TMI Blog2022 (12) TMI 826X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Inox Air Products Private Limited clearly reveals that there is only change of the name in terms of Ss.21 and 23 of Companies Act. Since no new entity, if any, has come into existence on account of proposed change in the name of company coupled with the fact that there is no document available on record, if any, to show that sale-purchase of properties took place between two entities, as noticed above, action of the respondents, demanding stamp duty appears to be highly unjust and unreasonable. While placing reliance on various judgments passed by this Court as well as other Constitutional Courts, the Division Bench has categorically held in the judgment supra that upon conversion of a registered partnership firm to an LLP under the provisions of the Limited Liability Partnership Act, all movable and immovable properties of erstwhile registered partnership firm automatically vest in the converted LLP by operation of Section 58(4) (b) of the Limited Liability Partnership Act. The Co-ordinate Bench of this Court in Sozin Flora Pharma LLP Vs. State of Himachal Pradesh and another, which otherwise has been taken note in JSTI Transformer Pvt. Ltd, while dealing with similar f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure P-3). Management of M/s SAPL was taken over by M/s Inox Air Products Limited (IAPL) on 1.4.2000 and aforesaid Superior Air Products Limited was amalgamated with Inox Air Products Limited, pursuant to order dated 10.1.2002 passed by this Court in Company Petition No. 13 of 2001. Simultaneously, Superior Air Products Limited also filed an amalgamation petition before the Bombay High Court under Ss. 391/394 of the Companies Act, which was allowed on 21.3.2002. 3. On 5.7.2002, Superior Air Products Limited submitted a request to the Tehsildar concerned for effecting change in the name of company in the revenue record, which was accordingly changed by the concerned revenue authority. 4. Record reveals that the petitioner company took steps for conversion from Public Limited to Private Limited and sought necessary permission from the Central Government, which was granted vide letter dated 11.4.2015 and a Certificate of Incorporation dated 11.4.2015 was issued by the Registrar of Companies Mumbai (Annexure P-6) and name of the petitioner was changed to Inox Air Products Private Limited . 5. As per petitioner, after conversion of the petitioner from a public limited to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm and a company are two separate legal entities an in such a situation if a company applies for change in its name, then it is clear cut case of transfer of property, which will attract provisions of S.118 of the Act ibid as also the Stamp Act, 1899. In the aforesaid background, petitioner has approached this Court in the instant proceedings seeking reliefs reproduced hereinabove. 10. Pursuant to notice issued in the instant proceedings, respondents have filed reply, wherein facts as noted herein above, have not been disputed, rather stand admitted. However, respondents have opposed the prayer made on behalf of the petitioner on the ground that a company and a proprietorship firm are two separate legal entities, as such are liable to pay stamp duty before change of its name in the revenue records. 11. Mr. Narender Guleria, learned Additional Advocate General, while inviting attention of this Court to instructions dated 16.02.2012 (Annexure P-15), issued by Department of Revenue, Government of Himachal Pradesh argued that when the name of a company is changed with the approval of Registrar of the Companies and no transaction/sale of property takes place, in that case, comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 16.02.2012, Annexure P-15, which reads as under:- Clarification regarding name change by Companies/firms No. Rev. B.F.(10)-154/2009 Government of Himachal Pradesh Department of Revenue From Principal Secretary-cum-F.C. (Revenue) to the Government of Himachal Pradesh. To 1. The inspector General of Registration SDA Complex, shimla-09, Himachal Pradesh. 2. All the Deputy Commissioners in Himachal Pradesh. 3. All the Tehsildars/Naib Tehsildars, in Himachal Pradesh. Dated; Shimla-171002, the 16th February, 2012 Subject:- Instructions for disposal of cases regarding change in name of the company. Sir, I am directed to say that the matter with regard to registration of a transaction for mutation of land in revenue records pursuant to change in the name of Company has been under consideration of the department for quite some time. 2. Section 394 of the Companies Act, 1956 deals with the provision for facilitation and amalgamation of two or more companies. The amalgamation scheme, which is an agreement between the two of more Companies, is presented before the Court which passes appropriate order sanctioning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adesh. Endst.No. As above, Dated: Shimla-2 16th February, 2012 Copy forwarded for information and similar necessary action to :- 1. The Settlement Officer, Shimla/Kangra at Dharamshala, H.P. 2. All the Sub-Divisional Magistrates, in Himachal Pradesh. 3. The IRSA-cum-Tehsildar, Stamp Cell, H.P. Sectt. Shimla-02. -Sd- Principal Secretary (Revenue) to the Government of Himachal Pradesh 16. Bare perusal of aforesaid instructions, itself reveals that after passing of order of amalgamation by competent Court of law, company can seek change in its name in record of the Registrar of the Companies, who after verification of the record, would issue fresh Certificate of Incorporation in the name of new company. In the case at hand, company, which is seeking change of the name in revenue record was earlier being run as M/s Superior Air Products Limited at Barotiwala. In the year 1995, M/s Superior Air Products Limited was granted permission under Section 118 of the Act to construct premises at Barotiwla, but since aforesaid M/s Superior Air Products Ltd. was taken over by M/s Inox Air Products Ltd., change in revenue record was effected on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se /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. The management of the Company i.e. Dabur Pharma Limited later on, decided to change its name from Dabur Pharma Limited to Fresenius Kabi Oncology Limited on 9.1.2009. The Registrar of Companies, NCT of Delhi allowed the change of name of the company from Dabur Pharma Limited to Fresenius Kabi Oncology Limited on 9.1.2009. It was against this backdrop that on 18.2.2009, petitioner submitted an application to the respondent-Corporation with a request to change the name of the allottee in respect of the plot in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hip and control of the company, and such change should be treated to have resulted in transfer of assets of the company. According to him, the leasehold right was shifting from one entity to another, and for this reason transfer fee was payable. His submission is that this is a case where there is simultaneous transfer of assets including leasehold right from one entity to another along with change of name and in this regard he relied on a judgment of this Court delivered on 8th February 2012 in the case of in Re:- Emami Biotech Ltd. Anr. [(2012)3 CHN 102] which is also a decision of an Hon ble Single Judge of this Court. 10. In the case of Bacha F. Guzdar (supra), it has been held by the Hon ble Supreme Court:- That a shareholder acquires a right to participate in the profits of the company may be readily conceded but it is not possible to accept the contention that the shareholder acquires any interest in the assets of the company. The use of the word 'assets' in the passage quoted above cannot be exploited to warrant the inference that a shareholder, on investing money in the purchase of shares, becomes entitled to the assets of the company and has any sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll other licences, of the transferor company without any further act or deed are transferred and vested or deemed to be transferred or vested in favour of the transferee company. Thus, in case of amalgamation no doubt the lease-hold interest of the transferor company stands transferred in favour of transferee company but the such transfer is not contemplated in case of transfer of share by the shareholder of the company to the stranger purchasers of such shares, as it was held in Mrs. Bacha F. Guzdar, Bombay vs. Commissioner of Income Tad, Bombay (supra) by the Hon ble Supreme Court that a shareholder who buys share does not buy any interest in the property of the company which is a juristic person entirely distinct from shareholders. It was further held therein that the true position of a shareholder in a company is that on buying shares he becomes entitled to participate in the profit of the company as and when the company declares, subject to articles of association, that the profits or any portion thereof would be distributed by way of dividends amongst the shareholders. It was further held therein that he has further a right to participate in the assets of the company which wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company. Such a situation cannot come within the ambit of the expression transfer of leasehold right , as stipulated in the notification of 18th December, 2007. The ratio of the judgment of this Court in the case of Emami Biotech Ltd. is not applicable in the facts of this case, as transfer fee is not being charged on any instrument of transfer, but on the basis of request for recordal of change of corporate name. It has not been argued by the State that the very act of transfer of equity-holding of the promoter group gives rise to the obligation of the company to pay transfer fee. 10. Similar issue again arose before this Court in Reckitt Benckiser (India) Private Limited (supra).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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there is transfer of assets and property by the Company. 11. Bombay High Court in Commissioner of Income-Tax vs. Texspin Engg. Mfg., (2003) 180 CTR Bom. 497, while dealing with a case where partnership firm was being treated as a company under the statutory provisions of the Companies Act, held that when a firm is treated as a company, there is no conveyance of the property executable in favour of the Limited Company. The vesting of property of firm in the Limited Company was not incidental to a transfer, but statutory. Therefore, there was no question of capital gain. It would be profitable to reproduce para-6 of the aforesaid judgment hereinbelow. 6. . Now, in the present case, it is argued on behalf of the department before the Tribunal, for the first time, that in this case, on vesting of the properties of the erstwhile Firm in the Limited Company, there was a transfer of capital assets and, therefore, it was chargeable to income-tax under the head Capital gains as, on such vesting, there was extinguishment of all right, title and interest in the capital assets qua the Firm. We do not find any merit in this argument. In the present case, we are conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporated under the provisions of the Companies Act. The Registrar is bound to give a certificate of registration under Section 262 (present Section 574) which is a conclusive proof of incorporation, vide Section 35 of the present Act that corresponds to Section 24 of the previous Act. Hence, it is clear that no conveyance is necessary when a partnership is converted and registered as a company. However, it is not possible to acquire such title statutorily under this section if the previous firm purports to convey title to the company in which event a separate deed of conveyance is necessary. The Court therefore held that if the constitution of the partnership firm is changed into that of a company by registering it under Part 9 of the present Act (Part 8 of the previous Act), there shall be statutory vesting of title of all the property of the previous firm in the newly incorporated company without any need for a separate conveyance. 13. The above judgment was quoted with approval by the Supreme Court in Jai Narain Parasrampuria (Dead) and others Versus Pushpa Devi Saraf and others, (2006) 7 SCC 756, in following manner:- 26. The said decision has been followed by a Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, while granting permission to reflect such change, directed the petitioner to deposit the stamp duty and registration fee. This court relying upon the aforesaid instructions dated 16.2.2012, in para-5 held as under: 5. Conclusion:- From the above discussion, following conclusions are drawn:- 5(a). Upon conversion of a registered partnership firm to an LLP under the provisions of the Limited Liability Partnership Act, all movable and immovable properties of erstwhile registered partnership firm, automatically vest in the converted LLP by operation of Section 58(4)(b) of the Limited Liability Partnership Act. 5(b). The transfer of assets of firm to the LLP is by operation of law. Being statutory transfer, no separate conveyance/instrument is required to be executed for transfer of assets. 5(c). Since there is no instrument of transfer of assets of the erstwhile partnership firm to the limited liability partnership, the question of payment of stamp duty and registration charges does not arise as these are chargeable only on the instruments indicated in Section 3 of the Indian Stamp Act and Section 17 of the Indian Registration Act. 5(d). Partnershi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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