2024:MHC:826

Writ Appeal No.758 of 2022 etc., (Batch)

IN THE HIGH COURT OF JUDICATURE AT MADRAS

JUDGMENT RESERVED ON : 19.12.2023

JUDGMENT PRONOUNCED ON : 19.02.2024

CORAM :

THE HON'BLE MR. SANJAY V.GANGAPURWALA, CHIEF JUSTICE

AND
THE HON'BLE MR.JUSTICE D.BHARATHA CHAKRAVARTHY

Writ Appeal Nos.758, 687, 751, 755 & 851 of 2022

Writ Petition (MD) No.1824 of 2019 and
Writ Petition Nos.31650 & 31651 of 2016, 8511,
31191 of 2019, 18188 of 2020 21977, 21979 &
22562 of 2021 and 30363 of 2023

Writ Appeal No.758 of 2022:

1.The State of Tamil Nadu
Represented by the Principal Secretary
to Government
Commercial Taxes and Registration Department
Secretariat, Fort St.George
Chennai – 600 009.
2.The Inspector General of Registration
No.10, Santhome High Road
Chennai – 600 028. ... Appellants/Respondents

Versus
M/s Serene Estate Private Limited
Represented by its Authorised Signatory
(Previously known as 'Zillion Estates
Private Limited & Nuziveedu Seeds Ltd.,)
NSL ICON, 4th Floor, 8-2-684/2/A
Road No.12, Banjara Hills
Hyderabad – 500 034. ... Respondent/Petitioner

Page No.1 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

Prayer in W.A.No.758 of 2022 : Writ Appeal filed under Clause 15 of the Letter
Patent, to set aside the order dated 12.01.2022 made in W.M.P.No.23193 of 2021
in W.P.No.21979 of 2021.
In W.A.Nos.758, 687, 751, 755 and 851 of 2022:

For the Appellants : Mr.S.Silambanan, AAG

Assisted by
Mr.Yogesh Kannadasan
Special Government Pleader

In W.A.Nos.758, 751, 755 and 851 of 2022:

For the Respondents : Mrs.Inthu Karunakaran

In W.A.No.687 of 2022:
For the Respondents : No appearance for RR1 & 2

In W.P.Nos.31650 and 31651 of 2016:

For the Petitioners : Mr.V.Venkadasalam

In W.P. (MD) No.1824 of 2019 and 18188 of 2020:

For the Petitioners : Mr.Naveen Kumar Murthi, Senior Counsel
for Ms.S.Varsha
In W.P.No.8511 of 2019:
For the Petitioner : Ms.S.Kamala Rani

In W.P.No.31191 of 2019:
For the Petitioner : Mr.S.R.Raghunathan, Senior Counsel
for Ms.Preeti Mohan &
Mr.K.V.Karthi Subramanian

In W.P.Nos.21977 and 21979 of 2021:

For the Petitioners : Ms.Inthu Karnakaran

Page No.2 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

In W.P.No.22562 of 2021:
For the Petitioners : Mr.P.R.Murali

In W.P.No.30363 of 2023:
For the Petitioner : Mr.G.Raghavan, Senior Counsel
for Ms.Preeti Mohan

In W.P.(MD) No.1824 of 2019 and

Writ Petition Nos.31650 & 31651 of 2016, 8511,
31191 of 2019, 18188 of 2020 21977, 21979 &
22562 of 2021 and 30363 of 2023:
For the Respondents : Mr.S.Silambanan, AAG
Assisted by
Mr.Yogesh Kannadasan
Special Government Pleader

COMMON JUDGMENT

(Judgment made by the Hon'ble Mr.Justice D.Bharatha Chakravarthy)

A. The Petitions:

These Writ Petitions are filed challenging the validity of the Circular dated

20.11.2018, issued by the Inspector General of Registration in

No.49282/P1/2018 and / or G.O.(Ms.) No.29, Commercial Taxes and

Registration (J1) dated 01.03.2019 and G.O.(Ms.) No.47, Commercial Taxes and

Registration (J1) dated 19.02.2020. When some of the Writ Petitions were

originally pending before the learned Single Judge, interim orders were passed,

directing the registration of documents without prejudice to the rights of parties,

Page No.3 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

upon receiving an undertaking affidavit before the registration authorities.

Aggrieved by the interim orders, the Writ Appeals are filed. Subsequently, the

Writ Petitions themselves were ordered to be posted before the Division Bench of

this Court as the vires of the notification is also challenged. Accordingly, all

these matters are taken up together and disposed of by this common Judgment.

B. The Factual Background:

2.To understand the factual matrix, the facts in W.P.No.30363 of 2023 are

as follows:-

2.1. The petitioner is Shriram Capital Limited. By an order dated

09.11.2022, the National Company Law Tribunal (in short ‘the Tribunal’)

sanctioned and approved a scheme for amalgamation of the

petitioners/companies therein with that of Shriram Capital Limited.

2.2 Whileso, the Inspector General of Registration, State of Tamil Nadu,

had issued a Circular No.49282/P1/2018 dated 20.11.2018 and thereby clarified

that in view of the Judgment of the Hon’ble Supreme Court in Hindustan Lever

& Anr Vs. State of Maharashtra & Anr 1, the scheme of arrangement of merger,

amalgamation or reconstruction approved under the Companies Act 2013 would

1 (2004) 9 SCC 438

Page No.4 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

fall within the definition of ‘conveyance’ and such Court Orders upon being

presented for registration become leviable with stamp duty. By the said Circular,

the Inspector General of Registration, State of Tamil Nadu issued the following

directions:-

“3.Thus the aforesaid judicial pronouncements lead to the

following conclusions:-
(i) Scheme of arrangements submitted by companies and
sanctioned by High Court / registered by competent authorities
evidencing transfer of property are classifiable under Article 23
of the Indian Stamp Act, 1899.
(ii) Consequently such instruments / copy of instrument
when presented for registration shall not be registered unless it
is unequivocally evident that original instrument is duly
stamped.
(iii) If such instrument is found to be not duly stamped, the
instrument presented shall be returned to the Presentant, by
clearly explaining the aforesaid legal position through a check
slip, and also requiring the presentant to produce evidence as to
the duly stamping of the original instrument.”

2.3. Thereafter, the State of Tamil Nadu through the Principal Secretary to

Government, Commercial Taxes and Registration Department issued G.O.(Ms.)

No.29 dated 01.03.2019, ordering publication of the following notifications

which were appended there of:

“ APPENDIX
NOTIFICATION – I
In exercise of the powers conferred by clause (a) of sub-
section (1 of section 9 of the Indian Stamp Act, 1899 (Central Act
II of 1899), the Governor of Tamil Nadu thereby reduces the duty
chargeable under the said Act in respect of instruments of transfer

Page No.5 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

of property relating to amalgamation or reconstruction of

companies to two percent of the market value of the immovable
property or 0.6 percent of the aggregate of the market value of the
shares, whichever is higher.
NOTIFICATION – II
In exercise of the powers conferred by section 78-A of the
Registration Act, 1908 (Central Act XVI of 1908), the Governor
of Tamil Nadu is of the opinion that it is necessary so to do in the
public interest hereby reduces the fee payable under the said Act
to Rs.30,000/- (Rupees thirty thousand only) in respect of
instruments of transfer of immovable property relating to
amalgamation or reconstruction of companies.”
2.4. Again, the State of Tamil Nadu, through the Principal Secretary to

Government, Commercial Taxes Registration Department issued G.O.(Ms.)

No.47 dated 19.02.2020, thereby making the above Notification No.1 to have

retrospective effect with effect from 01.04.1956, so that all the schemes relating

to amalgamation or reconstruction of companies by the High Court or the

Tribunal as the case may be, sanctioned hitherto shall also become eligible for

the Stamp Duty reduction granted in the said notification. It is essential to extract

the directions contained in paragraph Nos.3 and 4 of the said G.O., which reads

as under:-

“3. The Government have decided to accept the same and

accordingly issue the following orders:-

(a) The Stamp Duty reduction granted through the Notification-1

of the Government Order first read above shall be given
retrospective effect with effect from 01.04.1956 so that all the
Schemes relating to amalgamation or reconstruction of
companies by the High Court or the National Company Law

Page No.6 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

Tribunal, as the case may be, sanctioned hitherto shall also

become eligible for the Stamp Duty reduction granted in the said
Notification:

(b) For the purpose of calculation of Stamp Duty in respect of

such schemes, the market value of the immovable property shall
be reckoned as the market value set-forth in the scheme of
amalgamation or reconstruction of companies or if not set-forth
therein, the market value of the Immovable property shall be as
per the guideline register prevailing on the date of order
sanctioning the scheme:

(c) In respect of such instruments which consist of immovable

property situated outside the State of Tamil Nadu, then Stamp
Duty shall not be levied on the property which is situated outside
the State of Tamil Nadu:

(d) For the purpose of calculation of Stamp Duty, the market

value of the shares of an unlisted company shall be reckoned as
the market value set-forth in the scheme of amalgamation or
reconstruction of companies or if not set-forth therein, the market
value of the shares shall be the value of shares found in the
audited balance sheets of the companies filed with the Registrar
of Companies immediately before the date of order sanctioning
the scheme:

(e) If any other instrument is subsequently executed between the

same companies under the said scheme for the sole purpose of
reducing the terms of the scheme into writing and the subsequent
instrument is found to be duly stamped with the duty of two
percent of the market value of the immovable property or 0.6
percent of the aggregate of the market value of the shares,
whichever is higher, subject to a maximum of Rs.25 crores
(Rupees twenty five crores only), the principal instrument of
amalgamation or reconstruction shall be deemed to have been
duly stamped:

(f) If the principal instrument of amalgamation or reconstruction

is found to be duly stamped with the duty of two percent of the

Page No.7 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

market value of the immovable property or 0.6 percent of the

aggregate of the market value of the shares, whichever is higher,
any other subsequent instrument executed between the same
companies under the said scheme for the sole purpose of
reducing the terms of the scheme into writing, the subsequent
instrument shall be deemed to have been duly stamped.
4. The Government accordingly direct that the notification
appended to this order will be published in an extraordinary issue
of the Tamil Nadu Government Gazette, dated 19.02.2020. The
Works Manager, Government Central Press is requested to send
50 copies to the Government and 1000 copies to the Inspector
General of Registration of the gazette in which the notification is
published.”

2.5 Prior to the above exercise, the State of Tamil Nadu also tried to bring

an amendment to amend the Indian Stamp Act, 1899 (hereinafter the Act) in its

application to the State of Tamil Nadu, vide L.A. Bill No.20 of 2012. By the said

bill, the very definition of ‘conveyance’ was sought to be amended by

specifically including every order made by the High Court under Section 394 of

the Companies Act, in respect of amalgamation and reconstruction of Companies

and every order made by the Reserve Bank of India under Section 44A of the

Banking Regulations Act, 1949 by which, the property whether movable or

immovable or interest in any of the property is transferred inter vivos, which is

not otherwise specifically provided vide Schedule I. The statement of objects and

reasons in respect of the said bill reads thus,

“At present there is no provision in the Indian Stamp Act,

1899 (Central Act II of 1899) for levy of stamp duty on transfer

Page No.8 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

of properties made to facilitate amalgamation or reconstruction

of companies by the orders of the High court under Section 394
of the Companies Act, 1956 (Central Act 1 of 1956) or under the
order of the Reserve Bank of India under section 44A of the
Banking Regulation Act, 1949 (Central Act 10 of 1949), in
respect of Banking companies. The Government have, therefore,
decided to amend the Indian Stamp Act, 1899 (Central Act II of
1899) so as to provide for levy of stamp duty on the above
mentioned transfer of properties to augment the State
exchequer.”
2.6 However, the said bill got lapsed and subsequent attempts by way of

similar bills also lapsed and the State of Tamil Nadu has not carried out any such

amendment to the Indian Stamp Act till today. It is under these circumstances,

the present Writ Petitions were filed, either apprehending that the order of the

Tribunal will be treated as an instrument and Stamp Duty will be demanded or

aggrieved by the actual orders passed, demanding Stamp Duty and Registration

charges.

C. The Case of the Parties :

3. The petitioners challenge the circular and the exercise of reduction of

Stamp Duty on the grounds, firstly as a colourable exercise of power. The State

of Tamil Nadu itself felt that there is no provision in the Act to charge Stamp

Duty and registration charges, in respect of such schemes of amalgamation and

attempted to amend the Act. The amendment not having fructified into law, by

Page No.9 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

means of all these executive orders, the State had tried to legislate by bringing in

the scheme of amalgamation, within the purview of levy of Stamp Duty, as such

it is a colourable exercise. Power to levy Stamp Duty on all documents is

traceable to Entry 44 of List III of the Constitution of India and as such requires

an Act of competent legislature.

3.1 Similarly, the power to prescribe the rate of Stamp Duty is excluded

from the Entry 33 of List III and would be either under Entry 91 of List I by the

Parliament or under Entry 63 of List II by the State Legislature. Therefore,

without enacting legislation and prescribing the rate of Stamp Duty, by way of an

executive circular, under the garb of clarification, the impugned orders are

passed. The impugned orders are an attempt by creating a source to levy,

prescribe and collect Stamp Duty. More particularly, it is retrospective in nature.

The Indian Stamp Act seeks to levy Stamp Duty only on instruments not on the

underlying assets that is dealt with. It is also further contended that in many of

the cases Stamp Duty is also paid in other states like, 0.7 % in Mumbai (in

W.P.No.31191 of 2019) and therefore, the same cannot be once again subject to

levy in the State of Tamil Nadu. It is further contended that the scheme of

amalgamation considers both the assets and liabilities and arrive at the final net

value of the shares and therefore, selectively targeting the immovable assets of

Page No.10 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

the transferee company and making assets subject to Stamp Duty is arbitrary and

unlawful. In any event, the retrospective application is illegal and further while

demanding Stamp Duty retrospectively, the same cannot be on the current market

value.

3.2 The State of Tamil Nadu, being the respondent in the Writ Petitions

and the appellant in the Writ Appeals contends that Section 2(10) of the Stamp

Act defines ‘conveyance’ which would explicitly cover both movable and

immovable properties and attempt of the State of Tamil Nadu to amend the act

was only by way of abundant caution so as to avoid any ambiguity and merely

because the amendment did not fortify, it would not take away the right to collect

the Stamp Duty which it is otherwise entitled to. The declaration made in the

Statement of objects and reasons in a lapsed bill would not restrain the State of

Tamil Nadu. The Judgment of the Hon’ble Supreme Court in Hindustan Lever

case (cited supra) and prior to that in the Ruby Sales and Services (P) Ltd. &

Anr. Vs. State of Maharashtra & Ors., 2 would make it clear that the schemes of

amalgamation etc., would be 'conveyance' within the meaning of Section 2(10) of

the Stamp Act and the Orders of the Courts/Tribunals shall be instruments liable

for levy.

2 1994 (1) SCC 531

Page No.11 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

3.3 Further, Section 9 (1) (a) of the Act empowers the State Government to

reduce or remit the Stamp Duty, either prospectively or retrospectively.

Therefore, while in the ordinary course, a transfer or conveyance of immovable

property would attract 5% Stamp Duty, G.O.(Ms.) No.47 dated 19.02.2020

provides for levy of reduced Stamp Duty, i.e., 2 % of the market value of the

immovable property or 0.6 % of the aggregate of the market value of the shares,

whichever is higher on the instruments of transfer of property relating to the

scheme of amalgamation or reconstruction of companies. The Government

Orders are relatable only to the instrument of transfer / conveyance and not

relating to transfer of shares and therefore, are well within the ambit of the

powers of the State of Tamil Nadu. A reading of Section 9(2)(b) makes it

abundantly clear that only in respect of transfer of shares and debentures, the

power is vested with the Central Government. Therefore, the challenge to the

circular and the Government Orders have to be repelled and the appeals filed by

the State of Tamil Nadu ought to be allowed.

D. The Arguments :

4. We have heard Mr.G.Raghavan, learned Senior Counsel appearing on

behalf of the petitioner in W.P.No.30363 of 2023; Mr.S.R.Raghunathan, learned

Page No.12 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

counsel appearing on behalf of the petitioner in W.P.No.31191 of 2019;

Mr.Naveen Kumar Murthi, learned Senior Counsel appearing on behalf of the

petitioner in W.P. (MD) No.1824 of 2019 and W.P.No.18188 of 2020;

Mr.V.Venkadasalam, learned counsel appearing on behalf of the petitioner in

W.P.Nos.31650 and 31651 of 2016; Ms.S.Kamala Rani, learned counsel

appearing on behalf of the petitioner in W.P.No.8511 of 2019; Ms.Inthu

Karnakaran, learned counsel appearing on behalf of the petitioners in

W.P.Nos.21977 and 21979 of 2021 and Mr.P.R.Murali, learned counsel

appearing on behalf of the petitioner in W.P.No.22562 of 2021 and

Mr.S.Silambanan, learned Additional Advocate General appearing on behalf of

the State of Tamil Nadu. Though not a party, the Corporate, Insolvency &

Bankruptcy Laws Bar Association also sought to intervene. Considering the

question involved in the matter, having general interest in the law and practice in

the field, we heard the association, through Senior Advocates Mr.Aravindh

Pandiyan and Mr.Srinath Sridevan, who sought to assist the Court by making

their legal submissions.

4.1 Mr.Raghavan, learned Senior Counsel leading the arguments in respect

of the petitioners would firstly point out to the definition of 'conveyance' under

Section 2(10) of the Act and the definition of 'instrument' under Section 2(14) of

Page No.13 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

the Act. Pointing out to Section 3 of the Act, the learned Senior Counsel would

submit that it is the instrument which is chargeable with duty. Pointing to Article

- 23 of Schedule- I of the Act, the learned Senior Counsel would submit that the

combined reading of the above provisions would make it clear that the term

‘conveyance’ does not contain any word referring to an order of Court/Tribunal

sanctioning the scheme of amalgamation or reconstruction. Even assuming that

the definition should be read broadly so as to include such Orders, again, in

Article - 23 of Schedule- I, which is the charging provision, there is no language

or reference pertaining to the order of Court or Tribunal or the rate of Stamp

Duty, which is payable on such orders. Relying upon the Judgment in Mathuram

Agarwal Vs. State of Madhya Pradesh 3, the learned Senior Counsel submits that

the charging provision in a taxing statute should be clear and unambiguous.

Learned Senior Counsel taking this Court through the LA Bill No.20 of 2012,

more specifically the language used therein, which clearly stated that it seeks to

provide for levy of Stamp Duty and also expressly acknowledges that there is no

provision in the Act for levy of Stamp Duty and the Bill being sought to be

passed in the year 2012, much after the Judgment of the Hon’ble Supreme Court

in the Hindustan Lever case would submit that the same would bind the State in

3 (1999) 8 SCC 667

Page No.14 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

as much as it's intent is concerned the Bill was again sought to be introduced in

the year 2013 and 2019. But however, what they could not achieve by way of

bringing amendment, is now sought to be introduced through circular dated

20.11.2018.

4.2 The learned Senior Counsel would submit that the Circular dated

20.11.2018 is on an incorrect premise, basing on its reasoning on the strength of

the Judgment of the Hon’ble Supreme Court in Hindustan Lever case (cited

supra) which dealt with the Maharashtra Act . The said Act contains specific

provision for levying duty for amalgamation scheme. As far as the Judgment in

Ruby Sales and Services (P) Ltd., case, the same is in respect of the consent

decree and not regarding sanctioning the scheme of amalgamation. Relying upon

the Judgment of the Supreme court in Goan Real Estate and Construction

Limited and another Vs. Union of India and Ors.,4 more specifically paragraph

No.31, the learned Senior Counsel would submit that the Judgments should not

be read as statutes and should be read in the context. For the same proposition,

the learned Senior Counsel would rely upon the Judgment of the Supreme Court

in P.S.Sathappan (died) by LR’s Vs. Andra Bank Ltd., and Ors.,5 more

4 (2010) 5 SCC 388

5 (2004) 11 SCC 672

Page No.15 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

specifically relying upon the paragraph Nos.144 to 147 of the said Judgment.

Therefore, in the context of the position prevailing in the State of Tamil Nadu,

the Circular by which the Stamp Duty is sought to be levied is without

jurisdiction, as there can be no levy by way of an executive action. The learned

Senior Counsel also relied upon the Judgment of the Supreme Court in the case

of Jhunjunwala and others Vs. State of U.P.,and Ors.,6 more specifically

paragraph Nos.10 and 126.

4.3 Further, attacking the Government Orders, the learned Senior Counsel

would submit that the remit of the Government under Section 9(1) (a) of the

Companies Act is only to reduce the duty and for that the instrument must be

chargeable with duty. Secondly, the impugned Government Order charges the

instrument with 2 % of the value of the immovable property or 0.6 % of the value

of the shares whichever is higher. Therefore, even assuming the Orders of Court /

Tribunal sanctioning the scheme of amalgamation to be treated as conveyance,

Article 23 which prescribes the rate of duty, does not in any manner refer to

shares or their value. Therefore, the Government Order in the guise of reduction

introduces wholly a new levy, which is not relatable in any way to the existing

provision on conveyance. The Article relating to conveyance only deals with the

6 (2006) 8 SCC 196

Page No.16 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

property which is being transferred and vested and not with respect to the action

of amalgamation as such or in respect of any aggregate value of the shares.

Therefore, the Government Order is an attempt to impose a new levy dehors

legislative action on the transaction of amalgamation and thus it is illegal.

4.4 Mr.Raghavan, learned Senior Counsel further submitted that the

impugned Government Order states that the duty payable will be the amount

‘whichever is higher’. Therefore, it is a colourable exercise of power as it always

will not lead to reduction of duty as 0.6% net value of shares can be more than

5% of the duty payable on the immovable property. As a matter of fact, levy of

duty in respect of transfer of shares would fall under List I. Therefore, it would

be in the realm of Central Government and as such the impugned Government

Orders attempting to impose Stamp Duty at the rate of 0.6 % of the aggregate

value of the shares is beyond the legislative competence of the State of Tamil

Nadu.

4.5 Mr.G.Raghavan, learned Senior Counsel would rely upon the

Judgment of the Hon’ble Supreme Court in the case of Commissioner of Income

Tax, Udaipur, Rajasthan Vs. McDowell and Company Limited,7 more

specifically paragraph No.21 to contend that to levy tax, duty, cess or fee,

7 (2009) 10 SCC 755

Page No.17 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

legislative action is essential and it cannot be levied or collected in the absence of

any legislative sanction by the exercise of power of the State under Article 73 by

the Union or under Article 162 by the State. The learned Senior Counsel would

further rely upon the Judgment of Mathuram Agarwal’s case (cited supra) more

specifically paragraph No.12 to contend that if there is any ambiguity regarding

any of the ingredients in a taxing statute, then there is no tax in law. Concluding

his submissions, the learned Senior Counsel would submit that the existing

definition of conveyance and the levying Article 23 of the Act does not fulfil

these requirements in relation to an Order approving the scheme. That’s why

Article 25 (B) (a) was introduced in the Maharashtra Stamp Act. A similar

provision is absent in the State of Tamil Nadu. Only by virtue of the specific

amendment, the State of Maharashtra charges the aggregate market value of the

shares issued or allotted in exchange or otherwise the amount of consideration

paid for such amalgamation. In the absence of the same, the impugned circular

and the Government Orders are categorically a colourable exercise of power.

4.6 It is further contended that in the process of amalgamation, what is

transferred is a going concern and not the assets or liabilities separately.

Therefore, the amalgamation as such stands on a different footing and can never

be termed as mere conveyance of immovable or movable properties. When an

Page No.18 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

amalgamation takes place, a going concern is transferred to another and the same

is valued on the basis of share exchange ratio. Therefore, to term the same as an

instrument that too effecting conveyance by itself is erroneous. The learned

counsel would rely upon the Judgment of the Division Bench of Bombay High
8
Court in Li Taka Pharmaceuticals Ltd., Vs. State of Maharashtra and Ors.,

more specifically paragraph Nos.32 and 33 of the said Judgment. He would

further submit that particularly in the present case, after the amalgamation takes

place, the value of the amalgamation is gauged by the Maharashtra authorities on

the basis of value of shares and the duty being charged, to once again charge duty

merely because one of the immovable property is located within the State of

Tamil Nadu would be totally illegal and ultra vires, especially when there is no

express provision to charge in respect of amalgamation.

4.7 Mr.S.R. Raghunathan, the Learned counsel also submitting that the

source of legislative power is traceable to Entry 44 of List III, would reiterate

that the same requires a legislative act. If the instrument falls under the

categories mentioned in Entry 91 of List -I, then the power shall only be in the

Parliament. The Learned Counsel would rely upon the Judgment in V.V.S. Rama

8 1996 SCC Online Bombay 67

Page No.19 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

Sharma Vs. State of UP,9.

4.8. Mr. S.R. Raghunathan, would submit that in his case, the parties had

already paid duty under the Bombay Stamp Act, 1958 at the rate of 0.7% of the

value of the shares transferred and as such there is no question of levy of duty

once again. Again, stressing upon the Judgment of Bombay High Court in Li

Taka’s case, the Learned Counsel would submit that selectively targeting the

immovable assets of the transferor company and making the assets subject to

stamp duty is illegal.

4.9. Mr.V.Venkadasalam, learned counsel appearing on behalf of the

petitioners in W.P.Nos.31650 and 31651 of 2016 would rely upon the Judgment

of Hon’ble Kolkata High Court in the case of Madhu Intra Limited & Anr Vs.

Registrar of Companies, W.B. & Ors 10, more specifically on paragraph No.52

would contend that even in respect of an order under Section 394 (1) of the

Companies Act, the Hon’ble Calcutta High Court has held that the same will not

come within the purview of the expression 'Instrument' or 'Conveyance' for the

purpose of levy of Stamp Duty. He would also rely upon the Judgment of the

learned Single Judge of this Court in T.T.Krishnamachari and Co. Vs. Joint

9 (2009) 7 SCC 234

10 (2004) SCC Online Calcutta 36

Page No.20 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

Sub-Registrar – I and another11 , to contend that in the matter of transfer

effected by virtue of an amalgamation order made under Section 394 (2) of the

Companies Act, there is no instrument executed which is chargeable with Stamp

Duty. The said legal position is followed by another learned Single Judge of this

Court in W.P.(MD).No.4128 of 2010 dated 18.11.2014 and W.P.No.13001 of

2016 dated 20.10.2021.

4.10 It is further contended that even if the order of amalgamation is to be

considered as an instrument, even then the said original instrument is with the

appropriate High Court or the Tribunal as the case may be. What is supplied to

the parties is only a certified copy which is a secondary evidence and the same

cannot be treated as an instrument. The said order of the High Court or the

Tribunal if it is produced before any Court, cannot be refused to be received in

evidence as per Section 35 of the Stamp Act. In this regard, the Judgment of the

Hon’ble Supreme Court in Jupudi Kesava Rao Vs. Palavarthi Venkata

Subbarai and Others 12 is relied upon.

4.11. Per contra, Mr.Silambanan, learned Additional Advocate General

appearing on behalf of the State of Tamil Nadu would submit that firstly the

contention of the petitioners that Article 23 of the Indian Stamp Act covers only
11 2008 SCC Online Mad 460
12 (1971) 1 SCC 545

Page No.21 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

immovable property is fallacious and as per the definition under Section 10, the

word 'conveyance' covers movable and immovable properties. Placing strong

reliance in the case of Ruby Sales and Services (P) Ltd's case (cited supra), he

would submit that the consent decree was held to be an instrument of

conveyance. Thereafter, the Hon'ble Supreme Court considered the very order

under Section 394 of the Act in Hindusthan Lever(cited supra) rejected the

contention that it cannot be compared to that of a consent decree and specifically

held that it would amount to transfer inter vivos. It is also been held that such an

order would be an instrument which transfers properties. Reliance is made on

paragraph No.31 and 32 of the said Judgment. Further relying upon paragraph

No.9 of the same Judgment, he would contend that in an amalgamation what

happens is an agreement between the prescribed majority of the shareholders and

creditors of the transfer of company, and the transferee company, which is a

voluntary act of the contracting parties and has all the trappings of a sale.

4.12. The learned Additional Advocate General further relies upon the

Judgment of the Hon'ble Delhi High Court in Delhi Towers Limited case (cited

supra) more specifically paragraph Nos.8.21, 8.22 and 92 to contend that the

consistent view of the Hon'ble Supreme Court is that the scheme of

amalgamation is already covered in the definition of 'conveyance' under the

Page No.22 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

unamended Act.

4.13. The learned Additional Advocate General would submit that the

repeated attempts made by the State of Tamil Nadu was only by way of abundant

caution and there need not be any separate or explicit provision. When the

scheme of amalgamation is covered by the definition under Section 2(10) read

with Article 23 of the Act, the charge at the rate of 0.6 % on the net value of

shares is not a levy on transfer of shares within the meaning of Section 9 (1) (b)

of the Act, but will be within the remit of Section 9 (1) (a) of the Act.

4.14. The embargo under Section 35 of the Indian Stamp Act also applies

to the Registering Officer who is a public officer and as such even when a

certified copy is produced it has to be duly stamped. Relying upon the Judgment

in W.A.Nos.570 and 571 of 2014 dated 16.09.2021 the learned Additional

Advocate General would contend that this Court already approved such an act of

the Registering Officer. Further, relying upon the Full Bench Judgment of this

Court in R.Thiyagarajan Vs. Inspector General of Registration13, it is contended

that unless Stamp Duty is paid the instrument would be a still born child and no

right would vest upon the person concerned. The learned Additional Advocate

General would further rely upon paragraph No.5 of the Judgment of the Division

13 (2019) 4 CTC 839

Page No.23 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

Bench in W.A.No.1792 of 2022 dated 05.08.2022, to contend that even if the

registration of the document is not compulsory, still the further purpose of

conveying the property, Stamp Duty has to be paid.

4.15 The learned Additional Advocate General would place reliance on the

Judgment of the Hon'ble Supreme Court in S N Mathur Vs. Board of Revenue &
14
Ors to contend that the levy of stamp is on the entire instrument and it cannot

be partial and therefore, piecemeal payment of Stamp Duty would be derogation

of Section 35 of the Stamp Act. He would contend that while in the normal

course, transfer or conveyance of the immovable property would attract 5 % of

the value of the immoveable property, the impugned Government Order reduces

it to 2 % of the market value or 0.6 % of the aggregate market value of the

shares, whichever is higher. Therefore, it would not tantamount to encroaching

upon the field of Parliament under Entry 91 of List 1. As a matter of fact, States

such as Maharashtra, Karnataka and Gujarat are levying only on the aggregate

share value, which would disprove such an argument.

4.16 Amalgamation would not amount to transfer of shares and debentures

and therefore, the levy is not barred by Section 9(2) (b) of the Act. Once again

placing strong reliance on the Hindustan Lever case (cited supra), the learned

14 (2009) 13 SCC 301

Page No.24 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

Additional Advocate General would submit that the contention of the petitioners

are totally without any merits.

4.17 Mr.Aravindh Pandiyan, learned Senior Counsel, on behalf of the

Corporate, Insolvency & Bankruptcy Laws Bar Association would place reliance

on paragraph Nos.8.19, 8.20 and 8.21 of the Judgment of the Delhi High Court in

Delhi Towers Limited case (cited supra) and contend that the Hon'ble Supreme

Court and the High Court of Delhi have categorically held that the inclusive

definition of conveyance would already take amalgamation within its fold and the

amendment made in the Bombay Act is only clarificatory and declaratory in

nature. Once the order of the Court, sanctioning the scheme of amalgamation/

restructuring is to be treated as an instrument of conveyance then the question on

what basis the Stamp Duty is leviable, is answered by the Bombay High Court in

Li Taka Pharmaceuticals Ltd., case (cited supra) more specifically in paragraph

Nos.31 to 33 in the said Judgment.

4.18 The learned Senior Counsel would also further point out the Judgment

in Himalaya House Co. Ltd., Bombay Vs. The Chief Controlling Revenue
15
Authority to contend that the State Government has power to bring in

amendments not only in respect of the Stamp Duty but also the mode of

15 (1972) 1 SCC 726

Page No.25 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

computation of the Stamp Duty. He would also place reliance on the Judgment of

the High Court of Allahabad in the case of Hero Motors Ltd., Vs. State of U.P.
16
And Ors., more particularly paragraph Nos.19,20 & 27 of the Judgment to

contend that the scheme of arrangement involves business of a going concern and

it involves transfer of assets and liabilities as one transaction. Therefore, he

would submit that the action of the State in bringing the aggregate market value

of the shares as a criteria would be appropriate and cannot be termed as irrelevant

or colourable exercise power.

4.19. He would further rely upon the Judgment of the Vimpson Precision
17
Pvt. Ltd., and Ors. Vs. State of Gujarat and Ors., more specifically paragraph

Nos.8 to 14 to contend that the State Government has power to reduce or remit

the Stamp Duty prospectively or retrospectively. The learned Senior Counsel also

placed reliance on the Judgment of the High Court of Rajasthan at Jodhpur in the

case of the State of Rajasthan and Ors. Vs. Indus Tower Ltd., and Ors.,18 more

specifically paragraph Nos.17 and 27 of the said Judgment for the same

proposition. The learned Senior Counsel would draw the attention of this Court

to the 67th report of the Law Commission of India, in respect of Section 9 of the

16 AIR 2009 All 93

17 (1993) 2 GLR 1015
18 2023 (1) RLW 216 (Raj.)

Page No.26 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

Indian Stamp Act to contend that the conferment of such power to reduce, remit

or to compound the Stamp Duty can hardly be objected to in modern times. The

basis for determination of computation of Stamp Duty can be made by the State

and in this regard again relevance is placed on paragraph Nos.34, 35, 38 and 40

of Hindustan Lever case (cited supra).

E. The Questions:

5. Upon consideration of the above, the following questions arise for

consideration:

(1) Whether or not the order of the Court sanctioning the scheme of

amalgamation / restructuring or merger can be deemed to be an instrument ?

(2) Whether or not amalgamation / restructuring can be termed as a transfer

inter vivos amounting to conveyance ?

(3) If the Orders are instruments amounting to conveyance, then whether

the levy in the present manner, that is, prescription through an executive order is

valid?

(4) If so, the mode of computation, that is, 2 % of the value of the

immovable property or 0.6 % of the net value of the shares transferred whichever

Page No.27 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

is higher is in order ?

(5) Whether the retrospective application of the impugned Government

Order with effect from 01.04.1956, by way of G.O.Ms.No.47 dated 19.02.2020 is

valid ?

(6) Whether the stamp duty paid in other States, while registering the

amalgamation orders are liable to be taken into account and set off as against the

duty payable, while presenting the document for registration in the State of Tamil

Nadu ?.

F. Question No.1:

6. Section 3 of the Tamil Nadu Stamp Manual is the charging Section,

which makes the ‘instruments’ liable to duty. Section 3 reads as under:-

“3.Instruments chargeable with duty : - Subject to the

provisions of this Act and the exemptions contained in Schedule
I, the following instruments shall be chargeable with duty of the
amount indicated in that Schedule as the proper duty therefor,
respectively, that is to say, ......
......................”
(emphasis supplied)

6.1 This has been explained by the Hon'ble Supreme Court in the

Hindustan Lever case (cited supra) more particularly in paragraph No.22, which

Page No.28 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

reads as under:-

“22. The Court held that the thing which is made liable to
stamp duty is the “instrument”. It is not a transaction of purchase
and sale, which is struck at, it is the “instrument” whereby the
purchase and sale are effected which is struck at. It is the
“instrument” whereby any property upon the sale thereof is
legally or equitably transferred and the taxation is confined only
to the instrument whereby the property is transferred. If a contract
of purchase or sale or a conveyance by way of purchase and sale,
can be, or is, carried out without an instrument, the case would
not fall within the section and no tax can be imposed. Taxation is
confined to the instrument by which the property is transferred
legally and equitably transferred.”

6.2 Thus, it can be seen that it is the instrument which is liable to duty.

Section 2 (14) defines the term 'instrument' which is extracted as hereunder :-

“2(14) “instrument” includes,

(a) every document, by which any right or liability is, or
purports to be, created, transferred, limited, extended,
extinguished or recorded;
(b) a document, electronic or otherwise, created for a
transaction in a stock exchange or depository by which any right
or liability is, or purports to be, created, transferred, limited,
extended, extinguished or recorded; and
(c)any other document mentioned in Schedule I,
but does not include such instruments as may be specified by the
Government, by notification in the Official Gazette.”

6.3 Therefore, every document which results in creation, transfer, limiting

extension, extinguishment or record of any right are liable, then the same could

be an instrument. The Hon'ble Supreme Court in Ruby Sales and Services (P)

Ltd., case, (cited supra), while considering the matter as to whether a consent

Page No.29 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

decree passed by the Court by which rights are created in respect of the property

would be an instrument, held that the same is an instrument since the title passes

through. It is relevant to extract paragraph 11 of the said Judgment, which reads

as under:-

“11.There is no particular pleasure in merely going by the

label but what is decisive is by the terms of the document. It is
clear from the terms of the consent decree that it is also an
“instrument” under which title has been passed over to the
appellants/plaintiffs. It is a live document transferring the
property in dispute from the defendants to the plaintiffs.”

6.4 Further, the Hon'ble Supreme Court in the Hindustan Lever case (cited

supra) dealt with the similar definition of the term 'instrument' under the Bombay

Stamp Act and held that on a consideration of Section 394 of the Companies Act,

it is clear that upon such Orders of the Court, the undertaking of the transferor

company stood transferred to the transferee company with all its movable,

immovable and tangible assets and on presentation of certified copy of the said

Order of the Court to the Registrar of Companies, the transferor of company

stands amalgamated in the transferee company along with all its assets and

liabilities and as such the Court Order along with the amalgamation scheme

appended to it, is an instrument. It is essential to extract paragraph Nos.14 and

15, which read as follows:-

“14. The term “instrument” has been defined in Section 2(1) of

the Bombay Stamp Act, 1958 which is as under:

Page No.30 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

“2. (1) ‘instrument’ includes every

document by which any right or liability is, or
purports to be, created, transferred, limited,
extended, extinguished or recorded, but does
not include a bill of exchange, cheque,
promissory note, bill of lading, letter of credit,
policy of insurance, transfer of share,
debenture, proxy and receipt;”
15. This definition of instrument is not amended by Maharashtra
Act 17 of 1993. The word “instrument” is defined to mean, every
document by which any right or liability is, or purports to be
created, transferred, limited, extended, extinguished or recorded,
but does not include bill of exchange, cheque, promissory note,
bill of lading, letter of credit, policy of insurance, transfer of
shares, debenture proxy and receipt. The recital in the scheme of
amalgamation as well as the order of the High Court under
Section 394 of the Companies Act, declares, that, upon such order
of the High Court the undertaking of the transferor company shall
stand transferred to the transferee company with all its movable,
immovable and tangible assets to the transferee company without
any further act or deed. Sub-section (3) of Section 394 provides
that the certified copy of the order of the court has to be presented
before the Registrar of Companies within thirty days for
registration. And in default any officer of the company, who is in
default, becomes liable to be punished and fined, which may
extend up to Rs 500. Section 391(3) provides that an order made
by the court under sub-section (2) of Section 391 shall not have
effect till a certified copy of the order has been filed with the
Registrar. On presentation of the certified copy of the order, the
Registrar of the Company certifies that the transferor company
stands amalgamated with the transferee company along with all
its assets and liabilities. Thus the amalgamation scheme
sanctioned by the court would be an “instrument” within the
meaning of Section 2(1). By the said “instrument” the properties
are transferred from the transferor company to the transferee
company, the basis of which is the compromise or arrangement
arrived at between the two companies.”

6.5 Thus the Order of the Court / Tribunal along with the scheme of

Page No.31 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

amalgamation appended to it would be an instrument within the meaning of

Section 3 of the Act and axiomatically the contentions based on the Judgment of

the learned Single Judge of this Court in the T.T.Krishnamachari and Co. Case

(cited supra) cannot be countenanced. Similarly, the arguments based on the

Judgment of the Hon'ble Supreme Court in Jupudi Kesava Rao's case (cited

supra) is also rejected as the observations made therein are totally in a different

context. The Hon'ble Supreme Court in the said case was dealing with the

admissibility of oral evidence relating to an agreement which was insufficiently

stamped. In the said context, when the defendant did not produce the document

for the plaintiff to pay the penalty and make the document admissible, the

Hon'ble Supreme Court while approving the finding of the Appellate Court that

the defendants who are responsible for the suppression of the original agreement

of lease and that the reception of secondary evidence by way of an oral evidence

can be resorted to and it further held that the objection under Section 35 of the

Stamp Act cannot be made in respect of the secondary evidence. In the present

context, whereunder the Registrar being a public officer, under Section 35 is

mandated not to act upon in the scheme of amalgamation, unless it is duly

stamped, the said argument of certified copy will not hold good. Therefore, we

reject the submissions made on behalf of the petitioners in this regard and answer

Page No.32 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

the question that the Orders of Court/Tribunal sanctioning schemes of

amalgamation/restructuring/de-merger etc., along with such schemes appended

thereto, shall be ‘instruments’ within the meaning for the purposes of the Act.

G. Question No.2:

7. The term 'conveyance' is defined in Section 2(10) of the Act, which

reads as follows:-

“(10) Conveyance.- “Conveyance” includes a

conveyance on sale and every instrument by which property,
whether movable or immovable, is transferred inter vivos and
which is not otherwise specifically provided for by Schedule 1;”

7.1 We have already held that the Order of Court/Tribunal sanctioning an

arrangement/scheme of amalgamation appended thereto is an instrument. It can

be seen that such amalgamation results in transfer of both movable and

immovable assets. The scheme of amalgamation results in transfer of the rights,

assets and liabilities of the transferor company vesting in the transferee company

in praesenti and therefore there is a transfer inter vivos. In this context, the matter

is no longer res integra as the Hon'ble Supreme Court in the case of Hindustan

Lever case (cited supra) more particularly in paragraph Nos.28 and 31 has held

as follows:-

“28. The transfer of assets and liabilities takes effect by

Page No.33 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

an order of the court. The order also provides for passing of

consideration from the transferee company to the shareholders of
the transferor company. The consideration for sale in a
transaction like this is the shares. The share exchange ratio is
decided on the basis of number of factors including the value of
net assets of the transferor and transferee company. To arrive at
this figure of net assets the liabilities have to be set off against
the gross value of the assets. The share value is fixed. The
properties belong to the company and the company belongs to the
shareholders. Once the shareholders of the transferee company
receive the consideration it would be deemed as if the owner has
received the consideration.
.......................
.......................
31. Learned counsel for the appellants argued that Ruby
Sales and Services (P) Ltd. [(1994) 1 SCC 531] was a case of
consent decree where the term of the settlement was admittedly a
conveyance, transferring property alone. That the order passed by
the High Court under Section 394 of the Companies Act cannot
be equated with a consent order. This submission cannot be
accepted. The Court held that consent decree was an instrument.
It was not held to be an instrument because it was a consent
decree. It was held to be an instrument because it conveyed the
title in the property in dispute from the defendant to the plaintiff.
It was held to be an instrument because it had the effect of
conveying the title and not because it was a consent decree. Once
this definition is kept in view, it would be clear that consent or no
consent when the decree or order of the court purports to transfer
title in the property, it becomes an instrument. The Court
negatived the submission made that prior to introduction of
Section 2(g)(iii) the consent decree was not included in the
definition of “conveyance” and “instrument” by observing (SCC
p. 535, para 15) “it appears to us that the amendment was made
out of abundant caution and it does not mean that the consent
decree was not otherwise covered”. It clearly shows that the
Court was of the opinion that consent decree which purports to
convey the title in the property was in an instrument liable for
stamp duty at all times and it was only by way of abundant
caution that the legislature had included the consent decree in the
definition of the word “conveyance”.”

7.2 It is also essential to quote paragraph Nos.12, 44 and 45 of the

Page No.34 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

Judgment of the Hon'ble Supreme Court in the Hindustan Lever case (cited

supra) as under:-

“12. Two broad principles underlying a scheme of

amalgamation which have been brought out in this judgment are:
1. that the order passed by the court
amalgamating the company is based on a
compromise or arrangement arrived at
between the parties; and
2. that the jurisdiction of the
Company Court while sanctioning the
scheme is supervisory only i.e. to observe
that the procedure set out in the Act is met
and complied with and that the proposed
scheme of compromise or arrangement is
not violative of any provision of law,
unconscionable or contrary to public
policy. The court is not to exercise the
appellate jurisdiction and examine the
commercial wisdom of the compromise or
arrangement arrived at between the parties.
The role of the court is that of an umpire in
a game, to see that the teams play their role
as per rules and do not overstep the limits.
Subject to that how best the game is to be
played is left to the players and not to the
umpire.
Both these principles indicate that there is no adjudication by the
court on the merits as such.
....................
....................

44. Under the Bombay Stamp Act conveyance includes any

instrument by which property, whether movable or immovable, or
any estate or interest in any property is transferred to, or vested
in, any other person, inter vivos. The words “inter vivos” have not
been defined in the Act or in the General Clauses Act. The
meaning assigned to the words “inter vivos” in the Black's Law
Dictionary, 6th Edn., is:
“Between the living; from one living person to another. Where
property passes by conveyance, the transaction is said to be inter

Page No.35 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

vivos, to distinguish it from a case of succession or devise. So an

ordinary gift from one person to another is called a ‘gift inter
vivos’….”

45. It was contended that since the transaction was not

between “living beings” the same was not “inter vivos” as the
transfer of property had not taken place between living beings.
We do not agree. “Transfer of property” has been defined in
Section 5 of the Transfer of Property Act, 1882 to mean an act by
which a living person conveys property, in present or in future to
one or more other living persons. Company or association or body
of individuals, whether incorporated or not, have been included
amongst “living person” in this section. It clearly brings out that a
company can effect transfer of property. The words “inter vivos”
in the context of Section 394 of the Companies Act would
include within their meaning also a transfer between two “juristic
persons” or a transfer to which a “juristic person” is one of the
parties. The transaction between a minor or a person of unsound
mind with the other person would not be recognised in law,
though the same is between two living beings, as they are not
juristic persons in the eye of the law who can by mutual consent
enter in a contract or transfer the property. The company would
be a juristic person created artificially in the eye of the law
capable of owning and transferring the property. Method of
transfer is provided in law. One of the methods prescribed is
dissolution of the transferor company by merger in the transferee
company along with all its assets and liabilities. Where any
property passes by conveyance, the transaction would be said to
be inter vivos as distinguished from a case of succession or
devise.”

7.3 Thus, the Hon'ble Supreme Court, while considering the very question

has authoritatively decided the issue that it would be a transfer inter vivos of

movable and immovable properties and therefore even in the absence of a

specific amendment it would be covered within the definition of ‘conveyance’.

As a matter of fact, it can be seen that the definition of ‘conveyance’ is an

Page No.36 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

inclusive definition. The Hon'ble Supreme Court in Karnataka Power

Transmission Corporation and Anr. Vs. Ashok Iron Works Pvt. Ltd.,19 has held

that the inclusive definition in any legislation should be considered as under:-

“........(one) to enlarge the meaning of words or phrases so

as to take in the ordinary popular and natural sense of the words
and also the sense which the statute wishes to attribute to it; (two)
to include meaning about which there might be some dispute;
(three) to bring under one nomenclature all transactions
possessing certain similar features but going under different
names.”

7.4 Thus it can be seen that amalgamation, merger or other such

arrangements shall be within the meaning of ‘conveyance’ in more than one

sense. As a matter of fact, such schemes, originally being dealt with under

Sections 391-394 of the Companies Act, 1953 and now under Chapter XV

(Sections 230-240) of the Companies Act, 2013. Except doing away with the

definition of ‘transferor company’ and ‘transferee company’ in respect of

amalgamation and imposing certain additional requirements of disclosure etc.,

the essential features of the transactions remains the same. Therefore, we hold

that the order sanctioning amalgamation / restructuring appended by the scheme

as such is an instrument of conveyance liable to duty under Article -23 of the Act

and no further legislative action is necessary to bring the same within the ambit

of duty.

19 AIR (2009) SC 1905

Page No.37 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

7.5 As far as the impugned circular dated 20.11.2018 is concerned, it only

attempts to clarify the existing position by quoting the relevant Judgments and

addressing the registering officers that they should be aware that the scheme of

amalgamation submitted by the Companies and sanctioned by the High Court are

classifiable as ‘Conveyance’ and will be subject to duty under Article -23 of

Schedule -I of the Act. The operative portion of the said circular was extracted

above. Therefore, in view of our findings regarding Question No.1 and 2, we do

not find any illegality in the said Circular dated 20.11.2018.

H. Question No.3

8. We have held that the order of sanction of amalgamation / restructuring

is an ‘instrument’ of ‘conveyance’ and is liable to duty and is chargeable as per

Article -23 of Schedule -I of the Act. Once it is chargeable at the rate of 5 % of

the market value of the immovable property, then the state is enabled under

Section 9 (1) of the Act which is extracted hereunder:-

“9. Power to reduce, remit or compound duties - Gazette,

[(1)] [The Government] may, by rule, or order published in the
Official Gazette,
(a) reduce or remit, whether prospectively or
retrospectively, in the whole or any part of [the territories under
its administration], the duties with which any instruments or any
particular class of instruments, or any of the instruments
belonging to such class, or any instruments when executed by or
in favour of any particular class of persons, by or in favour of any

Page No.38 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

members of such class, are chargeable, and

(b) provide for the composition or consolidation of duties [of

policies of insurance and] in the case of issues by any
incorporated company or other body corporate [or of transfers
(where there is a single transferee, whether incorporated or not)]
of debentures, bonds or other marketable securities.”

8.1 As far as the notification in G.O.Ms.No.29 dated 01.03.2019, it states

that it is to reduce the duty chargeable under the Act. Therefore, the State of

Tamil Nadu is well within its powers to reduce or remit the duty chargeable

under the Act. So long as the power is exercised to reduce the duty chargeable

under the Act, the same would be perfectly in order. When it is only a question of

reduction or remitting, it can be by an Order passed in exercise of power under

Section 9(1)(a) of the Act and accordingly we answer the question.

I. Question No. 4 :

9. The impugned notification is extracted in para 2.3 above. While

exercising the powers under Section 9(1)(a), reducing the duty from 5 % to 2 %

of the market value of the property is a clear and fair exercise of power and it

merely reduces the duty chargeable as per Article- 23. As far as the second limb

of the notification, to compute the Stamp Duty on 0.6 % of the aggregate of the

market value of the shares and then adopt the value whichever is higher is

Page No.39 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

concerned, firstly it introduces a new mode of computation, which is not found in

Article -23. Therefore, the same tantamounts to amending Article -23, which

would require legislative action. Secondly, it was pointed out across the bar that

there are several instances where the aggregate market value of the shares in

respect of the transferee company which is amalgamated may run to several

crores, whereas it may have an immovable property of a meagre value within the

State of Tamil Nadu in which case, as per the notification if 0.6% of the

aggregate market value of the shares which is higher would only be taken, then

the same would result in increase in duty which would be more than 5 % of the

duty chargeable under Article- 23. Though on a consideration of the Judgment in

Li Taka Pharmaceuticals Ltd., case (cited supra) and Delhi Towers Ltd., case

(cited supra) it can be concluded that charging the instrument of amalgamation

on the basis of the aggregate market value of shares would be an appropriate

mode, in the absence of legislative act of amending Article- 23, in the exercise of

power or reduction under Section 9 (1)(a) of the Act, such a mode cannot be

introduced. To that extent alone, impugned Government Order is without

jurisdiction and is a colourable exercise of power.

9.1 Therefore, to the last sentence of the notification contained in the

impugned Government Order, in G.O.(Ms.) No.29 dated 01.03.2019, i.e., “or 0.6

Page No.40 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

percent of the aggregate of the market value of the shares, whichever is higher”

alone is struck down and rest of the notification shall stand. Accordingly we

answer the question No. 4.

J. Question No.5:

10. Firstly we have held that the instrument of amalgamation is already

liable to duty under the existing provisions and the impugned circular is only

clarificatory in nature. Therefore any clarification would automatically be

retrospective. As far as the impugned Government Order in G.O.(Ms.) No.47

dated 19.02.2020 is concerned, inter alia, it specifies that the applicability of

G.O.(Ms.) No.29 dated 01.03.2019 shall be retrospective. Conveyance it was

chargeable at various rates periodically prescribed and is presently at the rate of

5 % . It can be seen that from 01.04.1956 at no point of time, it was less than 2%

and the G.O.(Ms.) No.29 dated 01.03.2019 only reduces the duty to 2 %.

Therefore the petitioners have no ground to complain of G.O.(Ms.) No.47 dated

19.02.2020, which only makes the application of the beneficial provision of

G.O.(Ms.) No.29 dated 01.03.2019 as retrospective. As a matter of fact, Section

9(1) (a) of the Act itself expressly authorises the State to exercise such a power

retrospectively. Thus, the retrospective applicability per se cannot be termed as

Page No.41 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

illegal.

10.1. The further apprehension of the petitioners that the present market

value would be imposed is totally unfounded as clause 3 (b) of the Government

Order itself categorically makes it clear that it would be as per the value

mentioned in the amalgamation scheme or as per the guideline value prevailing

as on the date of the scheme.

10.2. Therefore, we uphold the G.O.(Ms.) No.47 dated 19.02.2020. We

hasten to add that it is yet another question that at what point of time, the State

can insist for duty and whether it can be insisted at the time of presentation of

any subsequent document in respect of any property which is conveyed to third

parties and whether such documents can be withheld as a Charge for payment of

duty on amalgamation are all altogether different questions which do not fall for

consideration in the present petitions and as such are not considered or answered.

We accordingly answer the question No.4 that the retrospective reduction of duty

is valid.

K.Question No.6:

11. It can be seen that while some States like the State of Tamil Nadu are

treating the orders of Court ordering amalgamation along with the schemes

Page No.42 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

appended thereto as conveyance per se, in some States like, Maharashtra

amendments have been made in respect of the definition of 'conveyance' and the

instruments effecting amalgamation are specifically charged on the market value

of the shares.

11.1. We have already held that the stamp duty under the Act is chargeable

on the instrument. Once the instrument is already presented for registration in

other States and again presented for registration within the State of Tamil Nadu,

then, Section 19 -A of the Act, which is a Tamil Nadu amendment of the Indian

Stamp Act, 1899, which will come into play. For ready reference, Section 19 -A

is extracted hereunder:-

“19-A. Payment of duty on certain instruments

liable to increased duty under section 3.- Where any
instrument has become chargeable in any part of India other
than the State of Tamil Nadu with duty under the stamp law in
force in that part and thereafter becomes chargeable with a
higher rate of duty in the said State under section 3-

(i) notwithstanding anything contained in section 3, the

amount of duty chargeable on such instrument shall be the
amount chargeable on it under Schedule I less the amount of
duty, if any, already paid on it in that part;

(ii) in addition to the stamps, if any, already affixed

thereto, such instrument shall be stamped with the stamps
necessary for the payment of the amount of duty chargeable on
it under clause (i) in the same manner and at the same time and
by the same persons as though such instrument was an
instrument received in India for the first time at the time when
it became chargeable with the higher duty; and

Page No.43 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

(iii) the provisions contained in clause (b) or clause (c)

as the case may be, of the proviso to sub-section (3) of section
32, shall, with the necessary modifications, apply to such
instrument, but the provisions contained in clause (a) of the
said proviso shall not apply thereto.”
11.2. The very question was dealt with in detail by the Constitution Bench

of the Hon'ble Supreme Court in New Central Jute Mills Co. Ltd. And Ors Vs.

State of West Bengal and Ors.,20 while considering the identical provision 19 -A

of the Uttar Pradesh amendment. The Hon'ble Supreme Court has held that

though the execution of instrument may be in other States, when the instrument

relates to any property situate within the State, then the liability also arises with

reference to the State, where the property is situate also. It is essential to extract

paragraph 14 of the Judgment, which reads as follows:-

“14. Primarily, the liability of an instrument to stamp

duty arises on execution. Execution in India itself made the
instrument liable to stamp duty under Section 3(a) as it stood
before the amendment. Under Section 3(c) execution out of
India, where the instrument relates to property situated or any
matter or thing done or to be done in India together with the
further fact that the instrument is received in India, made the
instrument chargeable with duty. In amending the Stamp Act
what the State legislatures substantially did was to treat the
particular State as equivalent to India. Thus, after the
amendment by the U.P. legislature the position in law is that
execution of an instrument in Uttar Pradesh is made the
primary dutiable event and liability to stamp duty arises on
such execution. Apart from that, liability also arises where the
instrument though executed out of Uttar Pradesh relates to
property situated or any matter or thing done or to be done in
Uttar Pradesh and is received in Uttar Pradesh. It may be

20 AIR 1963 SC 1307

Page No.44 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

mentioned that the changes in the law made by the other State
legislatures are exactly similar.”
11.3. Thereafter, considering the question in detail, the Hon'ble Supreme

Court has ultimately held as follows in paragraph Nos.19 and 20 :-

“19. Section 19-A in terms applies only to an

instrument which afters becoming chargeable in any State
outside Uttar Pradesh becomes chargeable in Uttar Pradesh
with a higher rate of duty. It seems to us, however, that where
the rate of duty in Uttar Pradesh is the same or even lower, no
further duty is payable on such an instrument. For, it would be
anomalous and unreasonable to hold that the legislature
intended that though where a higher rate is payable in Uttar
Pradesh the excess need only be paid, the Uttar Pradesh rate
should be paid in full where what has already been paid is the
same or higher.
20. The result of this will be that if an instrument after
becoming liable to duty in one State on execution there
becomes liable to duty also in another State on receipt there, it
must first be stamped in accordance with the law of the first
State and it will not require to be further stamped in
accordance with the law of the second State when the rate of
that second State is the same or lower; and where the rate of
the second State is higher, it will require to be stamped only
with the excess amount and that in accordance with the law
and the rules in force in the second State.”
(emphasis supplied)
11.4. Thus, it is clear that upon presentation in the State of Tamil Nadu, the

duty has to be calculated as per the rate payable in Tamil Nadu and thereafter,

upon comparison, if the duty paid in any other State is higher than the State of

Tamil Nadu, then the same has to be taken into consideration and no duty shall

be payable. If the duty paid is lesser than what is payable in the State of Tamil

Page No.45 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

Nadu, then whatever amount paid is to be set off and the balance duty is to be

paid on the instrument of amalgamation. Accordingly, we answer this question.

L. The Result:

12. In the result, the Writ Appeal Nos.758, 687, 751, 755 & 851 of 2022,

Writ Petition (MD) No.1824 of 2019 and Writ Petition Nos.31650 & 31651 of

2016, 8511 and 31191 of 2019, 18188 of 2020, 21977, 21979 & 22562 of 2021

and 30363 of 2023 are disposed of, on the following terms;

(i) the Circular No.49282/P1/2018 dated 20.11.2018 is upheld;

(ii) the G.O.(Ms.) No.29 dated 01.03.2019 is quashed in as much as portion

of the notification “or 0.6 percent of the aggregate of the market value of the

shares, whichever is higher” and in all other aspects the said G.O. (Ms.) No.29,

dated 01/03/2019 shall be valid;

(iii) the G.O.(Ms.) No.47 dated 19.02.2020 is held valid;

(iv) Accordingly, the authorities will be entitled to collect the stamp duty

by calculating 2% of the market value of the immoveable property and excess

duty if any collected shall stand refunded to the writ petitioners;

(v) The Stamp Duty if any paid, while presenting the order / scheme

Page No.46 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

relating to amalgamation in other States shall be taken into account, while

calculating the Stamp Duty payable in the State of Tamil Nadu and after setting

off the amount already paid, only the balance amount if any alone can be

demanded;

(vi) in Writ Petition No.31191 of 2019, pursuant to the interim orders of

this Court, the petitioner has deposited a total sum of Rs.4,56,55,000/-. Already,

by order, dated 16.11.2023, the petitioner was permitted to withdraw the sum of

Rs.3,25,47,198/-. As contained in Clauses – (iv) and (v) of the judgment above,

the respondent shall proceed to determine the 2% of market value of the

immovable property and after giving credit to the amount paid by the petitioner,

while registering the scheme in the State of Maharashtra, the balance, if any shall

be paid back to the petitioner within a period of 12 weeks from the date of receipt

of a copy of this judgment;

(vii) No costs. Consequently connected miscellaneous petitions are closed.

(S.V.G., C.J.,) (D.B.C., J.,)

19.02.2024
Index : Yes
Speaking order
Neutral Citation : Yes
Jer

Page No.47 of 48

https://www.mhc.tn.gov.in/judis
 Writ Appeal No.758 of 2022 etc., (Batch)

THE HON'BLE CHIEF JUSTICE

and
D.BHARATHA CHAKRAVARTHY, J.,

Jer

Pre-Delivery Order made in

Writ Appeal No.758 of 2022 etc., Batch

19.02.2024

Page No.48 of 48

https://www.mhc.tn.gov.in/judis