- (1.) 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-starved State is to blame for not being alive to its interest and insisting on the payment of stamp duty on the transfer of properties pursuant to the sanction of any scheme of amalgamation or demerger under the Companies Act, 1956. There can be no suspense as to how the question should be answered and the more conventional form needs to be eschewed to pronounce, at the outset, that stamp duty would be payable on transfers effected pursuant to any scheme of amalgamation or demerger under the Companies Act since that is the law of the land as recognised by the Supreme Court in the year 2003.
(2.) There is a history to the matter which requires narration. It was in 2002 that the company Judge of this court took a view that the transfer of property pursuant to any scheme of amalgamation or demerger would attract stamp duty as in any other ordinary case of transfer effected without the intervention of court. It was the court, and not the State, that took up the issue which culminated in the judgment reported at 114 Comp Cas 92 (In re: Gemini Silk Ltd) being rendered. The judgment held that an order sanctioning a scheme would amount to an instrument and conveyance that would be the subject to the charge under the Stamp Act as applicable in this State. That matter was heard upon notice to the State but the State s submission was recorded in two lines almost as a footnote to the judgment. The judgment reasoned that since an order of court or a decree could be regarded as an instrument within the meaning of that word appearing in the Stamp Act, that the transfer of properties was pursuant to an order of court and not by any document inter partes mattered little. The judgment referred to the Supreme Court pronouncements, inter alia, in (Haji Sk. Subhan v. Madhorao, 1962 AIR(SC) 1230) and (Ruby Sales and Services (P) Ltd v. State of Maharashtra, 1994 1 SCC 531). The argument in support of the petitioners claim of exemption of stamp duty upon the sanction of a scheme of amalgamation or demerger that was made in Gemini Silk Ltd was that the transfer of any property upon the sanction of a scheme under the Companies Act was by operation of law and not a mere agreement between the companies concerned. The court dealt with the argument by observing that schemes of amalgamation or demerger were nothing more than agreements between consenting parties that depended on the volition of 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.
(3.) The judgment rendered in Gemini Silk Ltd was carried in appeal and set aside in the judgment reported at Madhu Intra Ltd v. Registrar of Companies, 2006 130 CompCas 510. 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 matter should have ended there and the issue taken as concluded for even an obiter of the Supreme Court would be binding. In any event, and without taking lazy refuge in the principle that any obiter dictum of the Supreme Court would conclude a legal issue unless revisited and corrected by that court itself, it is evident that the relevant question arose in that matter and the Supreme Court held that even without the special provision in the applicable Stamp Act relating to stamp duty being payable on orders sanctioning schemes of amalgamation or demerger, such orders would, in any event, be instruments within the meaning of the Stamp Act that would attract stamp duty. The ratio decidendi in the Hindustan Lever judgment, which is what is binding on all courts in the country and is the law of the land under Article 141 of the Constitution of India, implied that even in the absence of any special provision requiring stamp duty to be paid on orders sanctioning schemes under the Companies Act, stamp duty would be payable thereon as in the case of any other comparable transfer.;