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Gujarat High Court
[FULL BENCH]
Hon’ble Mr. Chief Justice Bhaskar Bhattacharya,
Hon’ble Mr. Justice Vijay Manohar Sahai &
Hon’ble Mr. Justice Ravi R. Tripathi
Alembic Pharmaceuticals Limited
Versus
Chief Controlling Revenue Authority
Stamp Reference No. 1 of 2012—Decided on 26/11/2013
Gujarat Stamp Act, 1958 — Sections 54(1-A), 2(9), 31, 53(1-D), Articles 20(d) of Schedule I — Companies Act, 1956 — Sections 391 and 394 — Reference — Question is whether order passed by High Court for demerging the applicant company from his parents company can be considered as reconstruction or amalgamated as per Article 20(d) of the Act or not and applicant has to pay for the charge of ownership as per Section 2(9) and Article 20(d) of the Act or not — Further whether deponent is entitled to take stamp duty on share price of appointed date i.e. 50.05/- when share was originally transferred to the transferee company for the face value of Rs. 2/- only — Whether the deponent has to consider the market value Rs. 50.05/- as per the statement of SEBI — Finding as to — Court after considering the provision of Stamp Act and citation given by both parties answered the references in the following manner — A. Demerger amounts to reconstruction as per Article 20(d) of Schedule I of the Act. B. Yes applicant is required to pay for the charge of ownership as per Section 2(9) and Article 20(d) of Schedule I as indicated above. C. Yes, by applying the Explanation III of Article 20(d) of Schedule I of the Act — The contention of the applicant that the valuation of the share should be treated to be Rs. 2/- per share is not tenable — It should be treated to be Rs. 50.05 per share. D. Rs. 50.05 as per statement of SEBI.
Held :
Court, therefore, dispose of this Reference by answering the questions in the following manner:—
[A]. Demerger amounts to reconstruction as per Article 20 [d] of Schedule-I of the said Act.
[B]. YES. The applicant is required to pay for the change of ownership as per Section 2[g] and Article 20[d] of Schedule-I of the said Act as indicated by us above.
[C]. YES, by applying the Explanation III of Article 20 (d) of Schedule-I of the said Act. The contention of the applicant, that the valuation of the share should be treated to be Rs. 2/- per share is not tenable. It should be treated to be Rs. 50.05 per share.
[D]. Rs. 50.05 as per statement of SEBI. [Para 20]
Law Laid Down :
Clause 20(d) was substituted by Gujarat Act 5 of 2002 making it applicable to reconstruction or amalgamation of companies by an order of High Court under Section 394 of the Companies Act, 1956.
Bhaskar Bhattacharya, CJ.—This is a Reference under Section 54[1A] of the Gujarat Stamp Act, 1958, by which the following four questions have been referred to this Court.
“[A] Whether the order passed by this Hon’ble High Court for demerging the applicant company from his parents company can be considered as reconstructing or amalgamated as per Article 20[d] of the said Act or not.
[B] Whether the applicant has to pay for the change of ownership as per Section 2[g] and Article 20[d] of the Stamp Act or not.
[C] Whether the deponent is entitled to take stamp duty on the share price of appointed date i.e. Rs. 50.05/- on the appointment date Transferor Company transferred the said share to the transferee company? The contention of the applicant is that the share was originally transferred to the transferee company for the face value of Rs. 2/- only or [sic; and not for] Rupees 50.05/-.
[D] Whether the deponent has to consider the market value [Rs. 50.05/-] as per the statement of SEBI or face value [Rs. 2/-] i.e. on the date of appointment date i.e.1st April, 2010.”
2. Brief facts of the case may be narrated thus:
2.1 The applicant is Alembic Pharmaceuticals Limited, a company registered under the provisions of Companies Act, 1956 and having its office at Alembic Road, Vadodara [Gujarat] which made a demerger from the parent company known as Alembic Limited by virtue of the order passed by this High Court in Company Petition No. 152 of 2010 and Company Petition No. 153 of 2010 dated 21st March, 2011 under Section 394 of the Companies Act. Pursuant to such order, the transferor company transferred 13,35,15,914 equity shares to the transferee company. The appointed date of the transfer of the said shares of the transferee company was 1st April, 2010.
2.2 The applicant made an application to pay stamp duty regarding demerger instrument under Section 31 of the Bombay Stamp Act, 1958, now known as the Gujarat Stamp Act, [for short, “the said Act”] before the office of the Collector [Stamp] and Additional Superintendent of Stamp of Gandhinagar.
2.3 The Collector considered all the aspects and provisions of law and came to the conclusion that the applicant company is required to pay 1% of the conveyance deed in terms of Article 20[d] of Schedule-I of the said Act. The Collector opined that after the payment of Rs. 6,68,24,715/-, the stamp office would certify the order of demerger which had been carried out in accordance with Sections 391 and 394 of the Companies Act, 1956 pursuant to the order of the High Court dated 21.03.2011 passed in Company Petition No. 153 of 2011.
2.4 Being dissatisfied with the order passed by the Collector and the Additional Superintendent Stamp, Gandhinagar, Gujarat State, the applicant challenged the said order under Section 53[1-D] of the said Act before the Chief Controlling Revenue Authority [for short “CCRA”] by way of Appeal No. 20 of 2011.
2.5 In terms of the said demerger of the applicant company from its parent company, one share was additionally issued to the original share holders of Alembic Limited, i.e., the parent company.
2.6 The CCRA, after giving the opportunity of hearing and examining all the documents produced by the petitioner, passed an order dated 30th November, 2011 and confirmed the order passed by the Collector, which had been forwarded to the applicant on 12th December, 2011.
2.7 The applicant, being dissatisfied with the order passed by CCRA, preferred an application under Section 54[1-A] of the said Act with the following prayer:
“Your Lordship may be pleased to draw up a statement of the case being Appeal No. 20 of 2011, and refer the same to the Hon’ble High Court of Gujarat, as provided under Section 54[1- A] of the Bombay Stamp Act, 1958 in the interest of justice”.
3. In order to appreciate the points involved in this Reference, it will be profitable to refer to the provision contained in Article 20[d] of Schedule-I of the said Act which is quoted below along with the explanations
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