In a significant ruling, the Bombay High Court has directed the Maharashtra government to refund stamp duty worth ₹1.17 crore to Armstrong Machine Builders Private Limited. The company had paid the amount in July 2021 for a share purchase agreement (SPA) that ultimately collapsed after mandatory government approval was denied.
Background of the Dispute
Armstrong Machine Builders had entered into an SPA with Dematic Holdings UK Limited for transfer of equity shares valued at over ₹585 crore. To complete the process, the company purchased e-stamp papers worth ₹1.17 crore, as required under the Maharashtra Stamp Act. However, under the Foreign Direct Investment (FDI) policy, any investment from countries sharing land borders with India required prior government approval.
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Dematic Holdings UK, falling within this category, applied to the Ministry of Commerce and Industry for approval. On 24 March 2022, the ministry rejected the application, rendering the SPA “void and unenforceable.” Armstrong Machine Builders then sought a refund of the stamp duty in September 2022.
Rejection by Authorities and Legal Challenge
The Inspector General of Registration and Controller of Stamps rejected the refund application in October 2023, citing limitation under Section 48 of the Maharashtra Stamp Act. The authorities argued that refund claims must be made within six months from the purchase of the stamp, while the company applied more than a year later.
The company, represented by advocate Mutahhar Khan, argued that it had no cause to seek a refund until the government rejected the FDI application. “The denial of refund amounts to unjust enrichment by the State,” Khan submitted, stressing that the delay was due to governmental processes beyond the petitioner’s control.
Court’s Observations
Justice Milind N. Jadhav, delivering the judgment on 3 September 2025, held that the refund could not be denied merely on technical grounds. The court observed:
“A litigant cannot be penalized for the time consumed before a Government Authority. To deny refund solely on the ground of limitation would offend equity, justice and fairness.”
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The judge also noted Supreme Court rulings that limitation laws should not defeat legitimate claims where transactions fail due to reasons beyond a party’s control. Importantly, the court emphasized that while the Stamp Act prescribes a time limit, it does not expressly bar refunds beyond that period, nor does it exclude the applicability of equitable principles.
The High Court quashed the October 2023 order of the Inspector General of Registration and directed the State to refund the entire stamp duty amount of ₹1.17 crore along with 4% simple interest within four weeks.
Case Title: Armstrong Machine Builders Private Limited vs State of Maharashtra & Anr.
Case Number: Writ Petition No. 8750 of 2024
