Point of Law: Conversion of Partnership to Limited Liability of Partnership - Stamp duty and registration fee cannot be levied upon conversion of a partnership firm to LLP.

JUDGMENT :

Jyotsna Rewal Dua, J.

Upon conversion of the petitioner from ‘Partnership Firm’ to ‘Limited Liability Partnership’, the respondents while granting permission to reflect such change of name in the revenue record, directed it to deposit Stamp Duty and Registration Fee. The petitioner has challenged the aforesaid direction in this writ petition.

2. Facts :-

2(i). Petitioner was registered as a Partnership Firm on 14.12.2005 in the office of Deputy Registrar of Firms, District Industries Centre, Nahan. The registration was in the name and style of M/s Sozin Flora Pharma under the provisions of Indian Partnership Act.

2(ii). Essentiality Certificate was issued to the petitioner on 23.11.2005. Permission to purchase land measuring 16 Bigha 14 Biswa comprised in Khewat/Khatoni No.346/443, Khasra No.136 situtated at Mouza Moginand, Tehsil Nahan, District Sirmaur was granted to the petitioner by respondent No.2 under Section 118 of H.P. Tenancy and Land Reforms Act, 1972 in March 2006. Stamp Duty and all other leviable charges in lieu of this permission & purchase of land were paid by the petitioner. Eventually, production started in the unit.

2(iii). With intention to avail benefits of Limited Liability Partnership Act 2008, petitioner firm converted itself from ‘Firm’ to ‘Limited Liability Partnership’ (in short LLP) i.e. from ‘M/s Sozin Flora Pharma’ to ‘ M/s Sozin Flora Pharma LLP’. The conversion was as per Section 55 of LLP Act, which reads as under:-

“55. Conversion from firm to limited liability partnership- A firm may convert into a limited liability partnership in accordance with the provisions of this chapter and the Second Schedule.”

Consequent thereupon, the Registrar Himachal Pradesh, Government of India, Ministry of Corporate Affairs, Chandigarh issued a ‘Certificate of Registration on Conversion’ to the petitioner on 25.10.2016, pursuant to Section 58(1) of the LLP Act.

2(iv). Subsequent to it’s conversion to LLP, the Essentiality Certificate was issued in favour of the petitioner by the Director of Industries, Himachal Pradesh on 7.02.2017. The Essentiality Certificate mentioned that as a result of conversion, constitution of the petitioner underwent change. The petitioner applied to the Deputy Commissioner Sirmaur for changing its name in the revenue record from ‘M/s Sozin Flora Pharma’ to ‘M/s Sozin Flora Pharma LLP’. On 27.7.2017 the Deputy Commissioner sought clarification from respondent No.2 in this regard, citing non-clarity with respect to applicability of para-5 of the State Government instructions dated 16.02.2012 to the case of petitioner. It will be appropriate to reproduce hereinafter relevant extracts from the instructions dated 16.02.2012:-

“Subject :- Instructions for disposal of cases regarding change in name of the Company.

I am directed to say that the matter with regard to registration of a transaction for mutation of land in revenue records pursuant to change in name of Company has been under consideration of the department for quite some time.

2. Section 394 of the Companies Act, 1956 deals with the provision for facilitation and amalgamation of two or more Companies. The amalgamation scheme, which is an agreement between the two or more Companies, is presented before the Court which passes appropriate order sanctioning the compromise or arrangement. Under the scheme of amalgamation the whole or any party of the undertaking, the property or liability of any Company concerned in the scheme is to be transferred to the other company. The amalgamation scheme, sanctioned by the Court, would be an instrument and Stamp Duty is chargeable on such instrument unless the Hon’ble Court, while sanctioning a scheme, has directed under Section 394(2)of the Companies Act, 1956 that on transfer of property on sanction of scheme of amalgamation under Section 391 to 394 no stamp duty shall be payable. Where no such direction has been given by the Court while sanctioning scheme of amalgamation, then no such instrumen