Gujarat High Court
Network 18 Media And Investment Ltd vs State Of Gujarat on 21 March, 2022
Author: Aravind Kumar
Bench: Aravind Kumar, Ashutosh J. Shastri
C/SR/1/2016 CAV ORDER DATED: 21/03/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/STAMP REFERENCE NO. 1 of 2016
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NETWORK 18 MEDIA AND INVESTMENT LTD Versus STATE OF GUJARAT & 2 other(s) ========================================================== Appearance:
MR MIHIR THAKORE, SENIOR ADVOCATE for the Applicant(s) No. 1 MR MANISHA LAVKUMAR, GOVERNMENT PLEADER for the Respondent(s) No. 1 NOTICE SERVED for the Respondent(s) No. 2,3 ========================================================== CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR and HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI and HONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 21/03/2022 C.A.V. ORDER (PER : HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR)
1. This Stamp Reference is made under Section 54(1A) of the Gujarat Stamp Act, 1958 (hereinafter referred to as "Stamp Act' for short) by the Chief Controlling Revenue Authority, Gujarat State, Gandhinagar, for the opinion of this Court.
2. Under Section 54(1A) of the Stamp Act, the Chief Controlling Revenue Authority has submitted a reference Page 1 of 13 Downloaded on : Fri Mar 25 21:00:03 IST 2022 C/SR/1/2016 CAV ORDER DATED: 21/03/2022 received from aggrieved person namely, petitioner herein to this Court. Petitioner namely, Network 18 Media and Investment Limited (hereinafter referred to as "Network-18" for short) had moved the Chief Controlling Revenue Authority, Gujarat State for making reference to this Court against the order dated 3.6.2015 of the Chief Controlling Revenue Authority whereunder said authority had upheld the order dated 4.1.2013 passed by the Collector and Additional Superintendent of Stamps, Gandhinagar directing petitioner herein to pay stamp duty of Rs.86,77,617/-.
3. Brief facts of the case leading to the presentation of this reference are as under:
3.1 A Scheme of Arrangement came to be approved by the Board of Directors of Network-18 and M/s Infomedia 18 Limited (hereinafter referred to as 'Demerged Company" for short). Under said Scheme, it was proposed to demerge under Sections 391 and 394 of the Companies Act, 1956 (hereinafter referred to as "the Act" for short) whereby an undertaking of the Demerged Company was proposed to be merged into petitioner Company namely, the Resulting Company. Page 2 of 13 Downloaded on : Fri Mar 25 21:00:03 IST 2022
C/SR/1/2016 CAV ORDER DATED: 21/03/2022 3.2 The registered offices of both the petitioner Company and Demerged Company were located at New Delhi and as such, petition under Sections 391 and 394 of the Act was preferred before the Delhi High Court. The Delhi High Court vide order dated 22.11.2011 read with orders dated 14.2.2012, 3.5.2012 and 22.5.2012 passed in Company Petition No.266 of 2011 connected with Company Application No.181 of 2010 and Company Petition No.265 of 2011 allowed the petitions and sanctioned the Scheme.
3.3 By virtue of Clauses 1.6 and 5.1 of said Scheme, immovable properties of the Demerged Company stood vested in the petitioner Company from the appointed date. One of the immovable properties of Demerged Company which stood vested with petitioner Company was the immovable property situated at Ahmedabad.
3.4 On 21.8.2010, the petitioner preferred an application under Section 31 of the Stamp Act seeking adjudication of the stamp duty payable on transfer of the said property, pursuant to sanction of the Scheme by the Delhi High Court as provided under Section 394(2) of the Act. Petitioner filed the documents. Page 3 of 13 Downloaded on : Fri Mar 25 21:00:03 IST 2022
C/SR/1/2016 CAV ORDER DATED: 21/03/2022 Taking into consideration the details of writing and judgment of Delhi High Court (erroneously mentioned as Mumbai High Court), the Collector and Additional Superintendent of Stamps arrived at a conclusion that valuation report of the technical branch cannot be accepted as the audit report marking of value of immovable property had determined the same at Rs.1,41,82,000/- as against Rs.84,82,500/-. It was also held that shareholders of the transferor Company having issued 69,58,795 equity shares of Rs.5/- each for Rs.4,97,05,672 equity shares in the ratio of 7 (seven) equity shares against 50(fifty) equity shares i.e. 50:7 and accordingly, determined market value of the share on the total amount of Rs.86,77,61,736.50 and levied stamp duty at 1% of the market value of shares on said amount vide order dated 4.1.2013.
3.5 Being aggrieved by the said order or opinion of the Collector and Additional Superintendent of Stamps, applicant filed an application/appeal before Chief Controlling Revenue Authority, Gujarat State, Gandhinagar under Section 53(1) of the Stamp Act. Said application/appeal came to be rejected vide order dated 3.6.2015 on the ground of non-submission of paid- up stamp duty in the matter of property situated in the States Page 4 of 13 Downloaded on : Fri Mar 25 21:00:03 IST 2022 C/SR/1/2016 CAV ORDER DATED: 21/03/2022 other than Gujarat during the period the opinion was rendered by the Collector and Superintendent of Stamps and as such, petitioner sought for reference under Section 54(1A) of the Stamp Act. Hence, this reference has been sought for by the petitioner contending inter alia that following questions of law would arise for consideration:
A. Whether Article 20(d) of the Gujarat Stamp Act, 1958 provides for adjudication of an order under Section 394 of the Companies Act, 1956 passed by High Court of any state of India or only on an order passed by 'the High Court' of Gujarat at Ahmedabad?
B. Whether it is within the jurisdiction of the Collector of stamps to adjudicate stamp duty payable in respect of properties situated outside the State of Gujarat?
C. Whether, adjudication of stamp duty payable on an order of Delhi High Court passed under Sections 391 to 394 of the Companies Act in respect of properties situated in the State of Gujarat by Page 5 of 13 Downloaded on : Fri Mar 25 21:00:03 IST 2022 C/SR/1/2016 CAV ORDER DATED: 21/03/2022 applying Article 20(d) of the Gujarat Stamp Act, 1958 ('Act') violates the mandate of Section 3(b) of the Act?
D. Whether the Impugned Order and the Order passed by the Collector of stamps are unconstitutional, illegal and unsustainable in law? Whether the Petitioner is entitled for reduction under Section 19 of the Act to the extent of stamp duty already paid by it on the order under Section 394 of the Companies Act, 1956 in other States? E. Whether computation of stamp duty under sub-
clause (i) of the Article 20(d) of the Act, i.e. in the phrase " .... share issued or allotted in exchange ...", also includes computation based on shares in addition to the ones issued?
F. Whether it is permissible to add or substitute words in a statute not specifically provided therein?
G. Whether, in proceedings under Section 53 of the Page 6 of 13 Downloaded on : Fri Mar 25 21:00:03 IST 2022 C/SR/1/2016 CAV ORDER DATED: 21/03/2022 Act, the Ld. CCRA is bound by his own findings and is required to make corrections in the Ld. Collector's Order in consonance with such findings and implement the same?
H. Whether in passing its Order under Section 31 of the Act, the Collector of Stamps is under an obligation to observe the principles of natural justice?
I. Whether in proceedings under section 53 of the Act, the Ld. CCRA is under an obligation to consider and refer to the documents on record? J. Whether in passing its Order under Section 53 of the Act, the Ld. CCRA is under an obligation to observe the principles of natural justice? K. Whether the Ld. CCRA and the Collector, in proceedings under Sections 53 and 31 respectively, are under an obligation to pass speaking orders?
L. Whether the Impugned Order fails to appreciate Page 7 of 13 Downloaded on : Fri Mar 25 21:00:03 IST 2022 C/SR/1/2016 CAV ORDER DATED: 21/03/2022 that the Collector's Order was based on erroneous assumptions, error of law apparent on record, was arbitrary, capricious exercise of authority and discretion, reflected patent error in procedure, arrived at findings which are perverse and based on no material and resulted in manifest injustice?
4. We have heard the arguments of Shri Mihir Thakore, learned Senior Counsel appearing for the petitioner and Smt. Manisha Lavkumar, learned Government Pleader appearing for the State.
5. At the outset, Shri Mihir Thakore, learned Senior Counsel appearing for the petitioner would contend that there is a factual error committed by the adjudicating authority namely, it has been held under the order dated 4.1.2013 that shareholders of the transferor Company have been issued 69,58,795 equity shares of Rs.5/- each, whereas actually under the Scheme, number of shares issued to shareholders of the transferor Company being 36,79,356 and to substantiate said claim, he would draw our attention to the Scheme sanctioned by the Delhi High Court, hence, contending that the proper stamp Page 8 of 13 Downloaded on : Fri Mar 25 21:00:03 IST 2022 C/SR/1/2016 CAV ORDER DATED: 21/03/2022 duty is required to be levied as per Article 20(d) of the Stamp Act. He would also submit that petitioner is entitled to claim benefit of Section 19 of the Stamp Act which provides for adjustment of stamp duty paid on the instrument by the petitioner in other States. He would draw the attention of the Court to record on hand, to contend that petitioner had paid stamp duty on the concerned instrument namely, Rs.8,14,830/- in the State of Karnataka and Rs.35,94,150/- in the State of Maharashtra. Thus, in all, Rs.44,18,980/- had been paid and therefore, after adjustment in terms of Section 19 of the Stamp Act, petitioner is liable to pay stamp duty of Rs.1,45,262/- namely, (Rs.45,64,242 minus Rs.44,18,980/-) and on account of petitioner having already deposited an amount of Rs.21,70,000/-, petitioner would be entitled to refund of Rs.20,24,738/- and hence, he prays for answering the reference in favour of the petitioner.
6. Smt. Manisha Lavkumar, learned Government Pleader appearing for the respondents would contend (i) that the adjudicating authority has not given benefit of Section 19 of the Stamp Act to the petitioner inasmuch as photocopy of the stamp duty paid in the State of Karnataka and State of Page 9 of 13 Downloaded on : Fri Mar 25 21:00:03 IST 2022 C/SR/1/2016 CAV ORDER DATED: 21/03/2022 Maharashtra came to be produced before the adjudicating authority and same has not been accepted and if petitioner is able to produce original receipts or proof of having paid said duty in States of Karnataka and Maharashtra, same would be considered and; (ii) that revenue authorities were in error in arriving at a conclusion that shareholders of transferor Company having been issued 69,58,795 equity shares of Rs.5/- each for 4,97,05,672 equity shares in the ratio of 7 (seven) equity shares against 50 (fifty) equity shares i.e. 50:7 though actual shares transferred being only 36,79,356 and she would submit that if the matter is remitted back to the Controlling Authority, suitable orders would be passed.
7. In the light of submission made by the learned Government Pleader, we are of the considered view that instead of going into merits of the case, it would suffice to hold that the revenue authorities have committed a grave error in the matter of arriving at a conclusion that shareholders of transferor Company having been issued 69,58,795 equity shares, though as per the Scheme, actual shares transferred or number of shares allotted to the shareholders of petitioner Company was 36,79,356 shares as evidenced from Form No.2 filed by the Page 10 of 13 Downloaded on : Fri Mar 25 21:00:03 IST 2022 C/SR/1/2016 CAV ORDER DATED: 21/03/2022 petitioner Company before the Registrar of Companies, as required under Section 75(1) of the Act (Annexure-A5), which is also evidenced from the resolution passed by the Board of Directors of the petitioner Company, while approving the Scheme of Arrangement, which Scheme has since been approved by the Delhi High Court, a factual error has occurred at the level of adjudicating authority in its order dated 4.1.2013, necessarily value of the shares as determined by the adjudicating authority by order dated 4.1.2013 has to be held as erroneous and contrary to record. Even the consequential appellate authority's order under Section 53(1) of the Stamp Act passed on 2.4.2013 would not stand the test of law inasmuch as the ground urged before the appellate authority highlighting this aspect has also been ignored or not even considered by the appellate authority. In fact, in the application/appeal filed under Section 53(1) of the Stamp Act, petitioner had urged this aspect in ground No.9 and there has been non-consideration of this aspect in the order dated 30.5.2015. Thus, both the orders are liable to be set aside and matter deserves to be remanded to the adjudicating authority.
8. On the second issue namely, proof of petitioner Page 11 of 13 Downloaded on : Fri Mar 25 21:00:03 IST 2022 C/SR/1/2016 CAV ORDER DATED: 21/03/2022 having paid or not paid stamp duty in the State of Karnataka and State of Maharashtra requires to be examined in the background of rival contentions raised. Petitioner has relied upon the receipts, Annexures A-18, A-19 and A-20 issued by respective States for having paid stamp duty. However, said receipts are undisputedly photocopies. Revenue authorities could have called for the report from the counterparts of the State of Karnataka and State of Maharashtra instead of rejecting the application/appeal on technical ground. In that view of the matter, we are of the considered view that issues can be laid to rest by calling upon petitioner to produce either the originals of receipt dated 13.12.2012 (Annexure-A18) issued by Government of Karnataka and receipt dated 22.1.2013 (Annexure-A20) issued by Government of Maharashtra for having remitted stamp duty in these 2 (two) States or tender the certificates issued by respective Governments in proof of having paid the stamp duty and simultaneously respondent authorities would also be at liberty to seek for reports from said Governments to ascertain as to whether the stamp duty has in fact been paid or remitted as claimed by the petitioner and on receipt of the same, necessary orders shall be passed. In the Page 12 of 13 Downloaded on : Fri Mar 25 21:00:03 IST 2022 C/SR/1/2016 CAV ORDER DATED: 21/03/2022 event of adjudicating authority arriving at a conclusion that stamp duty paid is in excess, same shall be refunded to the petitioner with interest @ 6% per annum from date of receipt of amount till payment or in the event of adjudicating authority determining any amount is due and payable, petitioner shall pay the same within four (4) months of such determination, failing which, it shall carry interest @ 6% per annum till payment. Reference accordingly stands disposed of.
9. Registry is directed to transmit the records to the Chief Controlling Revenue Authority, Gujarat State, Stamp and Registration Bhavan, Gandhinagar for taking further steps. The aforesaid exercise shall be concluded expeditiously and at any rate within an outer limit of three (3) months from the date of receipt of the order.
(ARAVIND KUMAR,CJ) (ASHUTOSH J. SHASTRI, J) (NISHA M. THAKORE,J) RADHAKRISHNAN K.V. Page 13 of 13 Downloaded on : Fri Mar 25 21:00:03 IST 2022