The Hindu Business Line : HC rules no stamp duty payable on transfer of property of sick co under BIFR scheme

Chennai, Aug. 7 Transfer of property owned by a sick company [which had been sanctioned a rehabilitation scheme by the Board for Industrial & Financial Reconstruction (BIFR], in favour of a lendor company approved by BIFR scheme, would not come within the ambit of Section 2(14) of Indian Stamp Act.

Hence, such transaction would not call for payment of stamp duty and registration charges by the vendor, the Madras High Court has held.

Mr. Justice S. Nagamuthu, who heard a petition of T.T. Krishnamachari & Co., Chennai, challenging an order dated 11-12-2007 of Joint Sub-Registrar-I, Chennai Central, demanding payment of stamp duty of Rs 56,44,240, besides registration charges, ruled that since transfer of property on Cathedral Road, Chennai, in favour of TTK Prestige Ltd. was by operation of law, which was an involuntary act, as soon as the BIFR sanctioned the scheme, there was no question of payment of stamp duty.

Allowing the petition, the judge while quashing the order of Joint Sub-Registrar, held that the impugned order was highly misconceived.

According to the petitioner, TTK Textiles belonging to the group had bought landed property on Cathedral Road, Mylapore, on 7-7-1992. It became sick and was referred to the BIFR under Sick Industrial Companies (Special Provisions) Act, 1985. TTK Prestige Ltd was one of the specified lenders to the sick company (TTK Textiles).

The properties of the sick company, including the Cathedral Road property, vested with TTK Prestige Ltd. Subsequently, the petitioner, which was a partnership firm, purchased the property from TTK Prestige for a total consideration of Rs 6 crores by means of a sale deed dated 5-9-2007.

The Joint Sub-Registrar (1st respondent) issued a notice to the petitioner firm demanding payment of stamp duty and registration charges. The 1st respondent stated that when petitioner presented sale deed dated 5-9-2007, it also presented a document dated 31-7-2007 showing transfer of property from TTK Textiles to TTK Prestige. In respect of that document, no stamp duty was paid.

The petitioner contended that as per Section 18(6A) of SICA, the title stood transferred automatically in the name of the vendor of the petitioner. No transfer of title was effected under document dated 31-7-2007.

The judge ruled that since the transfer of property was effected by operation of law following BIFR scheme, there was no question of executing any other document chargeable with stamp duty, etc. The writ petition was allowed and the order dated 11-12-2007 of 1st respondent was quashed.