1998(4) ALL MR 437
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Ashok A. Desai & P.S. Patankar, JJ.
The Antifriction Bearings & Anr. Vs. State Of Maharashtra & Ors.
9th September, 1998
Petitioner Counsel: Mr.J.J. BHATT, Sr.Counsel with Mr.R.M. KADAM and Mr.S.C.DHARMADHIKARI i/by AMARCHAND & MANGALDAS
Respondent Counsel: Mr.S.M. SHAH
Bombay Stamp Act (1958), S.7 r.w.S.2(1),3, 19 - Companies Act (1956), S.125, 126, 132, 133 - Payment of higher duty in respect of certain instruments - Instrument creating charge registered in the State of Gujarat - Receipt of instrument copy u/s 125 is not a formality but a legal requirement - Charge registered and debentures issued pursuant to said instrument in Bombay - Instrument - Copy is, therefore, chargeable u/s 7 r.w.S.19.
Doing something pursuant to the instrument in this State is a chargeable transaction and what is recoverable is additional duty payable according to rates prevailing in this State. Receipt of the copy could only be a chargeable event. It however, could not be construed that Sec.7 attempts simpliciter to levy a stamp duty on the copy of the instrument. [Para 7]
To read, that the receipt of original instrument alone is a chargeable event, would certainly frustrate the entire legislative scheme under Section 7 read with Section 19 of the Act of 1958. Certainly such construction would fertilise the design of executor to evade Stamp Duty. [Para 8]
The contention that copy received in the state need to be only in terms of Sub-section 2 of Section 7 of the Act 1958, any other mode is not contemplated by Section 7 and, therefore, filing of the copy under Section 125 of the Act of 1956 would not be a chargeable event does not hold any merit. Sub-section 1 & 2 of S.7 of Act, 1958 referred to distinctly the copy of instrument received in the State and received in evidence. Both of them are different contingencies. [Para 9]
In view of the provisions of Ss.125(1), 126, 132 and 133 of the Companies Act, filing of copy could not be a formality but a definite legal requirement and non filing creates certain legal impediments. The Petitioner-companies, undisputedly, at Bombay issued debentures duly endorsed with the certificate envisaged by Section 132. The charge registered at Bombay (Section 125) was certainly to promote sale of debentures. The Instruments registered in Gujrat have therefore, relation with the matter or thing done by the company in the State of Maharashtra, as envisaged by Section 19 of the Act 1958. [Para 11]
ASHOK A. DESAI, J.:- Whether Section 7 of the Bombay Stamp Act, 1958, if seeks to levy stamp duty on the copy of Instrument, suffers from lack of Legislative competence ? Inter alia this is a common question involved in these petitions.
Preface to the question is that the Petitioner-Companies hold most of the immoveable properties in State of Gujrat. In relation thereto, they have executed Debenture Trust Deeds (the Instrument) in favour of the Industrial Credit and Investment Corporation. The companies obtained exemption under the Indian Stamp Act 1899 in view of Article 27. They have further registered those Instruments with Sub-Registrar in the State of Gujrat as required by the Indian Registration Act. Stamp duty was paid on them under the Act 1958, as applicable to the State of Gujrat, at the rates prevailing therein. These rates are comparatively lower than those prevailing in the State of Maharashtra.
2. Petitioner-Companies then filed copy of the instruments under Section 125 of the Companies Act 1956 with the Registrar of Companies at Bombay, where they are having registered offices. The Companies thereupon obtained the Certificates as envisaged by Section 132 and accordingly at Bombay issued Debentures. The Superintendent of Stamp, Bombay, observed that the Instrument is chargeable under Article 40(b) and 48(b) of Schedule I of the Act 1958. Respondent-Superintendent, in terms of Section 7 read with Section 19 of the Act of 1958, calculated the stamp duty on the instruments as payable in the State of Maharashtra. By the impugned Communications, the companies were called upon to pay the difference.
3. Submission before us is that the Superintendent of Stamp levied the stamp duty on a copy of the instrument even though original was never presented. Entry 63 of list II of Schedule VII to the Constitution of India authorizes the State Legislatures to levy on such "Document" other than those instruments mentioned in Entry No.91 of List I. Document referred to in Entry No.63 therefore, needs to be of the same character of the Instrument. Reference is made to a decision in the case of The Bar Council of Uttar Pradesh Versus The State of U.P. and another, reported in AIR 1973 SC 231. Copy of the Instrument, it is contended, is not a "Document" as envisaged, much less an "Instrument". To levy stamp duty on a copy of the instrument, pursuant to Section 7 of the Act of 1958, is beyond the Legislative competence. Attention is invited to a decision in the case of Jupudi Kesava Rao Versus Pulavarthi Venkata Subbarao and others, reported in AIR 1971 SC 1070 (Paragraph 13) wherein it is held that there is no scope for inclusion of the copy of the document as an instrument for the purpose of stamp Act.
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 Schedule I as the proper duty therefor respectively, that is to say-
(b) every instrument mentioned in Schedule I, which, not having been previously executed by any person, is executed out of the State on or after the said date, relates to any property situate, or to any matter or thing done or to be done in this State and is received in this State." (Emphasis supplied)
The term Instrument as defined in (Sec.2(1)) is analogous to that provided in the Indian Stamp Act 1899 and includes every document of specific description excluding those specified in Entry 91 of List II of Schedule VII.
(1) Notwithstanding anything contained in section 4 or 6 or in any other enactment, unless it is proved that the duty chargeable under this Act has been paid-
(a) on the principal or original instrument, as the case may be, or
(b) in accordance with the provisions of this section,
the duty chargeable on an instrument of sale, mortgage or settlement other than a principal instrument or on a counter part, duplicate or copy of any instrument shall if the principal or original instrument would, when received in this State have been chargeable under this Act with a higher rate of duty, be the duty with which the principal or original instrument would have been chargeable under section 19.
(2) Notwithstanding anything contained in any enactment for the time being in force, no instrument counter part, duplicate or copy chargeable with duty under this section shall be received in evidence unless the duty chargeable under this section has been paid thereon.
6. Impugned provisions have incorporated a special scheme to prevent the evasion of stamp duty. What is explicit in Section 7, that, on arrival of the copy of the instrument in this State, original instrument becomes chargeable in the same manner as if received in the State in terms of Section 19. This Section deals with increased duty on certain document in State of Maharashtra. Section 19 (as it stood prior to Amendment of 1993) reads thus :-
"Payment to duty on certain instruments liable to increased duty - Where any instrument of the nature described in any article in Schedule I and relating to any property situate or to any matter or thing done or to be done in this State is executed out of the State and subsequently received in the State,-
(a) the amount of duty chargeable on such instrument shall be the amount of duty chargeable under Schedule I on a document of the like description executed in this State less the amount of duty, if any, already paid under any law in force in India excluding the State of Jammu and Kashmir on such instrument when it was executed."
7. These provisions operate when the Scheduled Instrument is registered in some other State, and in relation thereto some matter or things done or to be done in this State and subsequently received in the State. What is significant that these provisions take note of the duty already paid on the instrument in other State and seeks to recover only difference between duty chargeable in this State and duty already paid when registered in some other State. Doing something pursuant to the instrument in this State is a chargeable transaction and what is recoverable is additional duty payable according to rates prevailing in this State. Receipt of the copy could only be a chargeable event. It however, could not be construed that Sec.7 attempts simpliciter to levy a stamp duty on the copy of the instrument.
8. To read, that the receipt of original instrument alone is a chargeable event, would certainly frustrate the entire legislative scheme under Section 7 read with Section 19 of the Act of 1958. Certainly such construction would fertilise the design of executor to evade Stamp Duty. At this stage, we refer to the Amending Act of 1993 which has added Sub-section 3 to Section 7 and term copies of the instrument at various places in Section 19. The learned Govt. Pleader invited attention to the ratio led down in 1992(2) BCR Page 29, which has been affirmed by the Supreme Court in the case of Ruby Sales and Services (P) Ltd., and another Versus State of Maharashtra and others reported in (1994) 1 Supreme Court Cases 531. They dealt with definition of term "Conveyance" under Maharashtra Amending Act No.27 of 1985 and a question whether a Consent decree was included in the unamended definition or not ? It is contended that amendment of 1993 is by way of clarification of what was already comprehended by Legislative provisions. However, in view of our discussion, we do not propose to express on the nature or effect of these amendments.
9. Learned Counsel for the petitioners, submitted that copy received in the State need to be only in terms of Sub-section 2 of Section 7 of the Act 1958. Any other mode is not contemplated by Section 7 and, therefore, filing of the copy under Section 125 of the Act of 1956 would not be a chargeable event. The submission does not hold any merit. Sub-section 1 & 2 of Section 7 of Act 1958 as reproduced, referred to distinctly the copy of instrument received in the State and received in evidence. Both of them are different contingencies.
10. Mere receipt of the copy of an instrument, it is then contended, could not be a chargeable event. Filing copy under Section 125 of the Act of 1956 is merely a formality. It is optional and not obligatory. Bringing copy therefor, could not be of any legal implication so as to be chargeable as envisaged by Section 7 of the Act of 1958. Submission is erroneous.
The Act of 1956 ( Part V ) deals with the registration of charges which includes mortgage. Section 125 reads thus :-
125(1) Subject to the provisions of this part, every charge created on or after the 1st day of April, 1914, by a company and being a charge to which this section applies shall, so far as any security on the company's property or undertaking is conferred thereby, be void against the liquidator and any creditor of the company, unless the prescribed particulars of the charge, together with the instrument, if any, by which the charge is created or evidenced, or a copy thereof verified in the prescribed manner, are filed with the Registrar for registration in the manner required by this Act....
(3) When a charge becomes void under this section, the money secured thereby shall immediately become payable.
11. What is explicit that the Instrument or copy thereof duly verified if not filed with the Registrar of Companies, the charge would become void against liquidator and creditor of the company. Statutory presumption ( Section 126) of the notice of charge is also provided. Certificate of registration (Section 132) further becomes conclusive proof of the charge. The company (Section 133) is obliged to cause endorsement of the certificate on the debentures. As such filing of Copy could not be a formality but a definite legal requirement and non filing creates certain legal impediments. The Petitioner-companies, undisputedly, at Bombay issued debentures duly endorsed with the certificate envisaged by Section 132. The charge registered at Bombay (Section 125) was certainly to promote sale of debentures. The Instruments registered in Gujrat have therefore, relation with the matter or thing done by the company in the State of Maharashtra, as envisaged by Section 19 of the Act 1958.
12. Section 125 of the Act of 1956 emphasises on filing of instrument or copy thereof duly verified in a prescribed manner. Rule 6 of Companies (Central Govt's) General Rules & Forms has prescribed the manner of verification, which reads thus :-
"Sections 125, 127 and 128-A copy of every instrument or deed creating or evidencing any charge and required to be filed with the Registrar in pursuance of Section 125, 127 or 128 shall be verified as follows :
(ii) where the instrument or deed relates, whether wholly or partly, to property situate in India, the copy shall be verified by a certificate of a responsible officer of the company stating that it is a true copy or by a certificate of a public officer given under and in accordance with the provisions of section 76 of the Indian Evidence Act, 1872 (1 of 1872)"
The copy of the instrument duly verified as per the statutory dictate, evidencing or creating the charge has the character of an instrument.
13. Mr.Chinoi, learned Counsel appearing for the petitioners fairly conceded before us, that the certified copy of the original instrument is an instrument. In view of this and discussion here-in-before, we do not propose to deal with the submission that the copy of the instrument is not a document as envisaged by Section 2(1) of the Act of 1958. The petitioners are, therefore, liable to pay duties as ordered by the Superintendent of Stamp, Maharashtra.
Petitions are therefore, dismissed. Rule discharged in each petition.