IMPORTANT POINT
The court established that stamp duty on amalgamation is determined by the share valuation as per the exchange ratio on the appointed date, following the amendments to the Maharashtra Stamp Act.

JUDGMENT :

R.M. JOSHI, J.

1. The petitioner being aggrieved by rejection of appeal under Section 53 (1A) of the Maharashtra Stamp Act 1958 (for short “the Stamps Act”) by order dated 6th May 2016 passed by Chief Controlling Revenue Authority, Maharashtra State, Pune, has filed this petition.

2. The facts which led to filing of the petition can be narrated in brief as under:

2.1. Petitioner is a private limited company registered under the Companies Act, 1956. It is the case of the petitioner that J. P. Morgan Group in the United States of America (USA) announced its intent to acquire Bear Stearns Company INC which was also situated in the USA. J.P. Morgan Group acquired the said company in the USA. This has resulted in entire group being owned and controlled by J.P. Morgan Group. Bear Stearns Financial Services (India) Private Limited (for short “BSFS”) was a company incorporated under the Companies Act 1956 whose entire share holding was held by BS Group. Pursuant to the acquisition of BSFS in the USA and the resultant acquisition of the BS Group globally, the entire shareholding of said group came to be held by J.P. Morgan Group. It was decided to effect merger of BSFS with petitioner. A scheme of amalgamation was prepared, which provided for reduction of share capital of BSFS to Rs.1,00,000/- comprising of 10,000 equity shares of the face value of Rs.10/- each. The scheme specifically provided that the reduction of share capital was to take place prior to BSFS merging with the petitioner. In view thereof, the petitioner filed proceedings in this Court seeking sanction of scheme of amalgamation. By order dated 18th December 2009, this Court sanctioned the scheme. Pursuant thereto, the petitioner lodged the said order for adjudication under Section 31 of then prevailing Bombay Stamp Act 1958 with respondent No. 3. Respondent No. 2 issued demand notice dated 2nd June 2010 thereby demanding an amount of Rs.1,57,81,892/- towards stamp duty under Article 25(da) of the Stamp Act. The petitioner objected to the said demand on 24th June 2010 by filing written submissions. Respondent No. 2 granted hearing to the petitioner on 29th July 2010 on demand notice and by passing order dated 16th October 2010 rejected the application for cancellation of the said demand notice. An appeal was preferred before Respondent No. 1, which came to be rejected by passing an impugned order, hence, this petition.

3. Learned senior advocate appearing on behalf of the petitioner submits that in view of the scheme of merger approved by the High Court, the share capital of the transferor – Company was reduced to the extent of Rs.1,00,000/- i.e. 10,000/- shares of Rs.10 each. This according to him has occurred on appointed date. By referring to the provisions of the Stamp Act, more particularly, Article 25 thereof, it is submitted that the stamp duty applicable on the instrument of merger would be on the shares which were exchanged with transferee company. It is submitted that the stamp authorities committed an error in taking into consideration the valuation of the shares before appointed date. It is his submission that since the entire scheme was sanctioned by this Court and there was exemption granted from compliance of Section 100 of the Act before reduction of the share capital, now it does not stand to any justification as to why the document is stamped not on the reduced value of the share capital but on the valuation prior to the date of appointment. To support his submission, he placed reliance on the judgment of the Division Bench of this Court in the case of Li Taka Pharmaceuticals Ltd. and Anr. vs. State of Maharashtra and Ors. 1996 SCC Online Bom 67. He also drew attention of the Court to the order passed by this Court in respect of the merger scheme, to contend that there cannot be any interpretation of the clauses thereto, which would run contr