Civil Reference No. 1 of 2007 in Writ Petition No. 1293 of 2007 in Reference Application No. 8 of 2005. Case: The Chief Controlling Revenue Authority and Ors. Vs Reliance Industries Limited and Ors.. High Court of Bombay (India)
| Case Number | Civil Reference No. 1 of 2007 in Writ Petition No. 1293 of 2007 in Reference Application No. 8 of 2005 |
| Counsel | For Appellant: A.A. Kumbhakoni, Sr. Advocate and Special Counsel, A.B. Vagyani, Govt. Pleader, Shardul Singh, V.N. Sagare, AGP and Tintina Hazarika i/by Sunil Y. Kale, Law Officer and For Respondents: Milind Sathe, Senior Advocate and Melane D'souza i/by Junnarkar and Associates |
| Judges | S. C. Dharmadhikari, K. R. Shriram and B. P. Colabawalla, JJ. |
| Issue | Banking Regulation Act, 1949 - Section 44A; Constitution of India - Articles 248, 254; Information Technology Act, 2000 - Sections 11, 2(g), 2(i), 2(t), 3 |
| Judgement Date | March 31, 2016 |
| Court | High Court of Bombay (India) |
Judgment:
K. R. Shriram, J.
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The Reliance Industries Limited (respondent No. 1) and Reliance Petroleum Limited, Jamnagar Gujarat (respondent No. 2) entered into a scheme of amalgamation under Sections 391 & 394 of the Companies Act 1956. The provisions of section 391 r/w 394 of the Companies Act required obtaining of an order from the High Court in whose jurisdiction these companies are registered, sanctioning the Amalgamation Scheme filed by both, the transferor, as also the transferee company. The purpose and the object as to why both, the transferor and the transferee company had to obtain order from the court sanctioning the Scheme of Amalgamation is that, such a scheme of amalgamation must bind the dissenting members, as also, all the creditors of both the companies. As per the Scheme, from the appointed date, the assets/undertakings of the transferor company, viz., respondent No. 2 was to, without any further Act, instrument or deed, stand transferred to and vested in or deemed to have been transferred to and vested in the transferee (respondent No. 1) company, pursuant to the provisions of Sections 391 to 394 of the Companies Act so as to become the properties and assets of the transferee company.
Accordingly, on 10th April 2002, the respondent No. 1-transferee company filed a Company Petition No. 391 of 2002 and Company Application No. 133 of 2002 in this court for sanctioning the arrangement in the Scheme of Amalgamation. Similarly, respondent No. 2, the transferor company on 16th April 2002, filed the Company Petition No. 75 of 2002 and Company Application No. 76 of 2002 in Gujarat High Court for sanctioning the arrangement in the Scheme of Amalgamation.
This court passed an order under Section 394 of the Companies Act 1956 on 7.6.2002 sanctioning the scheme and the Gujarat High Court passed an order on 13.9.2002 sanctioning the scheme.
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On 16.10.2002, Respondent No. 1 submitted the order dated 7.6.2002 passed by this court along with the order dated 13.9.2002 passed by the Gujarat High Court for adjudication of stamp duty in the office of Superintendent of Stamp, Mumbai (the applicant No. 2) now known as Superintendent of Stamp (Head quarters) Mumbai. Respondent No. 1 requested the applicant No. 2 to adjudicate the stamp duty, if any, payable on the order dated 7.6.2002 passed by the Bombay High Court. The respondent No. 1 had paid stamp duty of Rs. 10 crores in the State of Gujarat on the order dated 13.9.2002 passed by the Gujarat High Court.
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During the hearing of the adjudication proceedings, the respondent No. 1 had urged that the maximum stamp duty payable under Article 25 (da) of schedule-1 of Bombay Stamp Act 1958 for order sanctioning the Scheme of Amalgamation in the State of Maharashtra was Rs. 25 crores and since respondent No. 1 had already paid stamp duty of Rs. 10 crores in the State of Gujarat on the order of sanction of scheme passed by the Gujarat High Court, the respondent No. 1 was entitled to remission/deduction/set off in the payment of stamp duty thereon to the extent of Rs. 10 crores and therefore, the respondent No. 1 was liable to pay only Rs. 15 crores as stamp duty. The applicant No. 2 rejected the submissions of respondent No. 1 and direct respondent No. 1 to pay the entire amount of Rs. 25 crores as stamp duty.
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The respondent No. 1 appealed against this order of adjudication under Section 53(1A) of the Bombay Stamp Act 1958 before the Chief Controlling Revenue Authority, Maharashtra State who while dismissing the appeal upheld the order of applicant No. 2. Against this order the respondent No. 1 filed an application to the applicant No. 1 to refer the case to Bombay High Court for opinion under Section 54 of the Bombay Stamp Act 1958 as it involved a serious and a substantial question of law. This application was rejected. Against this order, the respondent No. 1 filed a Writ petition being Writ Petition No. 591 of 2006 before this Court. By an order dated 22.2.2006 this court remitted the matter back to the applicant No. 1 to decide the reference application afresh after hearing the parties. The applicant No. 1 once again rejected the reference application against which the respondent No. 1 filed a fresh writ petition bearing No. 1293 of 2007.
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By an order dated 1.3.2007, this court directed the respondent No. 1 to deposit the balance amount of deficit stamp duty of Rs. 10 crores in the office of the applicant No. 2 within two weeks thereof and directed the applicant No. 1 to make reference to this court under Section 54(2) of the Bombay Stamp Act 1958 within 4 weeks from the date of deposit of the balance amount of deficit stamp duty by respondent No. 1.
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The following questions therefore, have been referred to this court under Section 54 of the Bombay Stamp Act 1958:--
1. Whether a scheme sanctioned between the two companies under Section 391 and 394 of the Companies Act is one and same document chargeable to stamp duty regardless of the fact that order sanctioning the scheme may have been passed by two different High Courts by virtue of the fact that the Registered Offices of the two Companies are situated in two different states?
2. Whether the instrument in respect of amalgamation or compromise or scheme between the two companies is such a scheme, compromise or arrangement and the orders sanctioning the same are incidental as the computation of stamp duty and valuation is solely based on the scheme and scheme alone?
3. Whether in a scheme, compromise or arrangement sanctioned under Section 391 and 394 of the Companies Act where registered office of the two companies are situated in two different States, the Company in state of Maharashtra is entitled for rebate under Section 19 in respect of the stamp duty paid on the said scheme in another State?
4. Whether for the purpose of Section 19 of the Act the scheme/compromise/arrangement between the two Companies must be construed as document executed outside the state on which the stamp duty is legally levied, demanded and paid in another State?
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This being the background of the matter, let us proceed to answer the four questions of law.
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Under Entry 44 of List III of VII Schedule to the Constitution of India, the power to levy stamp duty other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty, on all documents is concurrent. Consequently, charging provisions as to levy of stamp duty can be enacted by both, the Parliament and the State Legislature, subject to Article 254 of the Constitution of India. But the power to prescribe the rate of such levy is excluded from this Entry 44. This power to prescribe the rate of such levy is divided between the Parliament and the State Legislature. The rates of stamp duty can be prescribed by the Parliament under Entry 91 of List I and by the State Legislature under Entry 63 of List II of the VII Schedule.
Entry 91 of List I covers rates of stamp duty in respect of Bills of Exchange, Cheques, Promissory Notes, Bills of Lading, Letters of Credit, Policies of Insurance, Transfer of Shares, Debentures, Proxies and Receipts. Whereas, Entry 63 of List II covers rates of stamp duty in respect of documents other than those specified in the provisions of List I with regard to rates of stamp duty. This aspect has been considered by the Hon'ble Supreme Court in the case of Bar Council v. State of U.P. AIR 1973 SC 231 Paragraphs-11 & 12 read as under:--
"11. Now Entries 77 and 78 in List I in the Seventh Schedule to the Constitution are as follows Constitution, organisation, jurisdiction and powers of the Supreme Court (including contempt of such Court), and the fees taken therein; person entitled to practice before the Supreme Court.
78 Constitution and organisation (including vacations) of the High Courts except provisions as to officers and servants of High Courts; persons entitled to practice before High Courts".
Entry 91 relates to rates of stamp duty in respect of certain instruments which do not cover an instrument or a document with which we are concerned, namely, certificate of enrollment issued under s. 22 of the Act. Entry 96 in the same list relates to fees in respect of any of the matters in the List but not including the fee 'taken in any court. Entry 63 in List II relates to rates of stamp duty in respect of documents other than those specified in List I i.e. Entry 91. In the same List Entry 66 relates to fees in respect of any of he matters in that List but not including fee taken in any court. The following Entries in List III may be reproduced:
"26. Legal, medical and other professions". "44. Stamp duties other than duties or fees collected by means of judicial stamp, but not including rates of stamp duty".
There is no dispute that the Act was enacted under Entries 77 and 78 in List 1. It is equally clear that the words "persons entitled to practice" would include determining or prescribing the qualifications and conditions that a person should possess and satisfy before becoming entitled to practice as an advocate before, the Supreme Court or the High Courts. So far as persons entitled to practice before these courts are concerned "the power to legislative regard to them is carved out from the general power relating to the provision in Entry 26 in List III and is made the exclusive field for Parliament". In other words the power to legislate in regard to persons entitled to practice before the Supreme Court and the High Courts is altogether excluded from Entry 26 in List II. (See 6. N. Mohindroo v. The Bar Council of Delhi & Others. From the entries the following scheme with regard to persons entitled to practice will appear to emerge; (1) The Parliament has the exclusive power under Entry 77 and Entry 78 in List I to prescribe, inter alia, the qualifications and conditions on the fulfillment of which persons would be entitled to practice before the Supreme Court or the High Courts. Any fee...
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