Zuri Hotels and Resorts Private Limited v. The Principal Sub-Registrar and Ors

What happened

M/s. Laguna Kumarakam Resorts Private Limited owned properties of about 6 hectares 89.22 ares and was amalgamated, with effect from 2009, into Zuri Hospitality Private Limited by an order of the Bombay High Court (Goa Bench) dated 31 March 2010; a de-merger order of 16 August 2012 transferred the Kerala activities to the petitioner. A mutation application was rejected by an order of 5 February 2016 saying registration under the Registration Act, 1908 was needed. A Single Judge in W.P.(C) No. 10939 of 2017 held on 5 March 2018 that no registration was needed, and the writ appeal W.A. No. 1622 of 2019 held that the procedural requirement of section 89(5) of the Registration Act had to be met. After the Bombay High Court directed the orders to be sent to the Kerala registering authorities by orders of 10 January 2020, the Registrar issued Exts. P1 and P2 of 8 July 2020 demanding stamp duty under the Kerala Stamp Act, 1959 of ₹2,01,90,659, followed by a revenue recovery notice in March 2021.

Questions before the court

• Can stamp duty under the 2016 and 2020 amendments of the Kerala Stamp Act be demanded on an amalgamation and a de-merger approved by court orders in 2010 and 2012?

Why the court ruled this way

The petitioner argued that duty on amalgamation and reconstruction was introduced prospectively from 1 April 2020, that the chargeable activity was the amalgamation and reconstruction approved by the orders, so the dates of those orders mattered, and relied on Vijay v. Union of India, (2023) 17 SCC 455, that the crucial date is the date of execution of the instrument (paragraph 5). The Government Pleader pointed to the amendment of section 2(d) including a deed of amalgamation within conveyance (paragraph 6). The Court found that the section 2(d) amendment came into force only on 13 November 2016 and that neither the 2016 nor the 2020 amendment was retrospective (paragraph 7). When mutation was first sought the authorities did not demand duty because the Act did not cover those transactions, and the demand arose only because the Bombay High Court sent the orders after the amendments; the orders of the High Court cannot be the basis for duty as the statute does not visualise court orders as attracting stamp duty (paragraph 8). The demands were made without regard to the crucial dates (paragraph 9).

Controlling point

The 2016 and 2020 amendments do not apply to the amalgamation and de-merger approved by the orders of 2010 and 2012.

Order and next steps

The writ petition was allowed and Exts. P1 and P2 were set aside. The coercive proceedings initiated on the basis of those demands under the Revenue Recovery Act, 1968 were also set aside.

Practical implications

A company whose merger or de-merger order predates the Kerala amendments should object to a stamp duty demand by pointing to the date of the court order and the absence of retrospectivity, and rely on Vijay v. Union of India.

Limits of this ruling

• The ruling concerns transactions approved before the amendments; it does not decide the duty on amalgamations or de-mergers approved after the dates on which the amendments took effect.