Back
2013 Supreme(Mad) 3577
IN THE HIGH COURT OF JUDICATURE AT MADRAS
D. HARIPARANTHAMAN, J.
Leela Scottish Lace Pvt. Ltd., Formerly known as Design Creations (Mumbai) Pvt. Ltd., rep. by its Director Venu Krishnan
Versus
Chief Controlling Revenue Authority and Inspector General of Registration, Tamil Nadu, and Others
Writ Petition No. 8034 of 2009 and M.P. No. 1 of 2009
Decided on: 10 October 2013
Aravind P. Datar, Senior Counsel for A.R. Karunakaran, for Petitioner
K.V. Dhanapalan, Additional Government Pleader for Respondents
Headnote:
Stamp Duty - Transfer of Property - Companies Act - G.O.Ms. No. 1224 - [Stamp Duty] - [Transfer of Property] - [Companies Act, Sections 391 to 394, Sections 100 to 103] - The court discussed the provisions of G.O.Ms. No. 1224 and its criteria for remission of stamp duty, the transfer of properties between holding and subsidiary companies, and the implications of the Companies Act on the transfer of business and properties.
Fact of the Case:
The petitioner company, a subsidiary of the 4th respondent, acquired properties through a Composite Scheme of Arrangement sanctioned by the Bombay High Court. The petitioner was asked to pay a balance stamp duty of Rs. 1,99,99,900, which it contested based on the remission criteria under G.O.Ms. No. 1224.
Finding of the Court:
The court found that the show cause notice and subsequent orders lacked specific allegations and violated principles of natural justice. It set aside the impugned order and remanded the matter back to the second respondent to issue a fresh show cause notice with clear allegations and provide an opportunity for the petitioner to respond.
Issues: The issues revolved around the remission of stamp duty under G.O.Ms. No. 1224, the transfer of properties between holding and subsidiary companies, and the compliance with the Companies Act in the transfer of business and properties.
Ratio Decidendi: The court held that the show cause notice and subsequent orders lacked specific allegations, violating principles of natural justice. It emphasized the need for clear allegations and an opportunity for the petitioner to respond before passing any order.
Final Decision: The writ petition was allowed, and the matter was remanded back to the second respondent to issue a fresh show cause notice with clear allegations and provide an opportunity for the petitioner to respond.
1. The petitioner company and the 4th respondent are constituents of group of companies. During 2004-2005, the petitioner was a subsidiary company of the 4th respondent. The 4th respondent held 96.30 % of the petitioner’s total shareholding. It is not in dispute that the petitioner was a subsidiary company of the 4th respondent. In fact, it is also not in dispute that the 4th respondent held more than 90% of the petitioner’s total shareholding.
2. The 4th respondent is a leading exporter of garments from India for several decades. During the course of its business, the petitioner company acquired several properties for its offices, godowns and factories and they are located in Tamil Nadu at Ambattur Industrial Estate, Sidco Industrial Complex, Guindy and Amalapattu in Tanjore District.
3. A petition was filed by the said group of companies in Company Application No. 360 of 2005 before the High Court at Bombay under Sections 391 to 394 r/w Sections 100 to 103 of the Companies Act for sanction of a Composite Scheme of Arrangement amongst the group companies due to restructure of the business.
4. The Bombay High Court passed an order dated 09.09.2005 granting sanction to the Scheme presented by the said companies under the provisions of the Companies Act. Under the said Scheme, only the garment business of the 4th respondent stood transferred to the petitioner.
5. It is the categorical case of the petitioner that the order of the Bombay High Court pertains only to the sanctioning of a Composite Scheme of Arrangement amongst the companies and there was no liquidation of the petitioner or the 4th respondent.
6. The 4th respondent intended to purchase a property in Pattukottai in Thanjavur District in Tamil Nadu, in order to establish a front office to explore the possibility of setting up an industrial unit in the nearby rural area. The 4th respondent executed an Indenture of Transfer on 19.04.2005 by way of Document No. 432 of 2005 registered in the office of the third respondent in favour of the petitioner, whereby, several properties belonging to the 4th respondent were transferred to the petitioner for a consideration of Rs. 25 Crores including the property that was purchased by 4th respondent on 19.04.2005 at Pattukottai. The 4th respondent had chosen Pattukottai for execution of Indenture of Transfer on 19.04.2005 as it was considered convenient.
7. It is relevant that the Document No. 432 of 2005 that was registered in the office of the 3rd respondent was executed in the non-judicial stamp paper for the value of Rs. 100/- and no other stamp duty was paid.
8. By the aforesaid registered Document No. 432 of 2005, the properties of the 4th respondent were transferred to the petitioner without stamp duty, pursuant to G.O.Ms. No. 1224 Revenue Department, dated 25.04.1964 and the amendments issued thereon.
9. According to G.O.Ms. No. 1224 dated 25.04.1964 and the subsequent amendments, the following criteria should be satisfied for remission of stamp duty:
“a) The registered offices of the transferor and transferee companies should be located in Tamil Nadu.
b) The Transferee company should be a subsidiary company of the Transferor.
c) 90% or more of the share holding in the subsidiary company should be held by the other company and
d) The properties should be located within Tamil Nadu with the Registrar of Companies certifying that the conditions a) to c) are complied with.”
10. The third respondent on being satisfied that G.O.Ms. No. 1224 was complied with, registered the Document No. 432 of 2005 on 19.04.2005 as stated above.
11. As on 19.04.2005, the date of execution of the deed, the registered office of the 4th respondent was at Plot No. 22 (SP), Thiru-vi-ka Industrial Estate, Guindy, Chennai – 600 032 and the registered office of the petitioner was at Super A8 & 9, Guindy Industrial Estate, Chennai. All the properties that were transferred are located within Tamil Nadu. The Transferee company viz., the petitioner is a subsidiary comp
