instrument
which transfers the properties and would fall within the definition of
Section 2(l) of the Bombay Stamp Act, which includes every
document by which any right or liability is transferred. By the said
instrument the properties are transferred from the transferor to the
transferee company. Paragraph 38 of the Judgment reads as
under :-
"As discussed above, the order passed under Section 394 is
founded on consent and this order is an instrument as defined
under Section 2 (1) of the Bombay Stamp Act. The State
Legislature would have the jurisdiction to levy stamp duty
under Entry 44 List III of the Seventh Schedule of the
Constitution and prescribes rate of stamp duty under Entry 63
List II. It does not in any way impinge upon any entry in List I.
Entry 44 of List III empowers the State Legislature to provide
for stamp duties other than duties or fees collected by means
of judicial stamps. Along with this, Entry 63 of List II
empowers the State Legislature to prescribe rates of stamp
duty in respect of documents other than those specified in the
provisions of List I, that is to say, rates of stamp duty in
respect of Bill of Exchange, cheques, promissory notes, Bill of
landing, letter of credit, policies of insurance, transfer of
shares, debentures, proxies and receipts. By sanctioning of
amalgamation scheme, the property including the liabilities
are transferred as provided in Section 394 of the Companies
Act and on that transfer instrument, stamp duty is levied. It,
therefore, cannot be said that the State Legislature has no
jurisdiction to levy such duty".
(emphasis supplied)
15 In Hindustan Lever (supra) the apex court also referred to
the English Court Judgment in Sun Alliance Insurance Ltd. Vs.
Inland Revenue Commissioners3 and observed " It was further
held that the order of the court was liable to stamp duty as it resulted
3 (1971) 1 ALLER 135
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21 CIVILREFERENCE 1.07
in transferring the property and that the order of the court which
results in transfer of the property would be an instrument as it
includes every document. Paragraphs-23, 24 & 25 of the Hindustan
Lever (supra) reads as under :-
"23. Point as to whether the stamp duty was leviable on the
Court order sanctioning the scheme of amalgamation was
considered at length in Sun Alliance Insurance Ltd. Vs. Inland
Revenue Commissioners 1971 (1) All England Law Reports
135. The point which arose for determination as to whether the
stamp duty was payable on the order of the Judge sanctioning
the scheme of arrangement under Section 206 of the
Companies Act, it was held:-
" It follows that it is the court order that effects the transfer; and
this is nonetheless so because the scheme is not operative
until an office copy has been delivered to the Registrar of
Companies for registration, for the court order itself ordered
that to be done and the Act so provides; nor because London
has still to cause the name of Sun Alliance to be entered on to
the register as the holder of the shares. The registration of the
transferee occurs in every case where a transfer is executed,
and merely perfects the title of the transferee. The same thing
occurs in the case of registered land, where one finds a
transfer and subsequent registration. I have therefore come to
the conclusion that by the court order the shares were
transferred to Sun Alliance, or, to use the words of s. 54, by
that order property was transferred to a purchaser."
24. Expression "conveyance on sale" as provided in Section 54
of the Stamp Act, 1891 is similar to Section 2 (g) of the
Bombay Stamp Act. The expression "conveyance on sale" as
defined in the said Section includes every instrument, and
every decree or order of any Court or any Commissioner,
whereby any property, or a estate or interest in any property,
upon the sale thereof was transferred or vested in the
purchaser, or any other persons on his behalf and on his
direction.
25. The Court further considered as to whether the order of the
judge is an 'instrument' executed in any part of the United
Kingdom for the purposes of Section 14(4) of the Stamp Act,
1891; it was held that it was an instrument executed in the
United Kingdom within the meaning of Section 14(4) of the
Stamp Act 1891. It was further held that order of the Court was
liable to stamp duty as it resulted in transferring the property
and that the order passed by any Court which results in
transfer of property would be an instrument as it includes every
document."
(emphasis supplied)
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22 CIVILREFERENCE 1.07
16 In Li Taka Pharmaceuticals Ltd. & Anr. Vs. State of
Maharashtra4 a division bench of this court had held that an order
under Section 394 is found or based upon compromise or
arrangement between the two companies of transferring assets and
liabilities of one company to another company. The order is an
"instrument" as defined under Section 2(l) of the Bombay Stamp Act
which includes every document by which any right or liability is
transferred.
17 Therefore, as the scheme of arrangement or
amalgamation has no effect or force unless or until it was sanctioned
by the court, it is the order sanctioning the scheme that would be an
instrument under Section 2(l). Hence, the order dated 7th June 2012
passed by this court will be the instrument as defined.
18 Section 3(a) of the Bombay Stamp Act, 1958 provides for
chargeability of the instruments covered under Schedule-I appended
to the said Act, when first executed in the State. As per section 2(i)
the words "executed" and "execution" means signed and signature.
In this context the Order of the Hon'ble High Court, Bombay was
executed on 07/06/2002. As per section 2(d) an instrument becomes
chargeable on execution or first execution after the commencement
of the Bombay Stamp Act, 1958. Section 17 of the Bombay Stamp
4 1996 (2) Mah. L.J. 156
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23 CIVILREFERENCE 1.07
Act, 1958 provides for stamping of the instruments executed in the
State. This section makes it clear that any instrument chargeable
with duty executed in the State is required to be stamped before or at
the time of execution or immediately thereafter or on the next
working day following the day of execution. Considering all the
provisions above, the transferee- respondent no.1 in any event was
bound to pay the necessary duty as it stood on the date of execution,
i.e., 07/06/2002, the date of passing of Order by this Court. Here it is
pertinent to note that the words "executed" and "execution" represent
signed and signature under the stamp Law. These words, however,
do not represent completion of an act, task, things or compliance of
any nature, to be done as per contents of the document. Therefore it
was obligatory on the part of the Respondent no.1-transferee to
approach stamp Authority and pay the stamp duty on execution of
Order by this Court. The Respondent no.1-transferee instead of
fulfilling the legal obligation cast on it, paid part of the stamp duty in
the State of Gujarat on the Order passed by Hon'ble High Court of
Gujarat which was passed couple of months after the order passed
by this Court. Had the Respondent no.1-transferee fulfilled its
obligations in Law, the settling of any question of Law would have
never arisen.
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24 CIVILREFERENCE 1.07
19 Section 3 of the said Act is a charging section and
provides for charging stamp duties. As quoted above, section 2 of
the said Act defines the terms "Conveyance" [2(g)], "Executed and
Execution" [2(i)], "Instrument" [2(l)] and "Settlement" [2(t)].
It is the settled position in law that in terms of the scheme
of the said Act, stamp duty is charged on 'the instrument' and not on
'the transaction' effected by 'the instrument'.
The Order dated 7.6.2002 as stated earlier would be the
instrument and that was executed in Mumbai, i.e., in Maharashtra.
As per section 3 every instrument executed in State of Maharashtra
is chargeable to duty. The Order dated 7.6.2002 whereby assets of
Respondent no.2 transferor company are transferred to the
Respondent no.1-Transferee company, is the instrument upon
conjoint reading of section 2(g), (l) and 3 of the Bombay Stamp Act.
As per the Scheme of the said Act, instrument is chargeable to duty
and not the transaction and therefore even if the Scheme may be the
same, i.e., transaction being the same, if the scheme is given effect
by a document signed in State of Maharashtra it is chargeable to
duty as per rates provided in Schedule I. As per the Scheme of the
Act, the taxable event is the execution of the instrument and not the
transactions. If a transaction is not supported by execution of an
instrument, there can not be a liability to pay duty. Therefore,
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25 CIVILREFERENCE 1.07
essentially the duty is leviable on the instrument and not the
transactions. Although the Scheme may be same, the Order dated
7.6.2002 being conveyance and it being an instrument signed in
State of Maharashtra, the same is chargeable to duty so far as State
of Maharashtra is concerned.
21 Although the two orders of two different high courts are
pertaining to same scheme they are independently different
instruments and can not be said to be same document especially
when the two orders of different high courts are upon two different
petitions by two different companies. When the scheme of the said
Act is based on chargeability on instrument and not on transactions,
it is immaterial whether it is pertaining to one and the same
transaction. The duty is attracted on the instrument and not on
transaction.
22 As regards the amalgamation of Companies is concerned,
section 391 r/w. Section 394 of The Companies Act, 1956,
contemplates following steps :-
(i) Formation of a Scheme mutually agreed by the Transferor and
the Transferee company ;
(ii) Holding of meeting for approval of the Scheme ;
(iii) The Order of the Court sanctioning the Scheme ;
(iv) Filing of a Certified copy of the Order sanctioning the Scheme
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26 CIVILREFERENCE 1.07
with the Registrar of Companies for registration ;
The transfer of any property or any interest in any
property on account of such amalgamation, takes place pursuant to
the Order passed by the Court sanctioning the Scheme of
amalgamation. This aspect is clear in view of sub-section 2 of
section 394 of the Companies Act, which specifically states that, by
virtue of an Order issued under Section 394(1), the property of the
Transferor Company gets transferred to and vests in the Transferee
company. Thus, the instrument, which effects transfer, is the Order
of the Court issued under Section 394(1) that sanctions the Scheme
and not the Scheme of amalgamation itself. The incident of transfer
is the second stage referred to in the aforesaid paragraph and not
the first stage, as such.
23 Therefore, the contentions of the respondents that the
Scheme of Amalgamation would be an instrument within the
meaning of Section 2(l) of the said Act, is not legally sustainable.
The Scheme of Amalgamation by itself cannot and does not result in
transferring the property. It is the Order of the Court that sanctions
such a Scheme of Amalgamation results in transferring the property
and it is therefore, this Order alone would be an 'instrument', as
defined by the said Act, on which stamp duty is chargeable.
Therefore, the contentions of the respondents that the parties were
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27 CIVILREFERENCE 1.07
liable to pay stamp duty on the sanctioned Scheme (read with the
two Orders) is not correct and cannot be accepted.
24 The provisions of Section 391 r/w. Section 394 of the
Companies Act require obtaining of an Order sanctioning the
Amalgamation Scheme by both the Transferor, as also, the
Transferee Company. The purpose and the object as to why both,
the Transferor and the Transferee company, have to obtain the
Order from the Court sanctioning the Scheme of Amalgamation, is
that, such a Scheme of Amalgamation must bind the dissenting
members, as also, all the creditors of both the Companies and not
just for the purpose of effecting transfer of property, assets etc.
Apart from the aforesaid legal aspect of the matter, as a matter of
fact, in as much as the present case is concerned, the chronology of
events separately submitted by the applicants when considered
demonstrates that the first Order sanctioning the Scheme, was
issued by this Court on 7 th June 2002 and the order states as
under :-
"AND THIS COURT DOTH ORDER that with effect from the
Appointed Date, the Assets/Undertakings of the Transferor
Company (as defined in the Scheme of Amalgamation being
Exhibit "E" to the petition and in the Schedule hereto) shall
without any further act, instrument or deed stand transferred to
and vested in or deemed to have been transferred to and
vested in the petitioner company pursuant to the provisions of
Section 391 to 394 of the Companies Act, 1956 so as to
become the properties and assets of the petitioner company."
(emphasis supplied)
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28 CIVILREFERENCE 1.07
Therefore, the order of this court sanctioning the Scheme was not a
conditional order, which was to operate after the scheme was also
sanctioned by the Hon'ble Gujarat High Court. By this Order dated
7.6.2002 of this Court itself, it could be considered that the transfer
was effected and therefore the said Order of this Court is the 'order
made by the High Court under Section 394 of the Companies Act
1956.............." as contemplated by Section 2(g) (iv) of the said Act.
For the same reason the order dated 7.6.2002 of this Court is the
'instrument', as contemplated by the provisions of the said Act.
However, it may also be mentioned that this court in its
order dated 7th June, 2002 has further ordered as under :-
"AND THIS COURT DOTH FURTHER ORDER that the petitioner
company do within 30 days of the sealing of this order, cause a
certified copy of this order to be delivered to the Registrar of
Companies, Maharashtra, Mumbai for registration And upon such
certified copy of order being so delivered to the Registrar of
Companies, Maharashtra, Mumbai And upon receipt of the oder
sanctioning the Scheme of Amalgamation by the High Court of
Gujarat at Ahmedabad and upon receipt of the files and documents
in respect of Transferor Company from the Registrar of
Companies, Gujarat, the Registrar of Companies, Maharashtra,
Mumbai shall place and register with him on the files and
documents kept by him in relation to the petitioner company and
shall consolidate the files of the Transferor Company and the
petitioner company accordingly."
That part of the order of this court clearly directs the
Transferee Company to deliver to the Registrar of Companies,
Maharashtra, Mumbai for registration, the certified copy of the order
of this court within 30 days of the sealing of the order, without waiting
for the Hon'ble Gujarat High Court to pass appropriate order in
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29 CIVILREFERENCE 1.07
regard to sanctioning the Scheme. Thus, the implementation of the
order of this court was not made dependent upon passing of an
appropriate order sanctioning the Scheme by the Hon'ble Gujarat
High Court. This is the step contemplated by the provisions of sub-
section 3 of section 394 of the Companies Act.
25 The aforesaid part of the order of this court will have to be
considered from the point of view of 'effective date' read with clauses
23,24 and 27, as contemplated by the Scheme of Amalgamation.
Thus, the transfer in issue though has taken place in terms of the
provisions of the Companies Act only and only on account of the
order of this court, such a transfer will take effect from the date the
Hon'ble Gujarat High Court passes an order sanctioning the
Scheme. In other words, after the Hon'ble Gujarat High Court passes
an order sanctioning the Scheme on account of the order of this
Hon'ble Court, the transfer in issue will take place.
26 It is further pertinent to note that the respondent no.2 -
Transferor Company, vide it's application dated 18th September,
2002, produced before the appropriate Authority contemplated by the
Bombay Stamp Act, 1958 (as applicable in the State of Gujarat), only
the order dated 13th September, 2002 of the Hon'ble Gujarat High
Court, as is clear from Exhibit '4' to the affidavit filed on behalf of the
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30 CIVILREFERENCE 1.07
1st respondent. The Collector and Additional Superintendent of
Stamps, Gujarat State, Gandhinagar, only on the order passed by
the Hon'ble Gujarat High Court has imposed a stamp duty of
Rs.10 crores. Admittedly, the respondents have not paid any stamp
duty on the order of this Hon'ble court, which is the subject matter of
this reference. The order of this court dated 7 th June, 2002 was
presented for payment of stamp duty for the first time only on
16th October, 2002 by the respondent no.1 - Transferee Company
along with application produced at Exhibit '6' to the affidavit filed on
behalf of the Transferee-1st respondent and not by the
2nd respondent-Transferor company.
27 The respondent no.2 - Transferor Company has not paid
any stamp duty on the order passed by this court either in the State
of Gujarat or in the State of Maharashtra at the time when the
aforesaid application dated 16th October, 2002 was submitted with
the Superintendent of Stamps, Mumbai. Therefore, the respondent
no.1 - Transferee Company was liable to pay full stamp duty on the
order dated 7th June, 2002 passed by this Court in the State of
Maharashtra inasmuch as on this order, no stamp duty was ever
paid by anybody either in the State of Gujarat or in the State of
Maharashtra.
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31 CIVILREFERENCE 1.07
28 The contention of the respondents that the provisions of
Section 4 of the said Act enables the respondents to treat the order
of the Hon'ble Gujarat High Court as "principal instrument" and act
accordingly is wholly unsustainable in law and in view of the facts of
the case.
29 Section 4 of the said Act has no application whatsoever in
as much as the present controversy is concerned. Section 4 of the
said Act applies only to the transactions set out therein viz.
Development Agreement, Sale, Mortgage or Settlement. It is obvious
that the instrument in issue does not fall in the first three categories
viz. Development Agreement, Sale or Mortgage. This also answers
that issue raised by the respondents as mentioned in paragraph-
10(vii) above.
30 As regards the fourth category viz. 'settlement' is
concerned, the instrument in issue does not even fall in this
category. The term 'settlement' is defined by Section 2(t) of the said
Act as under :-
Section 2(t) : "settlement" means any non-testamentary
disposition in writing of movable or immovable property
made, -
(i) in consideration of marriage ,
(ii) for the purpose of distributing property of the settler
among his family or those for whom he desires to provide,
or for the purpose of providing for some person dependent
on him, or
(iii) for any religious or charitable purpose and
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32 CIVILREFERENCE 1.07
Includes an agreement in writing to make such a disposition
and where any such disposition has not been made in
writing any instrument recording whether by way of
declaration of trust or otherwise, the terms of any such
disposition.
This definition demonstrates that 'settlement' contemplated by the
provisions of the said Act is not and cannot cover "the Scheme of
Amalgamation" whereby two Companies are amalgamated in terms
of Section 391 r/w. Section 394 of the Companies Act. Section 4 of
the said Act has no application at all to the facts of this case.
31 Apart from the aforesaid aspect, as set out in detail in the
aforesaid paragraphs, we have to go only by the instrument on which
stamp duty is payable and that instrument is the order passed by
this Court dated 7th June, 2002. Thus, in absence of 'several
instruments' used in 'single transaction', as such, the provisions of
Section 4 of the said Act is not applicable.
32 Further Section 19 is not applicable in the present case.
Section 19 is applicable in respect of -
(i) instrument executed out side State;
(ii) of property in the State or thing done or to be done
in State; and
(iii) subsequently received in the State of Maharashtra.
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33 CIVILREFERENCE 1.07
The instrument in question is the order dated 7.6.2002
executed by High Court of Bombay. The order is already in Mumbai
and executed in Mumbai. It is not executed out side Maharashtra.
The order dated 7.6.2002 is not received in Maharashtra
since it originated in Maharashtra.
Therefore, the ingredients of Section 19 are not complied.
Respondent no.2-transferee while paying duty on the order dated
7.6.2002 of the Bombay High Court can not claim rebate for duty
paid on order dated 13.9.2002 in State of Gujarat by invoking
Section 19 of the Act.
33 The provisions of Section 17 of the said Act also need to
be considered in its proper perspective. This Section specifically
contemplates that all instruments chargeable with duty, are required
to be stamped either before or at the time of execution or atleast
immediately thereafter on the next working day following the day of
execution. In the present case, this Court passed the order, which is
the instrument in issue on 7th June, 2002. The respondents were
required to pay the stamp duty in that regard atleast immediately on
the next working day following 7th June, 2002. The Hon'ble Gujarat
High Court passed the order only on 13th September, 2002. The
respondents were therefore, required to pay the requisite stamp duty
much before passing of the Order by the Hon'ble Gujarat High Court
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34 CIVILREFERENCE 1.07
on 13th September, 2002. Had the respondents acted strictly in
accordance with the said Act, the respondents would have paid the
entire stamp duty of Rs.25 crores much before passing of the order
by the Hon'ble Gujarat High Court. The respondents therefore, are
liable to suffer other consequences in this regard in addition to the
payment of full stamp duty on the order dated 7th June 2002 of this
Court.
The contention of the respondents that under Section 2(l)
of the said Act, only a document, which 'creates right or obligation'
alone constitutes an 'instrument', is not correct, as is apparent from
the definition clause itself. It is pertinent to note that, in first place, the
definition of the term 'instrument' is an inclusive definition and is not
an exhaustive definition, as such. Moreover, the term 'instrument', as
defined, will also include, in addition to a document which 'creates
right or obligation', a document, which 'purports to create, transfer,
limit, extend, extinguish or record' any right or liability. It is
emphasized that the term 'instrument' so defined, will also include a
document, which merely records any right or liability.
35 In view of the above, we answer the questions raised by
the present reference as under :-
(i) Whether a scheme sanctioned between the two
companies under Section 391 and 394 of the Companies Act
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35 CIVILREFERENCE 1.07
is one and the same document chargeable to stamp duty
regardless of the fact that order sanctioning the scheme may
have been passed by two different High Courts by virtue of
the fact that the Registered Office of the two companies are
situated in different States?
Ans. A scheme settled by two companies is not a document
chargeable to stamp duty. An order passed by the Court
sanctioning such a Scheme under Section 394 of the said
Act, which effects transfer is a document chargeable to
stamp duty. In case if the Registered Offices of the two
Companies are situated in two different States, requiring
such Orders, sanctioning the Scheme to be passed under
Section 394 of the Companies Act by two different High
Courts, then in that event, the order of this High Court which
sanctions the Scheme passed under Section 394 of the
Companies Act will be the instrument chargeable to stamp
duty.
(ii) Whether the instrument in respect of amalgamation or
compromise or scheme between the two Companies is such
a scheme, compromise or arrangement and the orders
sanctioning the same are incidental as the computation of
stamp duty and valuation is solely based on the scheme and
scheme alone?
Ans. The orders of the court, sanctioning a Scheme of
amalgamation are not just incidental orders even in
accordance with the Scheme of the Companies Act laid
down by Section 391 r/w, Section 394. Only after the orders
are passed by the Court, sanctioning the Scheme of
Amalgamation, such a scheme becomes operational and
effective. Computation of stamp duty and valuation does not
make Scheme of Amalgamation alone chargeable to stamp
duty. The order is the instrument.
(iii) Whether in a scheme, compromise or arrangement
sanctioned under Sections 391 and 394 of the Companies
Act where Registered Offices of the two Companies are
situated in two different States, the Company in State of
Maharashtra is entitled for rebate under Section 19 in
respect of the stamp duty paid on the said scheme in
another State?
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36 CIVILREFERENCE 1.07
Ans. The answer to this question will be in the negative for
the reasons set out in detail herein above.
(iv) Whether for the purposes of Section 19 of the Act, the
scheme/compromise/arrangement between the two
Companies must be construed as document executed
outside the state on which the stamp duty is legally levied,
demanded and paid in another State?
Ans. Basically, a scheme/compromise/arrangement between
the two companies is never a document chargeable to stamp
duty, whether such a document is executed in the State or
outside the State of Maharashtra. Moreover, in view of our
conclusions above, Section 19 of the Act in any event, has
no application whatsoever.
36 Civil Reference disposed accordingly.
37 No order as to costs.
(SC.DHARMADHIKARI,J)
(K.R.SHRIRAM,J)
(B.P.COLABAWALLA,J)
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