Back
2012 Supreme(Cal) 835
IN THE HIGH COURT OF CALCUTTA
Ashim Kumar Banerjee & Shukla Kabir (Sinha), JJ.
ITP LTD.
Vs.
UNION OF INDIA
EMAMI BIOTECH LTD.
Vs.
STATE OF WEST BENGAL
A.P.O. No. 114 of 2012; C.P. No. 398 of 2011; & A.P.O. No. 136 of 2012; C.P. No. 627 of 2011;
Decided on : September 12, 2012
Abhrajit Mitr, Jishnu Chowdhury, Dipayan Chowdhury, Subhradal Chowdhury for the appellant (In A.P.O. No. 114 of 2012, CP. No. 398 of 2011);
Jayanta Mitra, Debangshu Basak, Sakya Sen for the State (In A.P.O. No. 114 of 2012, C.P. No. 398 of 2011);
S.N. Mukherjee, Ratnanko Banerjee, Krishna Raj Thakkar, K. Mallick, A.K. Mishra for the appellant (In A.P.O. No. 136 of 2012, CP. No. 627 of 2011);
Jayanta Mitra, Debangshu Basak for the respondent No. 1 (State) (In A.P.O. No. 136 of 2012, C.P. No. 627 of 2011);
Somenath Bose, Bhaskar Prasad Banerjee for Union of India.
A scheme of amalgamation or arrangement sanctioned by the High Court under section 391 of the Companies Act, 1956 would attract appropriate Stamp Duty under the Indian Stamp Act, 1899, as it would be considered an inter vivos transfer of property.
Headnote:
STAMP DUTY - Amalgamation and Arrangement - Scheme Sanctioned by High Court under Section 391 of Companies Act, 1956 - Applicability of Indian Stamp Act, 1899 - Transfer of Property - Inter Vivos Transfer - Stamp Duty Liability.
Fact of the Case:
Two appeals were filed challenging the order of the learned Judge who held that the sanction of a scheme of amalgamation or arrangement under section 391 of the Companies Act, 1956 would attract Stamp Duty under the Indian Stamp Act, 1899. The appellants contended that the transfer of business was a movable property and did not attract any Stamp Duty, and that the decision in Hindusthan Lever & Another vs State of Maharashtra & Another would not apply due to distinguishing features.
Finding of the Court:
The Court held that the transfer of property through a scheme of amalgamation or demerger would have "all trappings of a sale" and would attract appropriate Stamp Duty. The Court relied on the decision in Hindusthan Lever, which held that the provisions of the Indian Stamp Act, even without State amendments, would automatically come into play in case of merger or demerger being sanctioned by the Court as it was an intra vivos transfer.
Issues: 1. Whether a scheme of amalgamation and/or arrangement sanctioned by the High Court under section 391 of the Companies Act, 1956 would attract the mischief of the Indian Stamp Act, 1899. 2. Whether the transfer of business, being a movable property, would attract any Stamp Duty as per the said Act of 1899. 3. Whether the decision in Hindusthan Lever & Another vs State of Maharashtra & Another would have any application in the instant case.
Ratio Decidendi: 1. The Court held that the transfer of property through a scheme of amalgamation or demerger would have "all trappings of a sale" and would attract appropriate Stamp Duty. 2. The Court relied on the decision in Hindusthan Lever, which held that the provisions of the Indian Stamp Act, even without State amendments, would automatically come into play in case of merger or demerger being sanctioned by the Court as it was an intra vivos transfer. 3. The Court held that the 1937 notification, which provided for exemption of Stamp Duty on certain transfers, would not be applicable in the instant case as it spoke about Schedule 1 of the Indian Stamp Act, which had been replaced by Schedule 1(A) in 1922.
Final Decision: The appeals were dismissed, and the order of the learned Judge was upheld.
Ashim Kumar Banerjee, J.:
PREFACE
1. Both these appeals would relate to a short but important question as to whether a scheme of amalgamation and/or arrangement sanctioned by the High Court under section 391 of the Companies Act, 1956 (hereinafter referred to as the said Act of 1956) would attract the mischief of Indian Stamp Act, 1899 in the State of West Bengal and, if so, to what extent.
2. The appellants contended before the learned Judge, the order of sanction of the scheme of amalgamation or arrangement was nothing but an arrangement and/or re-alignment of business and/or trade activity of the company as per the wish of the body of shareholders that would not amount to transfer of any immovable or movable property either under the Transfer of Property Act or otherwise attracting Stamp Duty as per the said Act of 1899. The learned Judge held it otherwise. His Lordship held, it was a voluntary transfer hence, would attract appropriate Stamp Duty. Hence, this appeal by the appellants.
FACTUAL MATRIX
3. In the case of Emami Biotech Ltd., it was a transfer of a business by the transferor company in favour of the transferee company, both run by the common management having controlling block of shares. As per the scheme, all immovable properties and assets, liabilities of Oriental, the transferor company would automatically stand vested in Emami, the transferee company. As per Clause 15 of the scheme, since Emami would control ninety per cent of paid up capital of Oriental such vesting of properties including lease-hold land would exempt from payment of Stamp Duty as per the notification dated January 16, 1937 issued by the then Governor of Bengal applicable to the State.
4. In case of ITP Limited, the scheme would suggest amalgamation of the transferor company ITP in Laxmi Tea Company Limited which was its wholly owned subsidiary both being engaged in tea plantation having tea gardens.
5. Needless to mention, in both cases the shareholders of the transferor company would get appropriate shares in the transferee company as per the share exchange ratio suggested in the scheme. In both the cases meeting of the shareholders were held where the schemes were sanctioned by overwhelming majority. Pertinent to note, no shareholder came forward to oppose the scheme. The learned Judge considered the issue of Stamp Duty and decided the said issue by a common judgment and order dated February 8, 2012 in the case of Emami Biotech Ltd. as well as ITP Ltd. and held that the sanction would require appropriate Stamp Duty and the notification dated January 6, 1937 would have no application in the instant case. His Lordship directed the matters to appear on a subsequent date for appropriate order on the sanction. Hence, these appeals.
THE JUDGMENT AND ORDER OF THE LEARNED JUDGE AN ANALYSIS
6. The judgment and order would appear at pages 276-296 of the paper book in the case of ITP Limited.
In Gemini Silk Limited vs Gemini Overseas Ltd., 2003 (114) Company Cases 92; the learned Single Judge of this Court held that the scheme would require payment of appropriate Stamp Duty that was upset by the Division Bench in the case of Madhu Intra Ltd. & Another vs Registrar of Companies and Others, 2006 (130) Company Cases 510. However, the Madhu Intra Ltd. did not take notice of Hindus tan Lever & Another vs State of Maharashtra & Another, 2004 (9) SCC 438; delivered by the Apex Court just before the delivery of the judgment. We find from the relevant dates, Hindusthan Lever was delivered after the hearing was concluded in Madhu Intra. However, the Madhu Intra was delivered subsequent to the said decision.
Hindusthan Lever categorically held, transfer of property through sanction of a scheme of amalgamation of demerger would have "all trappings of a sale". The Apex Court judgment would have a greater force than Madhu Intra, that would be binding upon the Court under Article 141 of the Constitution of India.
There had been evasion of Stamp Duty running into c
