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JANARDAN SAHAI, J.
M/s. Hero Motors Ltd. - APPELLANT
v.
State of U. P. & Ors. – Respondent
C. M. W. P. No. 41811 of 2006.
Decided on : 23-1-2009
Stamp Duty - Scheme of Arrangement - Indian Stamp Act - Section 2(10), Section 2(14), Article 23 of Schedule 1-B
Fact of the Case:
The court addressed the question of whether stamp duty can be charged under Article 23 of Schedule 1-B of the Indian Stamp Act on a scheme of arrangement sanctioned by the court, involving de-merger, merger, or amalgamation of companies.
Finding of the Court:
The court held that the scheme of arrangement sanctioned by the court is a conveyance and an instrument within the meaning of Sections 2(10) and 2(14) of the Stamp Act as applicable in Uttar Pradesh. The court also determined that the scheme of arrangement is covered by Article 23 of Schedule 1-B of the Indian Stamp Act.
Issues: The issues involved whether the writ petitions are liable to be dismissed on the ground for alternative remedy, whether the scheme of arrangement sanctioned by the court is an instrument and a conveyance within the meaning of the U.P. Stamp Act, and whether such scheme is covered by Article 23 of Schedule 1-B of the UP Stamp Act.
Ratio Decidendi: The court analyzed the nature of a scheme of arrangement, the transfer of a going concern, and the legal definitions of property, immovable property, and movable property to determine the applicability of stamp duty under the Indian Stamp Act.
Final Decision: The court allowed the writ petitions and quashed the order dated 8-6-2006 in one of the petitions, directing the authorities to decide the cases in accordance with the decision given in these writ petitions.
Heard S/Sri A. M. Singhvi. T. P. Singh. Rakesh Dwivedi. Senior Advocates and S/Sri Manish Goyel. S. D. Singh. Ritvik Upadhyay. V. K. Upadhyay. Vishal Kakkar.
Shahid Rizvi. Rakesh Ranjan. Tripathi B. G. Bhai Advocates for the petitioner and Sri Sanjay Goswami, learned Standing Counsel for the respondents.
2. On a difference of opinion between brother Yatindra Singh. J and brother Ran Vijay Singh. J in six connected writ petitions M/ s. Hero Motors Ltd. Dhampur Sugar Mills Ltd; M/s. Amar Ujala publications Ltd; M/ s. Telesia Trading finance Ltd; M/s. Prudential Merchants & Traders Ltd and M/s. Padamshree Projects, this matter has been referred for opinion to me. In the other writ petitions the question involved was the same and as such it appears the Division Bench before which these cases were being heard has tagged those cases with M/s. Hero Motors or other connected cases in which there was a difference of opinion between Brother Yatindra Singh Jana Brother Ran Vijay Singh J. The question substantially involved in these writ petitions Has been stated by brother Yatindra Singh J as follows:- .
"Whether any stamp duty can be charged under. Article 23 of Schedule I-B of the Indian Stamp Act as applicable in our State (the U. P. Stamp Act) on the scheme of arrangement sanctioned by the court, which may be de-merger of going concern with another company or amalgamation/merger of one company with another company".
3. Three points for determination were framed by brother Yatindra Singh, J in his judgment and have been answered by the two learned Judges;
(i) Whether the writ petitions are liable to be dismissed on the ground for alternative remedy?
(ii) Whether the scheme of arrangement sanctioned by the court, (which includes a scheme of de-merger and merger of the going concern with another company and a scheme for amalgamation/merger of a company with another company) is an instrument and a conveyance within the meaning of the U .P. Stamp Act?
(iii) In case the answer to the aforesaid point is in the affirmative then, whether such scheme is covered by Article 23 of Schedule
1- B of the UP Stamp Act?
4. Both the Judges have taken the view that the writ petition could not be dismissed op the ground of alternative remedy. On the second point also, both the Judges were agreed that the scheme of arrangement sanctioned by the Court is a conveyance and an instrument within the meaning of Sections 2 (10) and 2 (14) of the Stamp Act as applicable in Uttar Pradesh. The difference of opinion is on the third point. Brother Yatindra Singh, has taken the view that the scheme of arrangement is not covered by Article 23, Schedule 1-B of the Stamp Act whereas in the opinion of brother Ran Vijay Singh, J it is covered under that Article. It is only this third point upon which I have to give an opinion.
5. The facts of the various connected writ petitions have been set been the judgment of brother Yatindra Singh, J and brother Ran Vijay Singh, J and, it is not necessary to repeat them.
6. Section 3 is the charging section of the Stamp Act. Under this provision, the instruments mentioned in Schedule 1, 1-A or 1-B are chargeable to duty. In order to appreciate the controversy, it is necessary to refer to the definition of conveyance under Section 2 (10) and of instrument under Section 2(14) of the Stamp Act as well as to Article 23 Schedule 1-B.
7. In Section 2 (10rthe,definition of conveyance is as follows:- Conveyance:- Conveyance includes a conveyance on sale and every instrument by, which property, whether movable or immovable, is transferred inter vivos, and which is not otherwise specifically provided, for by Schedule 1, Schedule 1-A or Schedule 1- B, as the case may be.
The definition of instrument in Section 2(14) is as follows:-
Instrument:- Instrument includes every document and record created or maintained in or by an electronic storage and retrieval device or media by which any right or liability is, or purports to be created, transferred, lim
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