' SHAMS MEHMOOD MIRZA, J.---This judgment shall also dispose of C.O. No. 25 of 2013 titled "In the matter of Nishat Hotels and Properties Limited etc." and C.O. No.18 of 2012 titled "In the matter of D.W.P. Technologies Limited etc." as identical questions of law are involved in all the petitions.
2. While sanctioning the scheme for arrangement/amalgamation between the petitioner companies, this Court, on the objection raised by the Government of Punjab, formed a prima facie opinion that the transfer of property pursuant to any scheme of arrangement/amalgamation under section 284 of the Companies Ordinance, 1984 (the Companies Ordinance) would attract levy of stamp duty. The relevant portion is contained in paragraph 29 of order dated 23-10-2013, which is reproduced below.
' During the course of proceedings objection was raised by the Government of Punjab through the office of Advocate General, Punjab that the transfer of Sugar Undertaking from the transferor company to the transferee company attracts imposition of stamp duty under the Stamp Act, 1899.
Prima facie, there appears to be merit in the argument of the learned law officer.
' This aspect of the matter requires further deliberation and will be taken up separately. Learned counsel for the petitioner companies undertake that in case the issue of stamp duty is decided against the petitioner companies, they will unconditionally pay stamp duty as assessed on the Effective Date i.e., 1-10-2011 subject to the petitioners first exhausting their lawful remedies before the higher forum against any such order passed by this Court.
3. Pursuant to the above observations, arguments were addressed on this issue by the learned counsel for the petitioner companies, learned Assistant Advocate General on behalf of the Government of Punjab and by the counsel for Securities and Exchange Commission of Pakistan (SECP).
4. Learned counsel for the petitioner companies made the following submissions to oppose the levy of stamp duty on an order sanctioning a scheme of arrangement/amalgamation:
(a) the order of the Court sanctioning a merger does not fall within the purview of section 3. Of the Stamp Act, 1899 (the Stamp Act) as only re-composition of corpus and shareholding takes place in a merger and transfer of assets is merely a consequence of such a transaction. Accordingly, the record of various agencies is updated on the basis of order of merger without there being the need of any formal instrument.
(b) The scheme of arrangement/amalgamation and the order passed thereon does not constitute a consent order within the contemplation of Article 27-A to the First Schedule 9f the Stamp Act.
(c) While interpreting fiscal statutes rules of strict construction are to be adhered to, and in case of any doubt the benefit must be extended to the taxpayer.
(d) The definition of conveyance as contained in section 2 (10) of the Stamp Act encompasses transfer inter vivos, which expression does not cover artificial persons.
(e) Even if the order of arrangement/amalgamation falls in the definition of instrument/conveyance, the transaction of transfer ,of property is exempted by virtue of Notification No.1 dated 16-1-1937.
(f) The order of merger is passed under the provisions of section 284 of the Companies Ordinance, which is a Federal Statute whereas the Stamp Act is a provincial statute and as such it has no applicability to the orders passed by this Court sanctioning a scheme of arrangement/amalgamation.
5. The learned AAG appearing on behalf of the Province of Punjab as well as the learned counsel for SECP controverted the stance of the petitioners' counsel and relied heavily on a judgment by Indian Supreme Court reported as Hindustan Lever and another v. State of Maharashtra and another (2004) 9 Supreme Court 483 to support their case that an order on a scheme of arrangement/amalgamation is liable to stamp duty under the Stamp Act in terms of Article 27-A, and Article 23 read with Article 62 of the First Schedule to the Stamp Act. Learned counsel for SECP conceded that the petitioner Companies are entitled to the benefit of Notification No.1 dated 16-1- 1937 issued under the provisions of the Stamp Act but according to learned AAG the operation of the said notification was excluded by Article 27-A of the First Schedule to the Stamp Act.
' Legal Provisions
6. Section 3 of the Stamp Act is the charging section and insofar as it is relevant for the purpose of determination of the issues involved in this petition reads as under:
3. Instruments chargeable with duty.- Subject to the provision of this Act and the exemptions contained in the Schedule I, the following instruments shall be chargeable with duty of the amount indicated in the schedule as the proper duty therefore respectively, that is to say-
(a) every instrument mentioned in that Schedule which, not having been previously executed by any person, is executed in [Pakistan] on or after the first day of 1899.....
' Section 2(14) of the Stamp Act defines the expression "instrument" as follows: "instrument" includes every document by which any right or liability is or purports to be, created, transferred, limited, extended, extinguished or recorded."
' Section 2(10) of the Stamp Act lays down the definition of "conveyance" and reads as follows: "Conveyance" includes a conveyance on sale and every instrument by which property, whether moveable or immovable, is transferred inter vivos and which is not otherwise specifically provided for by Schedule 1"
' Articles 27-A and 23 and 62 of the First Schedule to the Stamp Act insofar as they are relevant are reproduced hereunder: "27-A. DECREE, RULE OF A COURT OR AN ORDER OF A COURT based on mutual consent of parties in cases involving transfer of an immovable property including sale, exchange, gift or mortgage, declaring or conferring a right in or title to an immovable property."
"23 Conveyance as defined by section 2 (10) not being a TRANSFER charged or exempted under Article 62"
"62. Transfer (Whether with or without consideration) of shares in an incorporated company or other body corporate"
'Nature of proceedings under section 284 of the Companies Ordinance
7. In order to appreciate the contentions of the learned counsel for the parties, it is necessary to ascertain the nature of order passed by this Court under Part IX of the Ordinance. Section 284 of the Ordinance reads as under: "284. Power to compromise with creditors and members.
(1) Where compromise or arrangement is proposed between a company and its creditors or any members or any class of them, the Court may, on the application in a summary way of the company or of any creditor or member of the company or, in the case of a company being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members of the company or class or members, as the case may be, to be called, held and conducted in such manner as the Court directs.
(2) If a majority in number representing three-fourths in value of the creditors or class of creditors, or members, as the case may be, present and voting either in person or, where proxies are allowed, by proxy at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the Court be binding on all the creditors or the class of creditors or on all the members or class of members, as the case may be, and also on the company, or , in the case of any company in the course of being wound up, on the Liquidator and contributors of the company: ' Provided that no order sanctioning any compromise or arrangement shall be made by the Court unless the Court is satisfied that the Company or any other person by whom an application has been made under subsection (1) has disclosed to the Court, by affidavit or otherwise, all material facts relating to the company, such as the latest financial position of the company, the latest auditor's report on the accounts of the company, the pendency of any investigation proceedings in relations to the company and the like.
(3) An order made under subsection (2) shall have no effect until a certified copy of the order has been filed with the Registrar within thirty days and a copy of every such order shall be annexed to every copy of the memorandum of the company issued after the order has been made and filed as aforesaid, or in the case of the company not having a memorandum to every copy so issued of the instrument constituting or defining the constitution of the company.
(4) If a company makes default in complying with subsection (3), the company and every officer of the company who is knowingly and willfully in default shall be liable to a fine which may extend to five hundred rupees for each copy in respect of which default is made.
(5) The Court may, at any time after an application has been made to it under this section, stay the commencement or continuation of any suit or proceedings against the company on such terms as it thinks fit and proper until the application is finally disposed of.
(6) In this section the expression "company" means any company liable to be wound up under this Ordinance and the expression "arrangement" includes a reorganization of the share-capital of the company by the consolidation of shares of different classes or by the division of shares into shared of different classes or by both those methods and for the purposes of this section unsecured creditors who may have filed suits or obtained decrees shall be deemed to be of the same class as other unsecured creditors.
' From the reading of the above section, it becomes clear that an order passed under it is founded upon the consent of the prescribed majorities of the shareholders of two or more companies to the proposed compromise or arrangement. The order sanctioning the scheme of arrangement/amalgamation when passed binds the shareholders and creditors of the companies. The order takes effect when its certified copy is supplied to the Registrar of Companies within the stipulated time. Learned counsel for the petitioner companies submitted that when a petition under this section is presented, the interested parties are the creditors and shareholders of the companies, the public at large, the government institutions, SECP and Competition Commission of Pakistan and any of these parties can object to the scheme of arrangement/ amalgamation. It was further stated that there is seldom a case where SECP does not raise objections to the scheme of merger. Accordingly, he stated that an order passed under 'section 284 of the Companies Ordinance does not always proceed on a unanimous consent of the concerned parties and some sort of adjudication is required from the Court. This position was controverted by the learned counsel appearing on behalf of the Government of Punjab and SECP who stated that the order of amalgamation is passed on the basis of consent of the shareholders of the companies. The learned counsel for SECP further submitted that SECP has never raised any objection to the scheme of arrangement/amalgamation per se but only to the clauses that might violate the law.
' Summary of Issues
8. After hearing the respective contentions of the learned counsel for the parties, it appears that the following issues need to be addressed for the resolution of the controversies involved in this case (a) whether the order passed for sanctioning the scheme of arrangement/ amalgamation is based upon the consent of the shareholders of the companies; if so, what is the nature and scope of such consent; (b) whether as a result of the consent of the shareholders of the companies on a scheme of arrangement/amalgamation and the order sanctioning thereof, the immovable assets of one company transfer to the other(s);(c) whether the order passed under section 284 of the Companies Ordinance comes within the purview of Article 27-A of the First Schedule to the Stamp Act; (d) whether the order passed under section 284 of the Companies Ordinance comes within the definition of "conveyance" as contained in section 2(10) of the Stamp Act; and (e) whether the petitioner companies are entitled to exemption under Notification dated 16-1-1937 of the issues shall be taken up separately in the succeeding paragraphs.
' Nature and scope of consent of the shareholders of the companies
9. The reading of section 284 of the Companies Ordinance clearly brings out the fact that the order sanctioning the scheme of amalgamation of the companies is passed in consequence of its approval and consent by two-thirds majority of the members or creditors, as the case may be. In regard to the role of the Court in sanctioning the scheme of arrangement/amalgamation, paragraph 21 of order dated 23-10-2013 is quite instructive, which is reproduced below: "Under sections 284 and 287 of the Ordinance the Court has to only ensure that the Scheme is made in good faith, is fair and reasonable, has commercial viability and is not adverse to the interest of the creditors or members of in any manner against the public interest. The Court is not to substitute its judgment over the collective commercial wisdom of the members or the creditors but is to actually supervise the Scheme in general so that it doesn't offend the parameters prescribed above. It is the commercial wisdom of the parties to the Scheme who have taken an informed decision about the usefulness and propriety of the Scheme by supporting it by the requisite majority vote that has to be kept in view by the Court. The Court certainly would not act as a Court of appeal and sit in judgment over the informed view of the concerned parties to the compromise as the same would be in the realm of corporate and commercial wisdom of the concerned parties. The Court has neither the expertise nor the jurisdiction to delve deep into the commercial wisdom exercised by the creditors and members of the company who have ratified the Scheme by the requisite majority. Consequently the Company Court's jurisdiction to that extent is peripheral and supervisory and not appellate. The Court acts like an umpire in a game of cricket who has to see that both the teams play their game according to the rules and do not overstep the limits. But subject to that how best the game is to be played is left to the players and not to the umpire. If the Scheme as a whole is fair and reasonable, it is the duty of the Court not to launch an investigation upon the commercial merits or demerits of the case which is function of those who are interested in the arrangements (Scheme)."
' The consent to the proposed scheme is a voluntary act of the shareholders of the companies without any compulsion from the Court.
' There is no element of adjudication involved in the order sanctioning the scheme as the Court exercises only a supervisory jurisdiction while examining the same. While doing so, its role is minimal and analogous to a court passing a consent order/decree in terms of Order XXIII, Rule 3, C.P.C., which simply superimposes its order on the agreement between the parties. Whenever three-fourth majorities of two or more companies vote in favour of a scheme of amalgamation or arrangement, it constitutes an agreement between them. Simply because a court order is required to create a valid sanction on the said agreement does not change the nature of the consent or the said document. A court passing a consent order/decree and the court passing an order on a scheme of amalgamation has only to examine the agreement between the parties to the extent of ensuring that the terms thereof are lawful and are not against the public policy and nothing more.
10. The consent required for sanctioning of a scheme by force of section 284 of the Companies Ordinance is based on three-fourth majority of the shareholders or creditors, as the case may be, of the companies. In the context of section 284 of the Companies Ordinance, there need not be 100% consent of the shareholders or the creditors as what is required is the super-majority of three- fourth in order to constitute consent for the purposes of sanctioning a scheme of arrangement/amalgamation. The scheme when approved by the prescribed majority of members and creditors, would also bind the minority dissidents, if any. In J.K. (Bombay) Private Limited v. M/s. New Kaiser-I-Hind Spinning and Weaving Company Limited and others. AIR 1970 SC 1041, the Indian Supreme Court while dealing with a similar issue stated the principle thus: ' The principle is that a scheme sanctioned by the court does not operate as a mere agreement between the parties; it becomes binding on the company, the creditors and the shareholders and has statutory force By virtue of the provisions of Section 391 of the Act, a scheme is statutorily binding even on creditors and shareholders who dissented from or are opposed to its being sanctioned. It has statutory force in that sense and' therefore cannot be altered except with the sanction of the court even if the shareholders and the creditors acquiesce in such alteration. The effect of the scheme is "to supply by recourse to the procedure thereby prescribed the absence of that individual agreement by every member of the class to be bound by the scheme which would otherwise be necessary to give it validity" (Palmer's Company Law, 20th Ed., page 664).
' The nature of the proceedings for approval of a scheme of arrangement/amalgamation was also interpreted in a judgment reported as In re: Telesound India Limited (1983) 53 Company Cases 926 (Delhi) on the following terms: "12. Amalgamation of a company with another or an amalgamation of two companies to form a third is brought about by two parallel schemes of arrangements entered into between one company and its members and the other company and its members and the two separate arrangements bind all the members of the companies and the companies when sanctioned by the court. Amalgamation is, therefore, an absorption of one company into another or merger of both to form a third... ...
' Whether the assets are transferred from one company to another
11. The next issue is whether by the Court order sanctioning the scheme of arrangement/amalgamation, the assets are transferred from the transferor company to the transferee company(s). The powers of the Court for enforcing and facilitating the reconstruction and amalgamation of companies are enumerated in section 287 of the Ordinance, which read as follows:
287. Provisions for facilitating reconstruction and amalgamation of companies.--
(1) Where an application is made to the Court under Section 284 for the sanctioning of a compromise or arrangement proposed between the company and any such person as are mentioned in that section, and it is shown to the Court that the compromise or arrangement has been proposed for the purpose of or in connection with a scheme for the reconstruction of any company or companies or the amalgamation of any two or more companies or the division of any company into two or more companies, and that under the scheme the whole or any part of the undertaking, property or liabilities of any company concerned in the scheme (in this section referred to as a "transferor company") is to be transferred to another company (in this section referred to as "the transferee company"), the Court may, either by the order sanctioning the compromise or arrangement or by any subsequent order, make provision for all or any of the following matters, namely:-
(a) the transfer to the transferee company of the whole or any part of the undertaking and of the property or liabilities of any transferor company.
(b) the allotment or appropriation by the transferee company of any shares, debentures, policies, or other like interests in that company which under the compromise or arrangement are to be allotted or appropriated by that company to or for any person;
(c) the continuation by or against the transferee company or legal proceedings pending by or against any transferor company;
(d) the dissolution, without winding up, of any transferor company;
(e) the provision to be made for any person who, within such time and in such manner as the Court directs, dissent from the compromise or arrangement; and
(f) such incidental, consequential and supplemental matters are necessary to secure that the reconstruction or amalgamation is fully and effectively carried out.
(2) Where an order under this section provides for the transfer of property or liabilities, that property shall, by virtue of the order, be transferred to and vest in, and those liabilities shall, by virtue of the order, be transferred to and become the liabilities of, the transferee company, and, in the case of any property, if the order so directs, freed from Companies Ordinance, 1984 any charge which is, by virtue of the compromise or arrangement, to cease to have effect.
(3) Where an order is made under this section, every company in relation to which the order is made shall cause a certified copy thereof to be delivered to the registrar for registration within thirty days after the making of the order, and if default is made in complying with this subsection, the company and every officer of the company who is knowingly and willfully in default shall be liable to a fine which may extend to one thousand rupees.
(4) In this section the expression "property" includes property, rights and power of every description, and the expression "liabilities" includes duties.
(5) In this section the expression "transferee company" does not include any company other than a company within the meaning of this Ordinance, and the expression "transfer company" includes anybody corporate, whether a company within the meaning of this Ordinance or not.
' It is manifest from Section 287 that while sanctioning the scheme of arrangement/amalgamation of the companies, the Court gives specific directions, inter alia, for transfer of the assets from the transferor company to the transferee company. It may be noted that the expressions used in this section are "property" and "liabilities", which can be transferred once arrangement/amalgamation has been ordered under section 284 of the Companies Ordinance. These expressions have been defined in wide terms by subsection (4) of section 287 of the Companies Ordinance by including "rights and powers of every description" and "duties" respectively. The company from whom the transfer of property and liabilities takes place is ordered to be dissolved without being wound up.
Thus the transfer of assets does take place from one company to another on the consent of their shareholders and upon the Court sanctioning the scheme of arrangement/amalgamation. Rule 65 of the Company (Court) Rules, 1997 stipulates that the order under section 287 shall be in Form No.21 with such variation as the circumstances may require. Form 21 reads as under: ' FORM NO. 21 (See rule 65)
(Heading as in Rule 4)
' Company Petition No........................................... Of 19 ' THIS COURT DOTH ORDER
(1) That all the property, rights and powers of the transferor company specified in the First, second and third parts of the Schedule hereto and all the other property, rights and powers of the transferor company be transferred without further act or deed to the transferee company and accordingly the same shall pursuant to section 287(2) of the Companies Ordinance 1984 be transferred to and vest in the transferee company for all the estate and interest of the transferor company therein but subject nevertheless to all charges now affecting the same [other than (here set out any charges which by virtue of the compromise or arrangement are to cease to have effect)]; and
(2) That all the liabilities and duties of the transferor company be transferred without further act or deed to the transferee company and accordingly the same shall pursuant to section 287(2) of the Ordinance, be transferred to and become the liabilities and duties of the transferee company ; and
(3) That all proceedings now pending by or against the transferor company be continued by or against the transferee company; and
(4) That the transferee company do without further application allot to such members of the transferor company as have not given such notice of dissent as is required by clause of the compromise or arrangement herein the shares in the transferee company to which they are entitled under the said compromise or arrangement ; and
(5) That the transferor company do within days after the date of this order cause a certified copy of this order to be delivered to the Registrar of companies for registration and on such certified copy being so delivered the transferor company shall be dissolved [Where the Court directs that the transferor company should be dissolved from any other date, the clause should be altered accordingly] and the Registrar of Companies shall place all documents relating to the transferor company, and registered with him on the file kept by him in relation to the transferee company and the files relating to the said two companies shall be consolidated accordingly ; and
(6) That any person interested shall be at liberty to apply to the Court in the above matter for any directions that may be necessary. SCHEDULE PART I (Insert a short description of the freehold property, of the transferor company).
PART II (Insert a, short description of the leasehold property of the transferor company).
PART III (Insert a short description of all stock, shares, debentures and other choses in action of the transferor company).
Dated this..................... ............ Day of 19... (By the Court).
' Registrar ' It is thus apparent that the title of the transferee company to the property and assets of the transferor company is derived from by the force of the order passed by this Court under section 284 read with section 287 of the Companies Ordinance.
' Salient features of the scheme of arrangement/amalgamation of the petitioner companies
12. Having laid down the legal perspective under which the transfer of assets takes place, it becomes necessary to see what the schemes of arrangement/amalgamation in the present petitions stipulated. In C.O. No.25 of 2013 titled " In the matter of Nishat Hotels and Properties Limited etc" the principal object of the scheme of arrangement is to segregate the assets of Nishat Hotels and Properties Limited (NHPL) (assets/undertaking of NHPL are fully described in Article 2.1 of the Scheme) and transfer the, same to (i) Nishat Gulberg Hotels and. Properties. Limited (ii) Nishat AziZ Avenue Hotels and Properties Limited and (iii) Nishat Raiwind Hotels and Properties Limited against the consideration of issuance of ordinary shares of the said companies. Under the scheme, the following assets of NHPL are being transferred:
(a) in favour of Nishat Gulberg Hotels and Properties Limited Plot No.SZZA-75-F.C.C measuring 14 Kanal 1 Maria and 175 square feet situated a Zahoor Elahi Road, Gulberg-III, Lahore at book value of Rs.898,890,268/- in consideration of the said company issuing 89,889,027 ordinary shares of Rs.10/- each in favour of NHPL.
(b) in favour of Nishat Aziz Avenue Hotels and Properties Limited
(i) 5 storied building constructed at Plot No.1-B measuring 2 Kanal 10 Marla situated at Aziz Avenue, Cana. Bank, Gulberg-V, Lahore;
(ii) Drive way (portion) measuring 4 Kanal 34 square feet leading to parking basement of building constructed on Plot No.1-B situated at Aziz Avenue, Canal Bank;
(iii) Plot measuring 14 Marla 65 square feet situated at Aziz Avenue, Canal Bank, Gulberg-V, Lahore at book value of Rs.218,606,958/- in consideration of the said company issuing 21,860,695 ordinary shares at par value to NHPL.
(c) in favour of Nishat Raiwind Hotels and Properties Limited
(i) land measuring 8 Kanal consisting of share out of 12 Kanal 5. Marla detailed as Khata No.495, Khatooni No.687, Khasra No. 4286/307 (6K- 16M) and 4284/30 (5K-9M) located at Mouza Bhobatian, Tehsil City and District Lahore;
(ii) Land measuring 44 Kanal 5 Marla located at Mouza Bhobatian, Tehsil City, District Lahore; at book value of Rs.228,918,710/- in consideration of the said company issuing 22,891,871 ordinary shares of the par value of Rs.10/- to NHPL.
13. Similarly, in C.O. No.10 of 2012 titled "In the matter of Fatima Sugar Mills Limited and Reliance Sugar Mills Limited," the purpose of the scheme is division/bifurcation of assets/undertaking of Fatima Sugar Mills Limited. The "Retained Undertaking" as described in the scheme shall be kept by Fatima Sugar Mills Limited whereas the "Sugar Undertaking" shall be transferred to Reliance Sugar Mills Limited against the issuance by it of its ordinary shares to Fatima Sugar Mills Limited. It may be pointed out that Reliance Sugar Mills Limited to whom the "Sugar Undertaking" is being transferred is a newly incorporated company and according to paragraph 18 of the petition it has no assets or liabilities except the issued share capital of Rs.350,000/- It is also a wholly owned subsidiary of Fatima Sugar Mills Limited. According to the scheme, Reliance Sugar Mills Limited shall allot 210,149,232 ordinary shares of Rs.10/- each to Fatima Sugar Mills Limited.
14. The salient features of the schemes of arrangement/ amalgamation of the petitioner companies mentioned above lays bare the dominant object and the essence of the schemes, which was to transfer of assets from one company to other company(s). However, the transfer of assets was being carried out from one company to another company in the garb of a scheme of arrangement/amalgamation. In ordinary course, such a transfer through a sale instrument in any form would have entailed levy of stamp duty. In the present case, shares of the transferee company are being allotted to the transferor company in consideration of the transfer of assets.
Such a transfer of assets has all the trappings of a sale. The Stamp Act subjects to duty all the instruments that fall within the description of documents specified in the First Schedule. It needs no emphasizing that for fixing the stamp duty payable on an instrument, the substance of the transaction should also be looked into, which in the present case, as noted above, is the transfer of assets. In the present case, even the order itself stipulates transfer of assets from the transferor company to the transferee company(s). It is not possible, therefore, to accept the contention of the petitioner companies that the transfer of assets is merely a consequence of the order of amalgamation and as such the order passed by this Court is not required to be stamped.
' Whether the order sanctioning the scheme of arrangement/ amalgamation is an instrument
15. Having made the determination that an order sanctioning the scheme of arrangement/amalgamation is based on the consent of the prescribed majorities of the shareholders of two or more companies and that transfer of assets is one of the features of such an order, the question that then arises is whether such an order stands on a special footing and is exempt from the legal consequences flowing from a normal transfer of property and, therefore, cannot be made subject to stamp duty. The logical follow up question that needs to be answered is whether an order passed by this Court under section 284 of the Companies Ordinance sanctioning a scheme of arrangement/amalgamation on the basis of a consent given by the shareholders of two or more companies is covered by Article 27-A of the First Schedule to the Stamp Act and, therefore, liable to stamp duty. As the court order based on consent of the parties involving transfer of an immoveable property has been described as an "instrument" in Article 27-A, the order passed by this Court sanctioning the scheme of arrangement/amalgamation as a natural corollary has to be treated as an "instrument" within the contemplation of the Stamp Act. In Sun Alliance Ltd v. Inland Revenue Commissioners [1971] 1 All ER 135, in regard to a scheme of arrangement/amalgamation, it was held that the scheme itself has no force or effect without an order of the court sanctioning it and that the court order enables the scheme to bring about that transfer. It was further held in the said judgment that: ' It follows that it is the court order that effects the transfer; and this is nonetheless so because the scheme is not operative until an office copy has been delivered to the Registrar of Companies for registration, for the court order itself ordered that to be done and the Act so provides; not because London has still to cause the name of Sun Alliance to be entered on to the register as the holder of the shares. The registration of the transferee occurs in every case where a transfer is executed, and merely perfects the title of the transferee. The same thing occurs in the case of registered land, where one finds a transfer and subsequent registration. I have therefore come to the conclusion that by the court order the shares were transferred to Sun Alliance, or, to use the words of section 54, by that order property was transferred to a purchaser.
16. The definition of "instrument" in the Stamp Act shows that it includes every document by which any right or liability is or purports to be, created, transferred, limited, extended, extinguished or recorded. As noted earlier, it is the Court order that effects the transfer of immovable property. By virtue of combined reading of section 2(14) and section 3 of the Act, every document mentioned in the First Schedule comes within the definition of "instrument". The First schedule to the Act lists out the instruments which are chargeable with stamp duty. Article 27-A of the First Schedule to the Act makes consent order/decree/rule of court whereby transfer of property takes place as an "instrument" and accordingly liable to stamp duty in terms of section 3 of the Act. There is no good reason why a decree of Court which results in transfer of property or creates or transfers a right in the property should not be included in the definition of "document". In consequence of an order sanctioning the scheme of arrangement/amalgamation, transfer of assets B indeed takes place from the transferor company to the transferee company in terms of section 287 of the Companies Ordinance. Such an order is an instrument as it conveys and has the effect of conveying the title in the property from the transferor company to the transferee company. The incident of the transfer of assets from the transferor company to the transferee company in the order sanctioning the scheme of arrangement/amalgamation, therefore, makes it liable to stamp duty in terms of Article 27-A of the First Schedule to the Stamp Act and the order is without any question an "instrument" as defined in section 2(14) of the Stamp Act. A matter of similar nature was interpreted in a judgment reported as Ruby Sales and Services (P) Ltd. And another v. State of Maharashtra and others (1994)
1 SCC 531 wherein it was held that the definitions of "conveyance" and "instrument" start with the expression "includes" which shows that: ..The definitions are very wide Merely because an agreement is put in the shape of a consent decree it does not change the contents of the document. It remains an agreement and it is subject to all rights and liabilities which any agreement may suffer. Having a stamp of court affixed will not change the nature of the document. A compromise decree does not stand on a higher footing than the agreement which preceded it. A consent decree is a mere creature of the agreement on which it is founded and is liable to be set aside on any of the grounds which will invalidate the agreement.
' Similarly in Bayer Pakistan (Pvt.) Limited and others v. Board of Revenue and others 2002 CLD 823 it was held that by using the term "includes" in the definition of the term "instrument", the legislature has extended its meaning by including documents which would otherwise ordinarily be not included in it. Lest there should be any doubt regarding court orders not being instruments, it may be stated that a court order effecting a partition in a suit has also been included in the definition of "Instrument of partition" as contained in section 2 (15) of the Stamp Act, which reads as follows: "Instrument of partition" means any instrument whereby co-owners of any property divide or agree to divide such property in severalty, and includes also a final order for effecting a partition passed by any Revenue-authority or any Civil court and an award by an arbitrator directing a partition."
17. The learned counsel for the petitioner companies urged that the Court orders are not executed and, therefore, do not come within the definition of instrument. This argument has no valid basis.
Section 2(12) of the Act defines (12) "executed" and "execution" when used with reference to instruments to mean "signed" and "signature". It was said in Re: Harrison's Share under a settlement, Harrison v. Harrison [1995] 1 All ER 285 that it would be startling if the court could not look at its own order if it was not stamped, but it would be equally startling if the only sanction provided by the Act for failure to stamp a document did not apply to a court order, some of which are clearly liable to stamp duty. Be that as it may, the Stamp Act itself makes the final order for affecting a partition passed by a civil court as an instrument. The argument put forward by the learned counsel for the petitioner companies thus has no valid basis and is accordingly repelled.
' Whether an order for amalgamation is a conveyance:
18. The learned counsel for the Government of Punjab and SECP also argued that the order sanctioning amalgamation also falls within the definition of "conveyance by relying on section 2(10) of the Stamp Act which defines "conveyance" as including a conveyance on sale and every instrument by which property, whether moveable or immovable, is transferred inter vivos and which is not otherwise specifically provided for by the First Schedule to the Stamp Act. They again placed heavy reliance on Hindustan Lever's case to reinforce their argument. The learned counsel for the petitioner companies by rebutting this contention referred to section 2(10) read with Articles 23 and 62 of the First Schedule to the Stamp Act to argue that since the transfer involved is inter vivos i.e. Between two living persons, therefore, the order sanctioning the scheme of arrangement/amalgamation goes out of the ambit of "conveyance" as defined in the Stamp Act.
Learned counsel further pleaded Notification 1 dated 16-1-1937 to claim exemption from the levy of stamp duty on the scheme of arrangement of amalgamation between the petitioner companies.
19. In Hindustan Lever's case one of the moot point was whether an order sanctioning a scheme of arrangement/amalgamation under section 394 read with section 391 of the Companies Act, 1956 is liable to be stamped in accordance with the provisions of the Bombay Stamp Act in its application in the State of Maharashtra. The Indian Supreme Court answered that query in positive and held that the order sanctioning a scheme of amalgamation is liable to stamped in terms of the provisions of the Indian Stamp Act. The following points can be gathered from the said judgment.
(i) The scheme for amalgamation has its basis in the agreement between the prescribed majority of the shareholders and creditors of the two companies which in turn becomes the basis for passing an order of Court.
(ii) While passing the order for sanctioning a scheme of amalgamation, the Court only has to examine as to whether the provisions of the statute have been complied with and that the agreement forming basis of the scheme is not contrary to the public policy or against the law.
(iii) The Court cannot substitute its judgment for that of the shareholders and creditors of the concerned companies and refuse to sanction the scheme as it exercises a supervisory jurisdiction.
(iv) The Court order sanctioning scheme of merger/amalgamation amounts to "instrument" and is liable to stamp duty as was held in Sun Alliance Insurance Ltd., v .RC (1971) All ER 135 as the properties of the transferor company stand transferred to the transferee company by virtue or an order of Court.
(v) The expression "inter vivos" in the context of section 394 of Companies Act, 1956 would include within its meaning a transfer between two juristic persons.
20. While arriving at the conclusion that the inter vivos transaction within the context of section 394 of the Companies Act, 1956 means a transaction between two juristic persons, the Supreme Court of India in Hindustan Lever's case stated that each shareholder is the owner of the company to the extent of his shareholding. In holding that the transaction of immovable property between two juristic persons is inter vivos transaction, the Supreme Court of India also sought support from section 5 of the Transfer of Property Act, 1882 which reads as under:
5. Transfer of property defined.--In the following sections "transfer of property" means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself and one or more other living persons; and "to transfer property" is to perform such act.
' In this section "living person" includes a company or association or body of individuals, whether incorporated or not, but nothing herein contained shall affect any law for the time being in force relating to transfer of property to or by companies, associations or bodies of individuals.
' The learned counsel for the petitioner companies took a strong exception to the observations made by the Supreme Court of India in Hindustan Lever's case as noted above and termed the judgment per incuriam. It was stated that the Stamp Act being a fiscal statute, it ought to be construed strictly in accordance with plain letters of language and that any doubt as to the interpretation to any expression used therein should be resolved in favour of the subject. It was further stated that the definition of "conveyance" given in the Stamp Act and the transactions contemplated therein cannot be controlled by the meaning ascribed to such term and the transactions by section 5 of the Transfer of Property Act, 1882. A good deal of emphasis .Was laid on the fact that in order to be covered under the definition of conveyance under section '2(10) of the Stamp Act, the transfer of interest has to be 'inter vivos', which expression, according to the learned counsel, was restricted to living persons. It was further submitted that the word "includes" has been used in the definition of "conveyance" which is generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute and, therefore, the definition given by the Legislature is to be accepted as it is without any further enlargement. It was further stated that the shareholders do not own the company and its assets rather the company is a juristic person and holds its property in its own name.
21. The definition of "conveyance" in section 2(10) of the Act clearly specifies that it includes all conveyances and instruments by which property moveable or immoveable is transferred and which are not specifically provided for in the First Schedule to the Stamp Act. A fortiori, where there is a specific Article in the First Schedule to the Act providing for an instrument transferring property, moveable and immovable, the operation of section 2(10) of the Act shall be excluded to the extent of that instrument. While examining sections 284, 285 and 287 of the Companies Ordinance and the consequences flowing from the said sections, it has already been declared in earlier part of this judgment that an order sanctioning a scheme of arrangement/amalgamation is an instrument which by its nature falls within the purview of Article 27-A of the First Schedule to the Act. It is, therefore, not necessary to go into the question whether the order sanctioning the scheme of arrangement/ amalgamation comes within the purview of the definition of "Conveyance". However, as much emphasis was laid on this aspect of the case by both the sides and with considerable vehemence and as Article 27-A to the First Schedule of the Stamp Act only covers court orders in respect of immovable property, this Court would also give its findings on this issue. Before embarking on the inquiry, it would be useful to state that in India, there is no comparable provision like Article 27-A and, therefore, the case-law developed by various Courts in India is confined to interpreting the expression "Conveyance"
22. The definition of "conveyance" in section 2(10) of the Stamp Act by using the word "includes" has given it an enlarged meaning for the purposes of the Act. In the opinion of this Court, the word "includes" as used in section 2(10) of the Act implies an extended meaning by including to the generic meaning of "conveyance" all those things that the definition declares that it should include.
In the famous case of Dilworth v. Commissioner of Stamps 1899 AC 99, Lord Watson thus held.
"The word 'include' is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. But the word "include" is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to "mean and include" and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions."
' In Emperor v. Jianand AIR 1928 Sind 149, a Full Bench of the Sindh High Court while adopting the statement of the principle enunciated by Lord Watson in the Privy Council case cited above held as follows: "It is a well-known rule of interpretation that the word "includes" is used as a word of enlargement and ordinarily implies that something else has been given beyond the general language which proceeds it; to add to the general clause a species which does not naturally belong to it."
23. The issue involved in this case is, however, the meaning of the expression "transfer inter vivos" ,as occurring in section 2(10) of the Stamp Act and whether transfer of assets between two companies is covered by the said expression as contemplated by section 5 of the Transfer of Property Act. The substantive law relating to the transfer of properties is given in the Transfer of Property Act. By virtue of section 2(d) of the Transfer of Property Act, transfers by "operation of law" are not effected by the Transfer of Property Act, except as provided in section 57 and Chapter IV of the Transfer of Property Act. The preamble of the Transfer of Property Act states that it is an Act to define and amend certain parts of the law relating to the transfer of property by acts of parties...."
(emphasis supplied)
' All the provisions of Transfer of Property Act will be deemed to be in connection with the transfer of property taking place between two or more parties. The provisions of the Transfer of Property Act either permit or prohibit or lay down the procedure for the transfer of property or other allied matters (see Pakistan National Shipping Corporation v. Adamjee Insurance Company. Limited 1987 CLC 1376). In order for a transfer to be by operation of law on the other hand, the transfer has to be an involuntary act. In the case of a scheme of arrangement/ amalgamation the transfer of assets takes place in consideration for the allotment of shares to the shareholders of the transferor company in the transferee company under a scheme agreed to by the shareholders of two or more companies. The transfer of this nature has all the trappings of a sale as has been noted earlier by looking at the transactional structure of the scheme of arrangement/amalgamation between the petitioner companies. The transfer of property and the modes in which it can be done has its roots in the Transfer of Property Act and as such it shall be a legitimate and valid tool of interpretation of statute for the Courts to take into account section 5 of the Transfer of Property Act to interpret the meaning of the term ascribed to transfer "inter vivos" in section 2(10) of the Stamp Act. At this juncture, it may pertinently be pointed out that "lease" has been defined in both the Stamp Act [section 2(16)] and the Transfer of Property Act (section 105) but for interpretation of the expressions "premium" and "rent" used in Article 35 of the First Schedule to the Stamp Act with regard to lease, recourse has always been made by the Courts to section 105 of the Transfer of the Property Act wherein these expressions have been used.
24. In Delhi Towers 1 Limited v. G.N.C.T. o Delhi C.A. No.466/2008 in Company Petition No. 50/2003 one of the issues was whether transfer of property by an order of the court under section 394 of the Companies Act, 1956 is exigible to stamp duty? While delivering the judgment, the following principles were enunciated by the Delhi High Court. a. The order approving the scheme for amalgamation passed by the Company Court in exercise of jurisdiction under subsection (2) of section 394 which have the impact of transferring of all assets and liabilities including the property of the transferor company to the transferee company would be, therefore, exigible to stamp duty under the Indian Stamp Act. b. There is nothing to denigrate from the basic and primary fact that order of the court is based on the consent of the parties. The most relevant factor is the undisputable reality that the transfer of property is not an involuntary act of the parties i.e. Companies involved. c. Scheme of amalgamation, as approved, amounts to a transfer inter vivos between two companies who were juristic persons in existence at the time of passing of the order and sanctioning of the scheme whereby right, title and interest in the immovable property of the transferor company are transferred to the transferee company. d. For the purposes of imposition of stamp duty, it would be immaterial as- to whether the conveyance was by operation of law, statutory operation, or by virtue of a private contract between the parties. Exemption has to be by specific statutory provision. e. The statutory definition of conveyance under subsection (10) of section 2 is an inclusive definition of wide import which cannot be confined to specific instruments mentioned in the statute. The contention of DTL that failure of the legislature to specifically include the order sanctioning a scheme of amalgamation in the definition of "instrument" or "conveyance" in the Indian Stamp Act manifests intent to exclude it from applicability of the statutory provisions is therefore devoid of legal merit and has to be rejected.
' While dealing with the question as to whether the transfer of assets under a scheme of arrangement/amalgamation under section 394 of the Companies Act, 1956 comes within the purview of transfer inter vivos, the judgment in Dehli Towers' case after taking into account a number of judgments answered it in negative. Reference was made to the definition of-inter vivos given in Black's Law Dictionary, which is stated as under; ' Between the living; from one living person to another. Where property passes by conveyance, the transaction is said to be inter vivos, to distinguish it from a case of succession or device.
' The substance of the reasoning in Delhi Towers' case was that the expression Inter vivos does not necessarily exclude a juristic person and that the expression transfer of property inter vivos has been used is in contradistinction to transfer by operation of law.
25. The Delhi High Court took note of State of Maharashtra and others. v. M,S. Builders Pvt. Ltd, and another. 1992 (1) Bom.C.R. 568 where it was held that the consent decree is a live document, taking effect between persons, who may be natural or artificial and who are alive at the relevant time, which would make the transaction or transfer 'inter-vivos'. It was held that this would be well within the inclusive part of the definition of 'conveyance' and 'instrument' as they existed prior to 1985 and are sufficient and substantial enough to take in its form and forceful grip the 'consent decree' . The Delhi Court also relied upon the following passage from Hidustan Lever's case.
45. It was contended that since the transaction was not between the 'living beings', the same was not "inter vivos" as the transfer of property had not taken place between the living beings. We do not agree. "Transfer of Property" has been defined in Section 5 of the Transfer of Property Act 1882 to mean an act by which a living person conveys property, in present or in future to one more other living persons. Company or association or body of individual, whether incorporated or not, have been included amongst the "living person" in this Section. It clearly brings out that a company can effect transfer of property. The word "inter vivos" in the context of section 394 of the Companies Act would include within its meaning also a transfer between two "juristic persons" or a transfer to which a 'juristic person' is one of the parties. The transaction between a minor or a person of unsound mind with the other person would not be recognized in law, though the same is between two living beings, as they are not juristic persons in the eyes of law who can by mutual consent enter in a contract or transfer the property. The company would be juristic person created artificially in the eyes of law capable of owning and transferring the property. Method of transfer is provided in law. One of the methods prescribed is dissolution of the transferor company by merger in the transferee company along with all its assets and liabilities. Where any property passes by conveyance, the transaction would be said to be inter vivos as distinguished from a case of succession or device.
26. Elaborating further on the ratio of the Hindustan Lever's case, it was held by the Delhi high Court that the transfer of property can take place through several modes including transfer by way of sale, lease, gift between living persons which are transfer in praesenti and that transfer can also take place through testamentary bequest after the demise of a person. The expression inter vivos contained in section 2 (10) of the Stamp Act, according to the reasoning of the said judgment, refers to transfer of property other than the bequest by a deceased and that such a transfer can be between two juristic persons as it is not necessary to pin down or restrict its operation to living person only.
27. A transfer inter vivos would, therefore, include a transfer in praesenti between persons who are in existence at the time of the transfer and such persons would include not only natural persons but artificial and juristic persons. A company incorporated under the provisions of the Companies Act is a juristic person created artificially in the eyes of law which admittedly owns property and can transfer the same. An approved scheme of arrangement/amalgamation amounts to a transfer inter vivos between two companies who are juristic persons, in existence at the time of passing of the order and sanctioning of the scheme whereby right, title and interest in the immoveable property of the transferor company is transferred to the transferee company. The transfer takes place in the present and is not postponed to any later date and is covered under the definition of conveyance under section 2(10) of the Stamp Act. Similarly, in Ruby Sales and Services case it was held that: ' There is no particular pleasure in merely going by the label but what is decisive is by the terms of the document. It is clear from the terms of the consent decree that it is also an "instrument" under which title has been passed over to the appellants/ plaintiffs. It is a live document transferring the property in dispute from the defendants to the plaintiffs. Thus the position becomes clear that the consent decree falls under the definitions of "Conveyance" as well as "instrument".
' The reasoning of the judgment in Delhi Tower's case is on sound footing and this Court is in respectful agreement with it and holds that an order sanctioning a scheme of arrangement/amalgamation falls under the definition of "Conveyance" as given in Section 2(10) of the Stamp. Act.
28, The entire issue can also be resolved and explained in the context of the legal concept of a body corporate. A company thinks, forms intentions, and makes decisions and acts through more than one means. The members (voting in general meeting) and the directors (taking decisions in the Board meetings) constitute the two organs of the company. These terms signify their constitutional authority to act as the company rather than merely to represent as its agent. Each organ has specific and general powers to make decisions. The organ constituted by the members is called the "the general meeting" and by the directors "the board of directors". The board of directors, as a decision making organ of the company, has broad powers to manage the business of the company. However, there are instances where the Ordinance divides the decision making power between the shareholders voting in a general meeting and the board of directors. Other than the board of directors acting as a whole, the, persons who will be treated in law as being the company are those natural persons who by the memorandum and articles of association or under the provisions of the Companies Ordinance are entrusted with the exercise of the powers of the company.. Section 284 and section 295 of the Companies Ordinance arc examples where the shareholders voting in general meeting are the decision makers for the purposes of transferring or alienating the company's property. Lord Hoffman in a landmark judgment of the Privy Council reported as Meridian Global Funds Management Asia Limited v Securities Commission [1995] 3 All ER 918 formulated the rules of attribution by which actions and knowledge are attributed to a company. It was held in the judgment as follows: ' Any proposition about a company necessarily involves a reference to a set of rules. A company exists because there is a rule (usually in a statute) which says that a persona ficta shall be deemed to exist and to have certain of the powers, rights and duties of a natural person. But there would be little sense in deeming such a persona ficta to exist unless there were also rules to tell one what acts were to count as acts of the company. It is therefore a necessary part of corporate personality that there should be rules by which acts are attributed to the company. These may be called "the rules of attribution."
' These primary rules of attribution are obviously not enough to enable a company to go out into the world and do business. Not every act on behalf of the company could be expected to be the subject of a resolution of the board or a unanimous decision of the shareholders. The company therefore builds upon the primary rules of attribution by using general rules of attribution which are equally available to natural persons, namely, the principles of agency. It will appoint servants and agents whose acts, by a combination of the general principles of agency and the company's primary rules of attribution, count as the acts of the company. And having done so, it will also make itself subject to the general rules by which liability, for the acts of others can be attributed to natural persons, such as estoppel or ostensible authority in contract and vicarious liability in tort.
' The primary rules of attribution as per the judgment were to be found in the company's constitution, most typically in its articles of association. As the company has to go out and do business, these primary rules are supplemented by more general rules of agency and estoppel which apply equally to individuals. The judgment in Meridian Global Funds is a step away from the concept of corporate personality marked by anthropomorphism as is reflected by Lord Hoffmann's observations below: ' Any statement about what a company has or has not done, or can or cannot do, is necessarily a reference to the rules of attribution (primary and general) as they apply to that company. Judges sometimes say that a company 'as such' cannot do anything; it must act by servants or agents.
This may seem an unexceptionable, even banal remark. And of course the meaning is usually perfectly clear. But a reference to a company 'as such' might suggest that there is something out there called the company of which one can meaningfully say that it can or cannot do something.
There is in fact no such thing as the company as such, no 'ding an sich', only the applicable rules.
To say that a company cannot do something means only that there is no one whose doing of that act would, under the applicable rules of attribution, count as an act of the company.
' In the present case, section 284 of the Ordinance stipulates that the prescribed majority of shareholders and their consent to the scheme of arrangement/amalgamation were intended to count as an act of the Company. It may be done in the name of the company but it is an act of the shareholders nonetheless.
' Exemption under Notification dated 16-1-1937
29. The learned counsel for the petitioner Companies also relied on Notification dated 16-1-1997 to claim exemption from levy of stamp duty on the order sanctioning the scheme of arrangement/amalgamation. It is immediately clear from the contents of the said Notification that its applicability is confined to Articles 23 and 62 of the Stamp Act and that an instrument falling under Article 27-A is excluded from its operation as was rightly asserted by the learned AAG. It appears that it was in the contemplation of the authorities while issuing Notification dated 16-1- 1937, on which reliance was placed by the counsel for the petitioner companies for seeking exemption from stamp duty, that the transfer of assets between two companies is within the scope of section 2(10) of the Stamp Act. The said Notification reads as under: "Notification No. 1 dated 16-1-1937.
' In exercise of the powers conferred by clause (a) of section 9 of the Indian Stamp Act, 1899 (II of 1899), the Governor General in Council is pleased to remit the stamp duty chargeable under Articles 23 and 62 of Schedule Ito the said Act on instruments evidencing transfer of property between companies limited by shares as defined in the Indian Companies Act, 1913, in cases--
(i) where at least 90 per cent of the issued share capital of the transferee company is in the beneficial ownership of the transferor company, or,
(ii) where the transfer takes place between 'a parent company and a subsidiary company one of which is the beneficial owner of not less than 90 per cent of the issued share capital of the other, or
(iii) where the transfer takes place between two subsidiary companies of each of which not less than 90 per cent of the share capital is in the beneficial ownership of a common parent company.
Provided that in each case a certificate is obtained by the parties from the officer appointed in this behalf by the local Government concerned that the conditions above prescribed are fulfilled."
' Clearly, the said Notification also treats the scheme of arrangement/amalgamation between two or more companies whereby transfer of assets takes place as an inter vivos transaction as there can be no other reasonable explanation as to why such a transfer was treated as conveyance. The said Notification, however, on the facts of the present case is not applicable as its operation is excluded by Article 27-A of the First Schedule to the Stamp Act. Apart from the case of Fatima Sugar Mills Limited, it is not clear that the condition precedents set out in the said Notification were applicable to the petitioner companies in other two cases.
30. Another contention raised by the counsel for the petitioner companies was that in terms of Article 268 of the Constitution, the Stamp Act is an existing law and falls solely within the legislative domain of the provinces and as such by its operation, an order passed by this Court under the Companies Ordinance cannot be treated as an instrument/document as the said Ordinance is a federal law. The premise of this argument is not valid. The Stamp Act is a provincial statute and Article 27-A of its First Schedule, which was introduced in the year 2008, makes the order of the Courts passed on consent of the parties in cases involving transfer of immovable property as an instrument and subject to stamp duty. No reasons were offered as to why the Stamp Act cannot make an order passed by .This Court under a Federal statute as an instrument.(sic) The Stamp Act levies the stamp duty in respect of documents and instruments effecting transfer of immovable and moveable property. It would be very much within the legislative competence of the provincial legislature to levy stamp duty on the orders passed by the Courts, the effect whereof is to transfer the immoveable property. Notification dated 16-1-1937 upon which much reliance was placed by the petitioner Companies clearly implies that the transfer of property between companies is subject to levy of stamp duty. Be that as it may no argument was pressed into service as to why the provincial legislature would not have jurisdiction to levy stamp duty on Court orders resulting in transfer of assets.
31. In view of the aforesaid discussion, it is declared that
(a) the order passed by the Court under section 284 of the Companies Ordinance is founded on the consent of the shareholders of two or more companies and that the role of this Court while sanctioning the compromise or arrangement is restricted to oversee that the compromise or arrangement arrived at is lawful and is not prejudicial to the interest of its members. Once the Court is satisfied with these prerequisites, the scheme is liable to be sanctioned as per the consent given to the scheme by the shareholders of the companies.
(b) the order passed by the Court sanctioning a scheme under section 284 of the Companies Ordinance is an instrument in terms of section 2(14) of the Stamp Act and falls within the purview of Article 27-A of the First Schedule to the Stamp Act
(c) the order passed by this Court sanctioning a scheme under section 284 of the Companies Ordinance is also a conveyance within the purview section 2(10) of the Stamp Act insofar as it does not involve transfer of immovable property.
(d) the orders sanctioning the schemes of arrangement/amalgamation of the petitioner Companies in C.O. No.10/2012, C.O. No.25/2013 and C.O. No.18/2012 are liable to stamp duty on the terms mentioned above.
32. Henceforth, the parties to a petition shall be liable to supply to the office the requisite stamp paper before the order sanctioning a scheme under section 284 of the Companies Ordinance is passed and thereafter the order shall be placed for final signatures. The Registrar of Companies shall not receive and take on its record an order sanctioning a scheme of arrangement/amalgamation until the same has been duly stamped in terms of the applicable provisions of Stamp Act.
33. Before parting with this judgment, this Court must acknowledge the invaluable assistance provided by both Samia Khalid, the learned A.A.-G. And Umair Mansoor, counsel for SECP.