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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.C.DHARMADHIKARI, K.R.SHRIRAM AND B.P.COLABAWALLA, JJ.
The Chief Controlling Revenue – Appellant
V/s.
M/s.Reliance Industries Limited and Ors. – Respondents
CIVIL REFERENCE NO.1 OF 2007 IN WRIT PETITION NO.1293 OF 2007 IN REFERENCE APPLICATION NO.8 OF 2005
Decided On : 31-3-2016
STAMP DUTY - AMALGAMATION OF COMPANIES - SCHEME SANCTIONED BY TWO DIFFERENT HIGH COURTS - ORDER OF HIGH COURT SANCTIONING SCHEME IS INSTRUMENT CHARGEABLE TO STAMP DUTY - SCHEME IS NOT DOCUMENT CHARGEABLE TO STAMP DUTY - REBATE UNDER SECTION 19 OF BOMBAY STAMP ACT, 1958 NOT APPLICABLE.
Fact of the Case:
Reliance Industries Limited and Reliance Petroleum Limited 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.
Finding of the Court:
1. 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. 2. 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. 3. The answer to this question will be in the negative for the reasons set out in detail herein above. 4. 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.
Issues: 1. Whether a scheme sanctioned between the two companies under Section 391 and 394 of the Companies Act 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 Offices of the two companies are situated in 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? 3. 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? 4. 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?
Ratio Decidendi: 1. The order of the court sanctioning the scheme is the instrument chargeable to stamp duty. 2. The scheme of amalgamation is not a document chargeable to stamp duty. 3. Section 19 of the Bombay Stamp Act, 1958 is not applicable in the present case.
Final Decision: Civil Reference disposed accordingly.
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 arrangement in the Scheme of Amalgamation. Similarly, respondent no.2, the transferor company on 16th 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 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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