TMI Blog2012 (4) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... e to stamp duty - no property transferred pursuant to any scheme of amalgamation of merger or demerger in this State would be effective unless appropriate stamp duty thereon has been paid. - CP No. 627 of 2011, CP No. 398 of 2011, CP No. 474 of 2011 - - - Dated:- 2-2-2012 - SANJIB BANERJEE, J. For the Petitioners: Mr S.N. Mookerjee, Sr Adv., Mr Ratnanko Banerji, Adv., Mr K.K. Thakkar, Adv., Mr A.K. Mishra, Adv. For the State: Mr Anindya Kr Mitra, Advocate General, Mr Debangshu Basak, Adv., Mr Sakya Sen, Adv. For the Central Ms Nilanjana Banerjee (Pal), Adv., Government: Mr Bhaskar Prasad Vaisya, Adv. SANJIB BANERJEE, J. : Considering the stage of the proceedings, the primary issue which has arisen at the behest of the court may be premature; yet the matter is of some importance and it is necessary that an unsavoury practice is immediately arrested. The issue does not appear to be res integra, yet the petitioners insist that there is much to say in support of the continuing practice in this State for veritable sales and transfers of immovable properties to be concluded without offering any stamp duty to the State. Equally, this apparently cash-starv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties and persons connected with them and there was nothing involuntary about them. It was observed in the judgment that a transfer by operation of law would be where the parties to the transaction had no role to play and the transaction could have been completed without any of the parties seeking the court s imprimatur or doing any overt act like carrying a petition to court. The judgment rendered in Gemini Silk Ltd was carried in appeal and set aside in the judgment reported at 130 Comp Cas 510 (Madhu Intra Ltd v. Registrar of Companies). It transpires that prior to the judgment being delivered in Madhu Intra, the Supreme Court had spoken on the issue in Hindustan Lever v. State of Maharashtra [(2004) 9 SCC 438]. Though the primary issue before the Supreme Court in that matter was as to whether stamp duty would be payable upon an order sanctioning a scheme of amalgamation by the Bombay High Court being regarded as an instrument chargeable under the amended provision of the Stamp Act in that State, the Supreme Court opined in the clearest terms that the transfer of any property upon the sanction of a scheme of amalgamation or demerger had all the trappings of a sale. The m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Allahabad, Delhi and Madras High Courts rendered after Hindustan Lever, recognising the issue to have been concluded by Hindustan Lever and at least two of the High Courts holding that Madhu Intra runs contrary to the Supreme Court pronouncement. In Delhi Towers Ltd v. GNCT of Delhi (159 Comp Cas 129), the Delhi High Court observed that even if the relevant provision was not incorporated in the Bombay Stamp Act specifically covering schemes sanctioned under the Companies Act, orders sanctioning schemes would be exigible to stamp duty under Section 3 of the Indian Stamp Act, 1899. In other words, going by the Supreme Court s enunciation of the law in Hindustan Lever, the relevant amendment to the Bombay Stamp Act was merely clarificatory and orders sanctioning schemes under the Companies Act were exigible to stamp duty unless specifically exempted. The Allahabad High Court has also accepted such position at paragraph 27 of a judgment delivered in 2006 on a clutch of writ petitions (Hero Motors Ltd v. The State of U.P.; CMWP No. 41811 of 2006) that an order sanctioning a scheme of arrangement of merger or demerger is both an instrument and a conveyance within the meaning of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, the relevant provisions of the Bombay Stamp Act and the Stamp Act applicable in this State must first be seen to appreciate that the dictum in Hindustan Lever applies equally to the statute relevant in this State: Bombay Act: 2(14) Instrument .- Instrument includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished, or recorded. 2(15) Instrument of Partition .- Instrument of partition means any instrument whereby co-owners of any property divide or agree to divide such property in severalty, and includes also a final order for effecting a partition passed by any revenue authority or any Civil Court and an award by an arbitrator directing a partition. West Bengal Act: 2(14) Instrument .- Instrument includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished, or recorded. 2(15) Instrument of partition .- Instrument of partition means any instrument whereby co-owners of any property divide or agree to divide such property in severalty, and includes- (i) a final order for effecting a partition passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The opinion in Haji Sk. Subhan cannot be read to have said that a decree of a court would be a document in all cases; the principle enunciated was that if the wording of a statute so demanded, a decree of a court could be regarded as a document for the purposes of such statute. It is such principle that was relied upon in Gemini Silk Ltd. The judgment in Hindustan Lever also accepted such proposition and traced the principle to Haji Sk. Subhan. In Ruby Sales and Services (P) Ltd the Supreme Court considered the Bombay Stamp Act prior to the 1985 amendment thereto and concluded that a consent decree was exigible to stamp duty even before the amendment. The view taken was that a consent or a compromise decree did not stand on a higher footing than the agreement which preceded it and was, as such, exigible to stamp duty. The Supreme Court held that the subsequent amendment by which a consent decree was included in the definition of conveyance in the relevant statute was merely clarificatory and did not imply that consent decrees passed prior to the amendment coming into effect were not liable to be assessed for stamp duty. Again, Gemini Silk Ltd took sustenance from the opinion i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nouncement in Hindustan Lever. If the Division Bench of this court had noticed Hindustan Lever and had still rendered the opinion in Madhu Intra, it would have been binding on the company Judge of this court. But in Madhu Intra not noticing Hindustan Lever and it being apparent that the question has been answered otherwise by the Supreme Court, it is the Supreme Court view that has to be followed. It is submitted on behalf of the petitioners that despite the Allahabad High Court holding in Hero Motors Ltd that an order sanctioning a scheme of arrangement of merger or demerger being both an instrument and a conveyance within the meaning of the applicable Stamp Act, there was a difference of opinion as to whether the property transferred by an order sanctioning such a scheme would be regarded as movable or immovable property. The difference was referred to a third Judge and it was ultimately held that the properties covered by an order sanctioning such a scheme should be regarded as movables. The State is justified in its assertion, in such context, that the Stamp Act applicable in Uttar Pradesh makes a distinction between movables and immovables and nothing in Article 23 under Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he field since it has not been altered or repealed or amended by any competent authority. The petitioners refer to the reluctant concession in such regard granted in the judgment of Gemini Silk Ltd. It is not necessary to delve deep into the issue and the interesting peripheral questions that arise. It may be possible to accept by virtue of Article 372 of the Constitution that any law, or any notification governing the operation of any statute, in force at the time of the commencement of the Constitution would continue to remain in force notwithstanding the source from which the law or the notification emanated being no longer in existence, until the corresponding post-Constitution authority of like competence altered, repealed or amended the same. It may also be possible to accept that the expression altered or repealed or amended would involve an overt act. The State says that Article 23, which applies to a conveyance, does not figure in Schedule I to the Stamp Act applicable in this State. Indeed, Article 23 which is relevant for the present purpose, falls under Schedule IA to the Stamp Act as relevant in this State. There can be no manner of doubt that in Article 23 no longer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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