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High Court Of Calcutta
T. K. Basu
ANGLO AMERICAN DIRECT TEA TRADING CO.LTD. - Appellant
Versus
STATE OF MADRAS - Respondent
Matter 990 Of 1979
Decided On : 01/10/1984
STAMP DUTY - INDIAN STAMP ACT, 1899 - SECTION 47-A - Applicability - Section 47-A of the Act is intended to apply to private transfers where the registering authority has reason to believe that the market value of the property has been undervalued to evade stamp duty. It does not apply where the transfer and valuation were privately agreed upon but sanctioned and approved by the Reserve Bank of India after due enquiry.
Fact of the Case:
The petitioner, a UK-based company, sold its Indian business, including immovable properties in Tamil Nadu, to another petitioner company. The Reserve Bank of India approved the transaction, subject to certain conditions. The registering authority issued a notice alleging that the market value of the transferred properties was undervalued and sought to determine the proper stamp duty payable. The petitioner challenged the notice and the reference made by the registering authority to the Collector for determination of market value.
Finding of the Court:
The court held that Section 47-A of the Indian Stamp Act, 1899 is intended to apply to private transfers where the registering authority has reason to believe that the market value of the property has been undervalued to evade stamp duty. It does not apply where the transfer and valuation were privately agreed upon but sanctioned and approved by the Reserve Bank of India after due enquiry. In the instant case, the Reserve Bank of India had approved the transaction after due enquiry and imposed certain conditions, which were accepted by the parties. Therefore, the registering authority did not have reason to believe that the market value of the property had been undervalued.
Issues: Whether Section 47-A of the Indian Stamp Act, 1899 is applicable to a transfer of property that has been sanctioned and approved by the Reserve Bank of India.
Ratio Decidendi: The court held that Section 47-A of the Indian Stamp Act, 1899 is intended to apply to private transfers where the registering authority has reason to believe that the market value of the property has been undervalued to evade stamp duty. It does not apply where the transfer and valuation were privately agreed upon but sanctioned and approved by the Reserve Bank of India after due enquiry. In the instant case, the Reserve Bank of India had approved the transaction after due enquiry and imposed certain conditions, which were accepted by the parties. Therefore, the registering authority did not have reason to believe that the market value of the property had been undervalued.
Final Decision: The court quashed the reference made by the registering authority to the Collector for determination of market value and directed the respondents to forbear from giving effect to the notice and to recall, cancel, and withdraw it.
( 1 ) THIS is an application under Article 226 of the Constitution of India praying for the quashing of a notice issued under the Indian Stamp Act. 1899 as applicable to Tamil Nadu.
( 2 ) THE facts and circumstances relating to the making of the present application may be briefly noted.
( 3 ) THE petitioner No. 1 is a Company Incorporated under the appropriate laws of the United Kingdom. The principal place of business of the petitioner No. 1 in India is at 2. Netaji Subhas Road, Calcutta within the jurisdiction of this Court. The petitioner No. 2 is the agent of the petitioner No. 1 in respect of its business in India.
( 4 ) BESIDES the petitioner No. 1, the petitioner No, 2 was also the agent of the following Companies incorporated under the appropriate laws of United Kingdom for their business in India. 1. The Consolidated Tea and Lands Co (India) Limited. 2. The Amalgamated Tea Associates Co. Ltd. 3. The Kanan Devan Hills Produce Co. Ltd. 4. Achabam Tea Co. Ltd. 5. The Borhat Tea Co. Ltd. 6. The Chubwa Tea Co. Ltd.
( 5 ) BY an agreement dated the 30th Dec. , 1975 between the petitioner No. 1 and the Companies mentioned in the immediate, preceding paragraph hereof (hereinafter referred to as the Sellers) and the petitioner No. 2 the sellers agreed to sell and the petitioner No. 2 agreed to buy as a going concern the Indian business of the sellers for the following consideration : (i) One Rupee each for the goodwill of James Finlay and of each of the Tea Companies. (ii) Rs. 12 crores for the Immoveable properties, plant and machinery, office furniture, patents, licences, motor cars and other vehicles and implements and other moveable property (other than current assets ). (iii) The book value as at the close of business on 31st December, 1975 for all assets taken over other than those mentioned in (i) and (ii) above, as reduced by the amount of all liabilities and obligations as mentioned in Clause 3 thereof (other than liability for gratuity and other retirement benefits for the employees as may be taken over in terms of Clause 6 thereof ). Provided always that verification of all such assets taken over other, than those mentioned in (i) and (ii) above and of the liabilities and obligations taken over by the purchaser in terms of Clause 3 thereof shall be carried out by a firm of Chartered Accountants acceptable to James Finlay and the purchaser or, failing agreement between James Finlay and the purchaser, by a firm of Chartered Accountants to be nominated by the President of the Institute of Chartered Accountant in India and the certificate of such firm as to the consideration payable in terms of this Item (iii) shall be conclusive and final and binding on lames Finlay, the Tea Companies and the purchaser.
( 6 ) IT was further agreed that out of sum of Rs. 12 crores the petitioner No. 2 would issue shares at par in respect of a sum of Rs. 218 lakhs and the balance sum would be credited in the books of the petitioner No. 2 as an unsecured loan carrying simple interest at the rate of 11 % per annum from the 1st January, 1976.
( 7 ) THIS agreement was expressly subject to the consent and approval of the Reserve Bank of India and the Bank of England.
( 8 ) THE Second Schedule of the agreement specifically provided the break up of the consideration in respect of each, of the sellers.
( 9 ) THEREAFTER there was a Supplemental agreement between the parties abovenamed dated the 31st December, 1976 the. details whereof are not really material for our purpose.
( 10 ) AT all material times, until the time hereinafter mentioned, the petitioner No. 1 was the owner inter alia of Pachamalia Estate, Uralikkal Estate, Velonie Estate, Selaliparai Estate (since amalgamated with Uralikal and Velonie Estates) and Valpari Estate in Anamalai Hills Village, Tamil Nadu, comprising of immovabe properties. The other major properties and assets of the petitioner No. 1 in India were ; nahorani and Nahortoli Tea Estates in the
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