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TMI Blog2012 (10) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme of amalgamation or arrangement was nothing but an arrangement and/or re-alignment of business and/or trade activity of the company as per the wish of the body of shareholders that would not amount to transfer of any immovable or movable property either under the Transfer of Property Act or otherwise attracting Stamp Duty as per the said Act of 1899. The learned Judge held it otherwise. His Lordship held, it was a voluntary transfer hence, would attract appropriate Stamp Duty. Hence, this appeal by the appellants. FACTUAL MATRIX In the case of Emami Biotech Ltd., it was a transfer of a business by the transferor company in favour of the transferee company, both run by the common management having controlling block of shares. As per the scheme, all immovable properties and assets, liabilities of Oriental, the transferor company would automatically stand vested in Emami, the transferee company. As per Clause 15 of the scheme, since Emami would control ninety per cent of paid up capital of Oriental such vesting of properties including lease-hold land would exempt from payment of Stamp Duty as per the notification dated January 16, 1937 issued by the then Governor of Bengal app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtent. Similar provision in Maharashtra came into effect in 2010. * Hindusthan Lever while considering Maharastra amendment, considered Allahabad, Delhi and Madras decisions in the case of Hero Motors Limited -VS- State of Uttar Pradesh & Others4, Automac (Madras) Private Limited5 and Delhi Towers Limited -VS- GNCT of Delhi6 and observed that in the other States appropriate amendments were made to the said 3 2004 Volume-9 Supreme Court Cases Page-438 4 All India Reporter 2009 Allahabad Page-93 5 2010 Volume-II Madras Law Journal Page-553 Act of 1899 which were yet to be imposed in the State, that was of no consequence as such amendments were superfluous in view of the provisions of Section 2(14) of the said Act of 1899 that was clear and unambiguous. * Article 23 that would apply in case of conveyance as specified in the notification dated January 16, 1937, was not in Schedule 1 but in Schedule 1(A) in the State that would make the said notification not applicable in the State. CONTENTIONS OF THE COMPANIES Mr. S.N. Mukherjee Mr. S.N. Mukherjee, learned senior counsel appearing for the Emami made the main submissions on behalf of the appellants. He raised the following issues : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contended, Schedule 1(A) was introduced by way of amendment in the State in 1922. The notification being post amended law would make the said notification squarely applicable in the State unless specifically recalled by the legislature. Mr. Abhrajit Mitra 9 All India Reporter 1968 Supreme Court Page-647 Mr. Mitra adopted the submission that was advanced by Mr. Mukherjee. In addition, he contended as follows : * In the case of ITP Limited, it was an amalgamation that would not have any trapping of sale as both the companies under the common management having controlling block of shares would amalgamate with each other that could not be said to be a "transfer" within the meaning of said Act of 1899. He relied on Article 31 and Section 29(e) of the said Act of 1899 in this regard. The issue would come squarely under Article 31 that could only be made applicable by a specific amendment that was available in the other States. The amalgamation, even if called as a transfer, would, at best, be between two groups of shareholders who were, in effect, one and the same group. Hence, it would be no transfer at all. He relied on Vodafone International Holdings BV -VS- Union of India & Ano ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sthan Lever, Mr. Mitra made elaborate submission. According to him, the decision in the Gemini Silk that merged in the decision in Madhu Intra would have no application in view of Hindusthan Lever coming into force. Hindusthan Lever considered Rubi Sales and Services Private Limited -VS- State of maharashtra14 and observed that the provision would, even without an amendment, have application in the instant case. Rubi Sales considered a transfer through litigation that was held to be inter vivos. Such analogy was extended in Hindusthan Lever and made applicable in the case of scheme of amalgamation and/or arrangement. He contended, 1937 notification spoke about Schedule-I that would not be applicable in the State as Schedule 1(A) was in force at the time of issuance of the notification. He relied on M/s. General Radio & Appliances Company Limited & Others - 14 1994 Volume-I Supreme Court Cases Page-531 VS- M.A. Khader15 to say that the scheme was nothing but sanction of the wishes of the shareholders that would have no binding effect on the persons outside the scope and purview. He relied on paragraph 6 of Hindusthan Lever to say that even without an amendment the mischief would squ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was considered wherein Ruby Sales held such amendment was introduced "out of abundant caution". It also held, such amendment would not mean that the consent decree was otherwise not covered by the definition of 2(g) or 2(e). The Apex Court held, "it was clear from the terms of the consent decree that it is also an instrument under which the property has been transferred by one person to another". Hindusthan Lever was nothing but an extension of Ruby Sales. The elaborate decision considered the State amendments. It also 16 Unreported Judgment dated September 24, 2003 in C.P. No.31 of 2003/C.A. No.584 of 2002 of the High considered Mafatlal, General Radio. Section 2(l) would define "instrument" as per the Bombay Stamp Act that is pari materia with our Section 2(14). The Apex Court, in no uncertain terms held, the scheme of amalgamation was not in-voluntary. It rather reiterated its earlier view expressed in General Radio and Mafatlal. It is true, Hindusthan Lever considered Maharashtra amendment. We however, do not find any reason as to how the same would not be applicable in our State particularly the observation contained in paragraph 6. Paragraph 43 and 45 being relevant herein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of amalgamation or demerger. It was a transfer between two "juristic persons". Hence, it was nothing but one of the methods of transfer in corporate field that would certainly be inter vivos. An inter vivos transfer would definitely attract Stamp Duty as per the said Act of 1899 and/or the State amendments applicable therefor. Lot was said on 1937 notification. Such notification would be applicable in case of Article 23 of Schedule 1. We do not know under what circumstance it was issued, particularly, when Schedule 1 was replaced by Schedule 1(A) in 1922. As Mr. Abhrajit Mitra says, we must interpret fiscal law rigidly. 1937 notification did not speak about Schedule 1(A). Hence, the same could not be made applicable. On the question of "holding subsidiary" we are of the view, corporate entities are having distinctive features. Shareholders do not own the corporate entity. Lifting of the corporate veil might suggest otherwise. In the eye of law, corporate entities are distinct. Hence, transfer from A to B would definitely a "transfer" to come within the scope of paragraph 45 of Hindusthan Lever quoted (Supra), attracting appropriate duty. As per the proposed law that was pend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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