D.Dis.No. 24790/P1/2019, Revision Petition on Document No.P45/2018

What the proceedings decide

D.Dis.No. 24790/P1/2019 concerns Document No.P45/2018, a sale deed executed on 16 August 2018 by Reliance Communications Limited in favour of Reliance Jio Infocomm Limited. The property value and sale consideration were stated as Rs.3,55,00,000.

The seller claimed title through a company demerger sanctioned by the Bombay High Court. The registering officer treated the transaction as involving two conveyances, the transfer under the demerger and the later sale deed. The document was impounded, and the Joint I Sub Registrar in the cadre of District Registrar determined deficit stamp duty of Rs.24,85,500 and a penalty of Rs.1,500.

Findings on company demergers

The Chief Controlling Revenue Authority and Inspector General of Registration rejected the petitioner's argument that a High Court sanctioned demerger was not subject to stamp duty. The decision relied on Madras High Court judgments stating that amalgamations, mergers and similar arrangements fall within the meaning of conveyance.

The decision also records that registration and stamping are separate issues. Even if a document does not require compulsory registration, it must be properly stamped before it can be admitted in evidence or used for the later conveyance of property.

Recalculation of stamp duty

D.Dis.No. 24790/P1/2019 does not approve the District Registrar's use of a 7 per cent duty basis for the demerger. It directs recalculation under G.O. (Ms.) No.47 dated 19 February 2020, which reduced stamp duty for merger, demerger and reconstruction schemes to:

• 2 per cent of the market value of the immovable property, or
• 0.6 per cent of the aggregate market value of the shares,
• whichever is higher.

The Government Order is recorded as having retrospective effect from 1 April 1956.

Who may be affected

The proceedings directly affect Reliance Jio Infocomm Limited, Reliance Communications Limited and Document No.P45/2018 at the Joint I Sub Registrar Office, Vellore. They are also relevant to companies relying on merger, demerger or reconstruction schemes as the source of title when later presenting Tamil Nadu property documents for registration.

The District Registrar must also check whether the property involved is the only property in Tamil Nadu transferred under the relevant Scheme of Arrangement before proceeding.