Disposed

Orissa Polyfiber Ltd. v. State

Orissa HC16 May 2017WP(C)/7617/2006

Case brief

AI extract

What is this about?

Writ petition challenging demand of stamp duty on land transfer post-merger. Court noted State Level Nodal Committee recommended exemption under IPR 1996 subject to Cabinet approval. Directs Industries Department to seek Cabinet approval within four weeks. Orders refund of judicial deposit pending final outcome.

What did the court decide?

Directed Government to place Committee's decision before Cabinet. Ordered refund of judge's deposit. Directed petitioner to deposit full amount with Collector.

16.5.2017 Heard Sri R.K.Rath, learned senior counsel for the petitioner and Sri K.K.Mishra, l earned Additional Government Advocate for the State. 2. Filing the writ petition, the petitioner-Reliance Industries Ltd., a Company i ncorporated under the Companies Act, stepping into the shoe of the original petitioner, M/s.Or issa Polyfibres Ltd. continues with the relief sought for by M/s.Orissa Polyfibres Ltd. for di rection calling upon the opposite parties to execute the deed of assignment as agreed by the S tate during pendency of the writ petition and ultimately in final hearing, direct for refund o f the amount, guarantee or deposit. 3. Short background involving the case is that in the year 1982, M/s.Orissa Synth etic Ltd. (shortly called as OSL) being promoted by M/s.Straw Products Ltd., (shortly called a s SPL) a public limited Company and Industrial Promotion and Investment Corporation Ltd. (shor tly called as IPICOL) decided to put up a plant in Dhenkanal District. In the process, private land measuring Ac.121.84 decimals and Government land measuring Ac.105.72 decimals totaling A c.227.56 decimals of land were allotted in favour of the OSL. Due to financial loss, OSL got m erged with M/s.J.K.Lakshmi Cement Ltd. (shortly called as JKCL), vide a BIFR order. As a conse quence, the JKCL transferred its Polyester Division entering into an alliance with M/s.Silvasa Polyester Ltd. and formed a separate company incorporated as M/s.Orissa Polyfibres Ltd. on 25 .1.1994. Subsequently, M/s.Orissa Polyfibres Ltd. was merged with M/s.Indian Petrochemicals Co rporation Ltd. (shortly called as IPCL) by virtue of order of the High Court of Gujarat dated 18.8.2006 but with effect from 1.4.2005. Be it stated here that the IPCL was originally establ ished as a Government of India Undertaking in 1969. In June, 2002, government of India as a pa rt of its disinvestments programme divested 26% of its equity shares in IPCL in favour of the Reliance Petroinvestments Ltd. (shortly called as RPIL). The RPIL acquired additional 22% of t he equity share capital of IPCL through a cash offer in terms of SEBI and by virtue of which t he RPIL held 46.54% of the IPCLs equity share. The RPIL is a Unit of RIL. On 16.8.2007 the IPC L and RIL both were amalgamated by virtue of judgments of the High Court of Bombay and Gujarat and in the process, name of the petitioners establishment got changed from OPL to Reliance In dustries Ltd.

During the above process, the JKCL formerly known as SPL requested the Industries D epartment to allot land, which has been allotted in favour of the OSL subsequently knows as M/ s.Orissa Polyfibres Ltd., which land by virtue of transfer/merger of the Company is now under the custody of the present petitioner. Burden of payment of stamp duty as a consequence has be en shifted to the present petitioner. Fact remains in the year 1999 the Government in its Indu stries Department decided to place the matter before the State Level Nodal Committee to take u p the matter on the issue of payment of stamp duty, particularly to consider the claim of the JKCL to get the benefit of IPR, 1996, which assured no payment of stamp duty in case of merger or amalgamation of a property with a new company. After several rounds of discussions and cor respondences and before the matter is taken up by the State Level Nodal Committee when an atte mpt has been taken for permission of transfer of the land to the subsidiary company, M/s.Oriss a Polyfibres Ltd., the District Sub-Registrar, Dhenkanal, O.P.4 informed the Revenue Departmen t that the issue involved a liability on account of stamp duty of Rs.34,48,200/-, additional s tamp duty of Rs.53,36,500/- and registration fees of Rs.16,42,006/- total requirement of a sum of Rs.1,04,26,706/-. In the process draft deed was also submitted to the Deputy Secretary, Re venue Department and the Collector, Dhenkanal by the transferor company. Necessary permission letter was also obtained for assignment of lease by the Government and private land as appeari ng at Anenxure-20 to the brief. Draft assignment was even approved by the Revenue Department. It is at this stage, vide Anenxure-23, the Collector, Dhenkanal sent a letter to th e Tahasildar regarding realisation of revenue dues. It appears, the transferor company sent cl arification to the Collector on 21.11.2002. After several deliberations on 15.9.2004, the Reve nue Department sent a letter to the Collector for execution of the deed of assignment. It is a t this stage, for the disagreement of the Collector on the issue of payment of stamp duty bein g resisted by the transferor company and the transferor companys representation in the said re gard being not considered by the Collector, the petitioner was constrained to file the above n umbered writ petition with the prayer indicated herein above. For the further merger of the Co mpany in RIL, the RIL is constrained to take up the issue. 4. Sri R.K.Rath, learned senior counsel for the petitioner, referring to number o f documents enclosed herein submitted that for the consideration of the entire issue taking in to consideration the benefits provided under the IPR, 1996, there is no justification in the d emand of the Collector. Sri Rath further contended that the demand of the Collector in the mat ter of payment of stamp duty contravenes the decision at the higher level particularly in the level of State Level Nodal Committee. Referring to the developments taken place, vide Anenxure -20, Sri Rath, learned senior counsel for the petitioner, finally submitted that for the devel opments taken place, vide Anenxure-20, there is no question of payment of stamp duty and the o ther duties indicated herein above and further referring to the interim direction of this Cour

t facilitating conditional registration of the deed of conveyance concerning the above two pat ches of land and for compliance of the direction on deposit to facilitate the registration of the deed of conveyance and the deeds of conveyances having been executed in the meantime, the writ petition should be allowed observing refund of the amount deposited to the petitioner fro m the point of view of the decision of the State Level Nodal Committee and the benefits grante d under IPR, 1996.

5. Sri K.K.Mishra, learned Additional Government Advocate appearing for the O.Ps. , on the other hand referring to the counter affidavit filed on behalf of O.Ps., challenged th e maintainability of the writ petition on the premises that for the companys filing the writ p etition, the writ petition at the instance of the General Manager of the Company is not mainta inable. Referring to a decision of this Court in Birla Tyres vrs. Commissioner (Appeals), Cent ral Excise, Customs & Service Tax & Others reported in 2011(I) ILR-CUT-826, Sri Mishra justifi es his objection on the maintainability of the writ petition. Going to the merit involved in t he case, Sri Mishra, learned Additional Government Advocate, bringing to the notice of this Co urt the document at Annexure-6, i.e., the proceedings of the State Level Nodal Committee in it s Meeting held on 6.8.1999, particularly referring to the recording of the proceedings at Clau se-3.3, submitted that the writ petition becomes premature for the recording at Clause-3.3 of the proceedings and the petitioner should await approval of the Cabinet. To the query of this Court, since there was no stay on the proceeding of the State Level Nodal Committee and as a d ecade has passed in the meantime, if any development through the Cabinet on the issue, in the meantime, Sri Mishra, learned Additional Government Advocate, made a statement that for the pe ndency of the writ petition in this Court, the State had no scope for placing the matter befor e the Cabinet and it will now all dependent on the outcome in the present writ petition.

6. Considering the rival contentions of the parties and avoiding the repetition o f developments taken all through and as indicated herein above, this Court finds, there is no dispute that on the States approval, the OSL put up the plant being promoted by the SPL, a Pub lic Limited Company and also by IPICOL at Dhenkanal. As far as the land requirement is concern ed, this Court does not find any dispute with regard to total extent of land measuring Ac.227. 63 decimals required for the purpose of setting up of the plant and assigned in favour of the Company in original. There is also no dispute with regard to transfer or amalgamation of the o riginal company finally with the RIL. This Court also finds, there is no dispute with regard t o applicability of the IPR, 1996 to the case at hand. However, fact remains, as to whether the re should be exemption of stamp duty to the petitioners establishment in the matter of executi on of deeds of conveyance in respect of the land involved or not ?

Perusal of the pleadings in the writ petition as well as counter affidavit by the respective parties, this Court finds, the claim of exemption of stamp duty being a matter of challenge between the parties, this matter was placed before the State Level Nodal Committe e and the said Committee being constituted under the Chairmanship of the Chief Secretary of th e State with other very high level officers participating as Committee Member as well as invit ed representatives as finds in the proceeding dated 6.8.1999. The State Level Nodal Committee in its meeting dated 6.8.199 at Clause-3 held as follows :-

3.1- The Company has sought exemption for transfer of 97 acres of Government l and valued at Rs.72 lakhs and 130 acres of private land valued at Rs.98 lakhs to the Subsidiar y Company as per the provision of the I.P.R.96 (Para 10. Sub-para 10.3, Part-II). The value of the buildings of the Company which will be transferred is approximately Rs.650 lakhs on which stamp duty and registration fee is sought to be exempted.

3.2- The Revenue Department have opined that the instrument relating to transf er of the Company will be treated as conveyance and chargeable with stamp duty as prescribed u nder Article 23 of Schedule I-A of the Indian Stamp (Orissa Amendment) Act, 1986.

3.3- Basing on the provisions contained in Para 10, sub-para 10.3 of the Indus trial Policy, 1996, the Committee recommended in principle waiver of the stamp duty, additiona l stamp duty and registration fees subject to approval by the Cabinet. JKCL would have to furn ish to the Industries Department the land particulars and valuation certificate from the compe tent authority for the lands and buildings for assessment of the exact amount of stamp duty, a dditional stamp duty and registration fees by the Revenue Department.

Reading of the aforesaid resolve, this Court observes, the Committee in its proceed ing dated 6.8.1999 has already resolved that basing on the provisions contained in Sub-Para 10 .3 of Para-10 of the Industrial Policy Resolution, 1996, the petitioner is entitled to waiver of stamp duty, additional stamp duty as well as registration fees but however the exemption wa s subject to the approval of the Cabinet. Such observation of the State Level Nodal Committee was also never challenged. This Court observes that for the clear provision in the IPR, 1996, the issue on stamp duty should have been closed here but however since the matter was left for the Cabinet approval, approval of the Cabinet should have been obtained in due time. Be that as it may, at this stage of the proceeding, this Court finds, entertaining the writ petition a

nd on subsequent consideration of the claim of the petitioner in the matter of execution of th e advance deed, this Court by order dated 27.8.2007 passed the following :- Heard learned counsel for the parties.

In this matter an affidavit has been filed by the State today and the copy of the s ame has been served on the learned counsel for the petiioner. The stand taken in the affidavit is that the matter of execution of the deed of assignment in respect of Ac.92.55 of Governmen t land and Ac.115.71 of private land in favour of the petitioner-company and the question of e xemption of stamp duty and registration fee is pending before the State Government in Industri es Department for cabinet approval and step should be taken by the Revenue and Disaster Manage ment Department after receipt of proposal from Industries Department. Today after the affidavi t has been filed, another communication has been handed over to this Court by the learned coun sel for the State to the effect that in this matter cabinet decision is required for which the matter may be adjourned for two months.

Learned counsel for the petitioner, on the other hand, submits that in this matter, the State Level Nodal Committee has granted total exemption from payment of stamp duty and re gistration fee as per IPR, 1996. According to the petitioner, the said proposal has also been approved by the Chief Minister on 25.8.1999 and therefore, no cabinet approval is required. Le arned counsel for the petitioner further submits that the petitioner has been harassed even th ough approval of the exemption from payment of stamp duty and registration fee has already bee n given.

Considering the submissions advanced by the learned counsel for both the parties, t he matter is adjourned till the month of November, 2007. But we direct the petitioner to depos it, without prejudice to its rights and contentions, Rs.1,04,00,000/- (One Crore four lakhs) w ith the Collector, Dhenkanal (Opp.party No.3) towards payment of Stamp duty and registration f ee and also deposit by way of demand draft the balance amount of Rs.1,65,00,000/- (One Crore S ixty-five lakhs) in favour of the Registrar (Judl.) of this Court. Upon such payment being mad e, the opposite parties will execute both the deeds of conveyance within a period of two weeks from the date of payment. We make it clear that the Registrar (Judl.) shall invest the above money in a short term interest earning Account in any Nationalised Bank and the said deposit s hall be renewed from time to time until further orders. It is further made clear that both the aforesaid deeds of assignment and deposit of money will abide by the result of the writ appli cation.

Reading of the aforesaid order makes it clear that pending consideration of the riv al case involving the writ petition, this Court had already directed for proceeding ahead with the execution of deeds of conveyance in respect of both the patches of land but however subje ct to deposit of the amount indicated therein. There is no dispute amongst the parties that th e amount as directed by the Court by order dated 27.8.2007 has not only been deposited in the meantime by the petitioner but there has also been execution of the deed of conveyance in resp ect of both the patches of land involving the petitioner and the State. With the developments taken place through the recording in the proceeding of the State Level Nodal Committee at Anne xure-6 and further the development through the interim direction of this Court, this Court fin ds the part of the prayer, particularly with regard to direction for execution of deed of assi gnment during pendency of the writ petition becomes infructuous, but however with regard to th e direction to the State to refund the amount involved for the observation of the State Level Nodal Committee, particularly in clause-3.3 of Annexure-6, this Court finds, the refund of sta mp duty, additional stamp duty and registration fees will however be subject to the approval o f the decision of the State Level Nodal Committee by the Cabinet.

7. Under the circumstance and as the Cabinet decision is required for approval of the decision of the State Level Nodal Committee, this Court directs the Principal Secretary t o Government, Industries Department to place the decision of the State Level Nodal Committee b efore the Cabinet for its approval within a period of four weeks from the date of this order a nd the matter involved should attain finality within a further period of six weeks thereafter. So far as conditional deposit by the petitioner in getting the execution of the deed of conve yance is concerned, the deposit so far sum of Rs.1,65,00,000/- (one Crore sixty-five lakhs) ma de in this Court with accrued interest be refunded to the petitioner and the petitioner is dir ected to deposit the entire amount with the Collector, Dhenkanal and release of both the depos its will be dependent on the ultimate outcome involving the Cabinet decision.

Orissa Polyfiber Ltd. v. State

Case brief

What is this about?

What did the court decide?

Orissa Polyfiber Ltd. v. State

Case brief

What is this about?

What did the court decide?

What the court decided

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