An investor is not liable for stamp duty on an investment agreement if no assets or rights are transferred, as per provisions of relevant law.

JUDGMENT :

PIYUSH AGRAWAL, J.

1. Heard Shri Navin Sinha, learned Senior Advocate, assisted by Shri Rohan Gupta, learned counsel for the petitioner and Shri Siddharth Singh, learned Standing Counsel for the State-respondents.

2. The instant writ petition has been filed against the impugned order dated 22.10.2021 passed by the Assistant Commissioner (Stamps), Kanpur Nagar as well as the impugned recovery citation dated 06.12.2021 issued by the Tehsildar, Kanpur Nagar.

3. Learned senior counsel for the petitioner submits that the petitioner is a Company registered under the Companies Act and is wholly owned subsidiary of Jaiprakash Associates Limited. He further submits that the fertilizer complex was first set up by a multi-national company, namely, M/s ICI Limited in the year 1969 for production of a chemical fertilizer 'Urea' by the brand name of Chand Chhap Urea. He further submits that in the year 1993, the Company was taken over by Duncans Industries Limited (DIL). The fertilizer plant went out of production and Duncans Industries Limited became sick and upon a reference to the BIFR, the same was declared as 'sick company' under the Sick Industrial Companies (Special Provisions) Act, 1985. The State Bank of India was appointed as an operating agency to formulate a rehabilitation scheme for the revival of the Company.

4. He further submits that in order to formulate a draft rehabilitation scheme, the ISG Traders Limited, a part of the promoter group of Duncans Industries Limited, along with the petitioner and its subsidiary - J.P. Uttar Bharat Vikas Pvt. Ltd., entered into a joint venture agreement on 18.06.2010. On 16.01.2012, a draft rehabilitation scheme was formulated and submitted before the BIFR, which was considered and modified. Pursuant to the aforesaid recommendation, the joint venture company in the name of Kanpur Fertilizer and Cement Limited was formed and in pursuance of the rehabilitation scheme, the fertilizer undertaking was to be de-merged into a new Company, namely; Kanpur Fertilizer & Cement Limited. Further, the funds to be infused in transferee Company in a manner to ensure that the joint venture company shall hold 99.87% of the paid up equity share capital and balance paid up equity share capital of the transfer company shall be held by the share holders of Duncans Industries Limited.

5. He further submits that the petitioner was to provide fund to the transferred company to enable it to discharge its liability. As per rehabilitation scheme, the petitioner was allotted 1 lac equity share having face value of Rs. 10/-. Thereafter, the Kanpur Fertilizer & Cement Limited moved an application dated 28.06.2013 before the stamp authority for exemption from payment of stamp duty on the assets of the fertilizer undertaking of the DIL/Sick Industrial Company transferred to KFCL in terms of the rehabilitation scheme sanctioned by the BIFR. The BIFR, on 09.09.2015, directed the State Government to consider for grant of exemption to KFCL from the levy of stamp duty on the de-merger of asserts of Fertilizers undertaking, but on 15.01.2018, a notice under section 33 read with section 47-A (3) of the Indian STAMP ACT was issued by the Collector with regard to deficiency of stamp duty, to which the petitioner filed a detailed objection on 16.02.2018. He further submits that on 15.10.2020, again a notice under section 33 read with section 47-A (3) of the Indian STAMP ACT was issued to the petitioner by the Assistant Commissioner (Stamps), Kanpur Nagar, to which the petitioner filed detailed objection on 23.12.2020, but vide impugned order dated 22.10.2021, a sum of Rs. 41,81,13,140/- has been imposed as deficiency