[Cites 18, Cited by 0]
Bombay High Court
Schaeffler India Ltd vs Chief Controlling Revenue Authority ... on 20 January, 2026
2026:BHC-AS:2695-DB
WP-7496-2023 (1).doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 7496 OF 2023
Schaeffler India Limited ...Petitioner
vs.
Chief Controlling Revenue Authority and Ors. ...Respondents
Mr. Nikhil Sakhardande a/w Mr. Dhaval Shethia, Ms. Nafisa
Khandeparkar, Ms. Mrudula Dixit i/b AZB and Partners, for the
Petitioner.
Mr. O. A. Chandurkar, a/w Ms. Tanu Bhatia, AGP for the Respondent Nos.
1, 2 and 5.
CORAM : SHARMILA U. DESHMUKH. J.
RESERVED ON : JANUARY 07, 2026
PRONOUNCED ON : JANUARY 20, 2026
--------------
JUDGMENT:
1. Rule. With consent, Rule made returnable forthwith and taken up
for final disposal.
2. The present petition impugns the order dated 12.09.2022 and
25.03.2019 passed by the Respondent Nos. 1 and 2 assessing the stamp
duty of Rs. 50,00,000/-. The instrument lodged for adjudication was the
order of National Company Law Tribunal, Mumbai Bench (for short
"NCLT") dated 8th October, 2018 sanctioning a composite scheme of
amalgamation of INA Bearing India Private Limited (for short "INA
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Bearing") and LuK India Private Limited (for short "LuK India") with the
Petitioner Company under the provisions of Section 230 to 232 of the
Companies Act, 2013.
3. Under the scheme of amalgamation, the entire business of LuK
India and INA Bearings was to be transferred to the Petitioner as a
'going concern", in consideration whereof the Petitioner was to issue
equity shares to the shareholders of INA Bearings and LuK India priced
at INR 5,853 per share. As LuK India was based in Hosur, Tamil Nadu, it
filed a Company Petition before NCLT, Chennai Bench seeking sanction
of the scheme, which was sanctioned by NCLT, Chennai Bench vide order
dated 13th June, 2018. The Petitioner and INA Bearings being located in
Maharashtra filed similar Company Petition before NCLT, Mumbai
Bench, which sanctioned the scheme vide order dated 8 th October, 2018.
The order of 8th October, 2018 of the NCLT, Mumbai bench directed
lodging of the certified copy of the order alongwith the copy of the
Scheme for adjudication.
4. In pursuance thereof, the Petitioner lodged the order dated 8 th
October, 2018 for adjudication on 27.11.2018 accompanied by an
affidavit of the Company Secretary of the Petitioner setting out the
necessary details in respect of the scheme sanctioned by National
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Company Law Tribunal including the shares allotted and the share price
along with all supporting documents. An interim order was passed on
19.01.2019 for payment of stamp duty of Rs. 50,00,000/- and the final
order was issued on 25.03.2019 holding that the scheme consisting of
two different transactions and stamp duty was to be paid separately.
The order relied upon the stamp duty notification dated 6 th May,
2002,which capped the maximum duty payable at Rs. 25,00,00,000/- and
accordingly, the stamp duty was adjudicated at Rs. 50,00,00,000/
considering the instrument to comprise of two different transactions.
Being aggrieved by the order, the Petitioner filed an appeal before the
Respondent No. 1 under Section 53 (1A) of the Maharashtra Stamp Act,
1958 (for short "Stamp Act, 1958") and by the impugned order dated
25.03.2022 confirmed the Respondent No. 2 order dated 25.03.2019.
Hence, the present petition.
5. Mr. Sakhardande, learned senior advocate appearing for the
Petitioner would submit that the imposition of stamp duty of Rs.
50,00,00,000/- is contrary to Article 25 (da) of Schedule I of the Stamp
Act, 1958 as the 2002 notification capped the maximum duty
chargeable under the said Article at Rs. 25,00,00,000/-. He would
submit that under Section 3 of the Stamp Act, 1958, stamp duty is
payable on the instrument and not on the underlying transaction. He
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submits that the instrument in the present case is the order of NCLT,
Mumbai Bench and not the scheme of amalgamation. He submits that
the authorities have erroneously applied Section 5 of the Stamp Act,
1958, which speaks of an instrument which comprises of several distinct
matters or transaction. He submits that the order of NCLT, Mumbai
Bench sanctioned one composite scheme of amalgamation which order
is chargeable with stamp duty. He would submit that the scheme of the
Stamp Act is based on chargeability on instrument and not on
transactions, is drawing support from the decision of this Court in Chief
Controlling Revenue Authority, Pune And Anr. vs Reliance Industries
Limited, Mumbai And Anr1. He submits that in identical facts, the
Gujarat High Court in the case of Ambuja Cement Limited vs Chief
Controlling Revenue Authority2 has considered the issue as to whether
the order of the High Court sanctioning a single composite scheme of
arrangement is not a single indivisible instrument that is not comprising
or relating to several distinct matters as contemplated by Section 5 of
the Stamp Act, 1958 considering that the instrument would be the order
of the High Court and not the scheme sanctioned by the order. He
points out that the Gujarat High Court has held that treating the
transaction as distinct transaction and demanding separate stamp duty
is in conflict with true import and meaning of Section 5 of Stamp Act,
1 2016 SCC Online Bom 1428
2 C/SR/1/2020 decided on 10/02/2023 by Gujarat High Court
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1958.
6. Learned AGP has taken this Court through the provisions of
Section 5 of the Stamp Act, 1958 to contend that in the present case,
there are two different entities which are merging into one entity which
is evident from the order of NCLT, Mumbai. He submits that NCLT,
Chennai sanctioned the scheme of amalgamation on 13.06.2018 and the
second scheme was sanctioned by NCLT, Mumbai which was subject
matter of adjudication. He submits that in the present case, the order of
NCLT, Mumbai relies upon order of NCLT Chennai and the consideration
of the Scheme is also for acquiring the assets of LuK which is a second
transferor Company.
7. Mr. Sakhardande, in rejoinder would submit, on instructions, that
the NCLT, Chennai order was lodged for adjudication in Chennai and
the stamp duty has been accordingly paid in Chennai.
REASONS AND CONCLUSION :-
8. The core issue which arises for consideration is as regards the
applicability of Section 5 of the Stamp Act, 1958 to an order of NCLT
sanctioning the Scheme of Amalgamation under the statutory
provisions of Section 230 to 232 of the Companies Act, 2013. There is
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no dispute about the applicability of the notification of the year 2002
which capped the stamp duty at Rs 25,00,000/.
9. Section 3 of the Stamp Act,1958 provides for instruments to be
chargeable with the amount of duty indicated in Schedule I. Section 2(l)
defines instrument to include every document by which any right or
liability is or purports to be created, transferred, limited, extended,
extinguished or recorded. The provisions of Article 25 (da) of Schedule I
of the Stamp Act, 1958 governs the stamp duty payable on the order of
National Company Law Tribunal passed under Section 230 to 234 of the
Companies Act, 2013 in respect of the amalgamation, merger,
demerger, arrangement or reconstruction of companies. Article 25(da)
refers to the order of NCLT in respect of amalgamation, mergers etc
which is an indicator that the statutory provisions of Stamp Act, 1958
recognizes that it is the order of NCLT, which is chargeable with duty.
10. The proposed scheme was a composite scheme of amalgamation
of two companies i.e. INA Bearings and LuK India with the Petitioner
company. As NCLT, Mumbai had no jurisdiction over LuK India which was
situated within the jurisdiction of NCLT, Chennai Bench, there were two
applications filed seeking sanction: one with NCLT, Mumbai which had
jurisdiction over INA Bearings and the Petitioner Company and the other
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application was filed with NCLT, Chennai having jurisdiction over LuK
India. The sanction was sought from NCLT, Mumbai and Chennai Bench
to the same composite scheme. NCLT, Mumbai noted that similar
application was filed with NCLT, Chennai in respect of LuK India which
has been sanctioned on 13 th June, 2018. NCLT, Mumbai Bench
considered the arrangement proposed by the scheme and opined that
the scheme of merger by absorption appears to be fair and reasonable.
In clause (a) of paragraph 9 of order dated 8 th October, 2018, NCLT,
Mumbai directed that all assets and liabilities of the 1 st Transferor
Company i.e. INA Bearing shall be transferred to and become the
liabilities and duties of the transferee company. In clause (c) of
paragraph 9, NCLT, Mumbai ordered for issuance of shares in the
transferee company to the share holders of INA Bearings and LuK India.
The order of NCLT, Chennai Bench dated 13 th June, 2018 notes that
under the proposed scheme, the Petitioner Company is to issue and
allot the shares to shareholders of LuK India, which was also noted in
the order of NCLT, Mumbai Bench.
11. Learned AGP has pointed out the observations of NCLT Mumbai
Bench as regards the consideration by way of shares to be issued to the
share holders of INA India and LuK India in the order of NCLT, Mumbai to
contend that by the order of NCLT Mumbai Bench, there has been
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merger of two different companies into one company and hence the
applicability of Section 5 of Stamp Act, 1958. Section 5 of Stamp Act,
1958 reads as under:
"5. Instruments relating to several distinct matters:- Any
instrument comprising or relating to several distinct matters
shall be chargeable with the aggregate amount of the duties
with which separate instruments, each comprising or relating
to one of such matters, would be chargeable under this Act."
12. The provisions of Section 5 of the Stamp Act, 1958 applies, where
one instrument relates to several distinct matters of transactions which
cannot be blended into one or cannot be conceived as merely parts of
one aggregate. It applies where the instrument comprises of several
distinct matters, though may be of same category and where Section 5
applies, each of the instruments dealing with each of the matter would
be chargeable under the Stamp Act, 1958 by the aggregate amount of
stamp duty in respect of all such instruments.
13. The composite scheme was considered by NCLT, Mumbai Bench
for ascertaining whether the same was fair and reasonable. In that
context, the consideration in respect of the share holders of the second
transferer company i.e LuK India was noted. A similar exercise was
carried out by NCLT, Chennai which also noted the consideration of
issuance of shares to share holders of LuK India by the Petitioner
Company. The whole exercise was carried out in order to ensure that
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the scheme is fair and reasonable. The observations of NCLT, Mumbai as
regards the consideration in respect of amalgamation of LuK India does
not constitute a distinct transaction within the meaning of Section 5 of
the Stamp Act, 1958. Mr. Sakhardande, on instructions, has submitted
that the order of NCLT, Chennai Bench was lodged for adjudication in
Chennai and the stamp duty has been paid on the said order.
14. The instrument on which stamp duty is chargeable is the order of
NCLT, Mumbai Bench. In Chief Controlling Revenue Authority, Pune
And Anr. vs Reliance Industries Limited, Mumbai And Anr (supra), the
issues referred to the Hon'ble Full Bench of this Court arose out of
proceedings filed by the Respondent Company therein seeking
remission/setback/deduction on the stamp duty paid on the order
sanctioning scheme of amalgamation as the same scheme was
sanctioned by the Bombay High Court and Gujarat High Court and stamp
duty was accordingly paid on the order of Gujarat High Court. In that
case there were two applications filed : one by the transferor Company
in the Gujarat High Court and other by the transferee Company in
Bombay High Court seeking sanction of the same scheme. One of the
issues which was considered by the Hon'ble Full Bench was whether the
scheme of arrangement between the parties which has been
sanctioned by the Court is the instrument or the order of the Court
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sanctioning the scheme is the instrument. The Hon'ble Full Bench held
in paragraph 20 and 21 as under:
"20. 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), (1) 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. the 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 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 the
conveyance and it being an instrument signed in State of
Maharashtra, the same is chargeable to duty as far as State
of Maharashtra is concerned.
21. Although the two orders of two different high Courts are
pertaining to the 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 the instrument and not on the transaction, it
is immaterial whether it is pertaining to one and the same
transaction. The duty is attracted on the instrument and not
on transaction."
15. The Hon'ble Full Bench also held that the provisions of
Section 19 of the Stamp Act, 1958 governing the amount of stamp
duty payable on instruments executed out of State and
subsequently received in State providing for deduction of the
stamp duty already paid would have no applicability.
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16. In Ambuja Cements Limited vs Chief Controlling Revenue
Authority (supra), the Gujarat High Court was considering stamp
references made by the Chief Controlling Revenue Authority of Gujarat
State in respect of stamp duty payable on scheme of amalgamation.
One of questions considered was as under:
"46. Assuming that an order of the High Court under Section
232 of Companies Act, 1956 sanctioning a single composite
scheme of arrangement, albeit between multiple companies,
is an instrument comprising or relating to several distinct
matters or distinct transactions, whether as per Article 20(d)
of Schedule I to the Stamp Duty Act, stamp duty chargeable
on such an order would not be calculated on the aggregate of
amount pertaining to each of such distinct matters and is
subjected to a maximum cap of Rs 25 Crores?
17. The Hon'ble Full Bench considered the various provisions
including Section 5 of the Stamp Act. It noted the decision of the
Hon'ble Apex Court in The Member, Board of Revenue vs Arthus Paul
Benthall3, where the Hon'ble Apex Court had held that if a number of
persons join in executing one instrument, and there is community of
interest between them in the subject matter comprised therein, it will
be chargeable with a single duty. It held in paragraph 112 as under:
"112. As such treating the said transaction as distinct
transaction and thereby demand separate stamp duty
appears to be in conflict with the true import and meaning of
Section 5 of the Stamp Act. A conjoint reading of the
principals enunciated in the afore-mentioned cases by the
Hon'ble Apex Court, we are of the opinion that neither the
scheme of amalgamation or reconstruction sanction by
Company Court in exercise of the powers vested under
Section 394 of the Companies Act, 1956 or Section 232 (2013
Act) can be brought within the sweep of Section 5. if such
3 AIR 1956 SC 35
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interpretation were to be accepted, it would run counter to
the literal meaning of fiscal statute and as such reference will
have to be answered against the Revenue and in favour of the
Subject."
18. This Court is in agreement with the decision of the Gujarat High
Court as regards the non applicability of Section 5 of the Stamp
Act,1958 to the order of sanction to the scheme of amalgamation.
19. Article 25(da) of Schedule I of the Stamp Act, 1958 assesses the
stamp duty payable on the order of sanction of scheme of
amalgamation on the basis of the aggregate of the market value of the
shares issued or allotted in exchange or otherwise and the amount of
consideration paid for such amalgamation subject to cap of an amount
equal to 5% of the true market value of the immoveable property
located within the State of Maharashtra of the transferor company or an
amount equal to 0.7% of the aggregate of market value of share issued
or allotted in exchange or otherwise and the amount of consideration
paid, for such amalgamation, whichever is higher. In the present case,
the consideration are the shares which are allotted by the Petitioner
Company to the share holders of the transferor companies.
20. If the reasoning of the impugned order, that there are two
different companies merging with another company and stamp duty is
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leviable on the second merging company I.e LuK India is accepted, it
would amount to the scheme of amalgamation being assessed to stamp
duty and not the order of sanction of NCLT, Mumbai Bench which is the
instrument chargeable to stamp duty. For assessing the stamp duty
qua LuK India, the market value of the shares issued to the share
holders of LuK India will have to be considered and consequently, it
would be the transaction which would be assessed for purpose of stamp
duty, which has been negated by the Hon'ble Full Bench in Reliance
Industries Limited (supra). There is yet another reason why the
adjudicating authorities in Maharashtra cannot assess the stamp duty
leviable on the merging of LuK India with the Petitioner as necessary
stamp duty on the sanction order of NCLT, Chennai Bench has already
been paid. It would then be open for Petitioner to seek recourse to
Section 19 of the Stamp Act, 1958 and claim remission/ setback/
deduction on the stamp duty already paid in Chennai, a course
specifically negated by the Hon'ble Full Bench in Reliance Industries
Limited (supra).
21. The impugned order assessing the stamp duty on the transactions
of merger with INA Bearings and LuK India by considering the two
transactions as separate and distinct transactions is clearly erroneous in
view of the settled legal position. The impugned order seeks to levy the
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stamp duty on the transaction by segregating the transactions into two
different transactions : one of amalgamation of INA Bearings with
Petitioner and other of LuK India with the Petitioner. As held by the
Hon'ble Gujarat High Court in Ambuja Cements Limited (supra), such
reconstruction cannot be inter se segregated. That apart, it has been
submitted before this Court that stamp duty has been paid on the order
of NCLT, Chennai. Thus, the finding in the impugned order that stamp
duty would not be levied on the other merging company is
unsustainable.
22. In light of the above, the impugned order dated 25.03.2019 and
12.09.2022 are hereby quashed and set aside. The Petitioners are liable
to pay stamp duty on the instrument being the order of National
Company Law Tribunal, Mumbai dated 8th October, 2018 under the
provisions of Article 25 (da) of the Stamp Act, 1958 with the cap of Rs.
25,00,00,000/-. As the amount has already been paid under protest by
the Petitioner, the Respondent Nos. 1 and 2 to refund the excess stamp
duty of Rs. 25,00,00,000/- within a period of 8 weeks from the date of
uploading of this order on the website. In the event, the amount is not
refunded within the period of 8 weeks, the same to carry interest at the
rate of 6% per annum till payment of realization.
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23. The Petition is allowed in the above terms. Rule is made absolute.
(SHARMILA U. DESHMUKH, J.)
