2022 (4) TMI 1480 - HC - Companies Law

Change in the name of the company - exit of the minority shareholder - petitioner-company became 100% subsidiary of JSTT - requirement to pay the stamp duty and registration fee on the value of assets of the petitioner upon change of name - HELD THAT - This Court in M/S. FRESENIUS KABI ONCOLOGY LIMITED VERSUS H.P. STATE INDUSTRIAL DEVELOPMENT CORPORATION LIMITED 2018 (8) TMI 2103 - HIMACHAL PRADESH HIGH COURT was dealing with a case where consequent upon request made by the petitioner to incorporate by way of change of its name in the record respondent-State Authorities demanded a sum of Rs.1, 04, 21, 508/- towards unearned increase /transfer charges on account of alleged violation of Clause 2(xi) of conveyance deed where Pharma business of the Company Dabur India Limited by way of merger merged into the new entity Dabur Pharma Limited . The respondent-Corporation changed the name of the allottee company i.e. Dabur India Limited to Dabur Pharma Limited vide order dated 28.11.2003. Later on petitioner-Company incorporated under the laws of Singapore acquired 90.89% of total equity share capital of Dabur Pharma Limited on 11.8.2008. The management and control of Dabur Pharma Limited therefore came to be changed and its Board reconstituted with the nominee of the petitioner-company - This Court held that mere acquiring of equity share capital of Dabur Pharma Limited by the petitioner Company does not amount to transfer assignment or parting with the possession or any other rights of the allottee Company neither with the plot in question nor structure in existence thereon. The acquiring of equity share capital of the allottee Company by the petitioner also does not contravene the conditions contained in Clause 2(xi) of the conveyance deed. In such circumstances how a right to claim unearned increase/transfer charges would have arisen in favour of the respondent is not understandable held this Court. Similar issue again arose before this Court in Reckitt Benckiser (India) Private Limited 2020 (9) TMI 80 - HIMACHAL PRADESH HIGH COURT . In that case petitioner was initially incorporated as a public limited company by the name of M/s Reckitt Colman of India on 5.7.1951. Subsequently it got its name changed to Reckitt Benckiser (India) Limited on 18.12.2000. Thereafter the name of the petitioner-company was again changed to Reckitt Benckiser (India) Private Limited on 13.5.2015 vide certificate of incorporation issued by the Registrar of Companies NCT of Delhi and NCT of Haryana. This lastly named company which was a public limited company had acquired a piece of land i.e. industrial plot measuring 7-14 bigha entered in Khewat/Khatauni Nos. 39 min/64 min bearing Khasra No. 449/2 situated in village Nandpur BH No. 170 Pargana Dharampur Tehsil Nalagarh District Solan Himachal Pradesh together with the factory building measuring 46000 square feet vide sale deed dated 24.2.2006 - Section 13(2) made it crystal clear that no new company was ever created as a result of the change of its name and it is the case of mere addition of word private to its name. Relying upon aforesaid instructions/clarification dated 16.2.2012 issued by the respondent-State this Court held that respondents erroneously concluded that there is transfer of assets and property by the Company. Petition allowed.

Summary

Issues Involved:

1. Whether the change in the name of the company requires payment of stamp duty and registration fee.
2. Interpretation of the instructions issued by the Revenue Department, Government of Himachal Pradesh.
3. Precedents regarding the change of name and its implications on stamp duty and registration fees.
4. The legal distinction between change of name and transfer of property.

Issue-Wise Detailed Analysis:

1. Whether the change in the name of the company requires payment of stamp duty and registration fee:

The petitioner argued that no sale transaction or conveyance took place between two parties, and the property did not change hands. The only effect was the exit of the minority shareholder, resulting in the total shareholding being vested in the petitioner. The respondents contended that the change was not merely a name change but involved the exit of a shareholder, thereby implying a transfer that necessitates the payment of stamp duty and registration fees.

2. Interpretation of the instructions issued by the Revenue Department, Government of Himachal Pradesh:

The instructions dated 16.2.2012 clarify that no stamp duty is chargeable where merely the name of the company is changed with the approval of the Registrar of Companies. The court emphasized that the instructions clearly state that no transaction or sale of property takes place in such scenarios, and only the change in the name of the company is sought to be recorded in the revenue record.

3. Precedents regarding the change of name and its implications on stamp duty and registration fees:

The petitioner relied on several judgments, including M/s Fresenius Kabi Oncology Limited v. H.P. State Industrial Development Corporation Limited, Reckitt Benckiser (India) Private Limited v. State of H.P., and M/s Sozin Flora Pharma LLP v. State of Himachal Pradesh. These cases established that the mere change of name does not constitute a transfer of property and thus does not attract stamp duty or registration fees. The court reiterated these precedents, emphasizing that the change in the name of the company does not amount to a transfer of assets.

4. The legal distinction between change of name and transfer of property:

The court examined various case laws, including the High Court of Calcutta's decision in M/s Fresenius Kabi Oncology Limited v. The State of West Bengal, which held that change of name does not constitute a transfer of leasehold rights or assets of the company. The court also referred to the Supreme Court's judgment in Bacha F. Guzdar v. Commissioner of Income Tax, which clarified that a shareholder does not acquire any interest in the company's assets. The court concluded that the change of name does not imply a transfer of property, and therefore, no stamp duty or registration fee is chargeable.

Conclusion:

The court allowed the writ petition, quashing the impugned order dated 18.12.2020, which imposed the condition of payment of stamp duty and registration fee on the value of assets upon the change of name. The court directed the respondents to enter the petitioner's new name in the revenue record without requiring the payment of stamp duty and registration fees. All pending applications were disposed of.