Supreme Court: In a case where the Court was called upon to decide whether the requirement of a recommendation from the Assistant Registrar as a pre-condition to claim stamp duty exemption under Section 9A of the Stamp (Bihar Amendment) Act, 1988 was legal or ultra vires, the bench of Pamidighantam Sri Narasimha and Atul S. Chandurkar, JJ has held the Memo as illegal, emphasising on simplicity in public transactions as a key tenet of good governance.
Holding that once a cooperative society is registered and a certificate is issued, Section 5(7) of the Act declares it to be a conclusive proof of its existence and continuation as a body corporate, the Court noted that administrative procedures should avoid superfluous or irrelevant requirements that serve no legal purpose or value addition.
Background
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Section 9 of the Stamp Act, 1899 empowers the government to reduce, remit or compound stamp duties on various instruments.
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Section 9A was inserted by the Stamp (Bihar Amendment) Act, 1988 (Bihar Amendment Act) exempting payment of stamp duty on instruments relating to transfer of premises by Cooperative Societies to their members.
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In 2009, the Principal Secretary to the Department of Registration issued the impugned Memo number 494, dated 20.02.2009, calling upon the District Sub Registrars to ensure that exemption under Section 9A will be given only when there is a recommendation of the Assistant Registrar, Cooperative Society.
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In the case at hand, the appellant, a cooperative society registered under Section 5 of the Jharkhand Self-Supporting Cooperative Societies Act, 1996, aimed at providing housing and other utilities to its members, challenged the letter issued by the Principal Secretary on the ground that the Memo,
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Imposed an extra hurdle ultra vires the Stamp Act.
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Violated the independence and self-reliance of cooperative societies.
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Lacked authority under the Registration Act, 1908.
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Violated natural justice by issuing the memo without hearing cooperative societies.
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The Jharkhand High Court upheld the memo, citing the need to prevent fake societies and asserting the Principal Secretary’s authority.
Supreme Court’s Analysis
The Court noted that the benefit granted to a cooperative society under Section 9A of the Bihar Amendment Act is sought to be regulated by the Principal Secretary of the Department of Registration to ensure that the benefit is not misused by what he terms as fake societies. Hence, with this objective, the Principal Secretary, in exercise of his power and discretion, directed all the registering authorities of the State not to register a document till recommendation of the Assistant Registrar of Cooperative Society is obtained. The Supreme Court was hence called upon to examine the legality of this of the Principal Secretary.
The Court explained that in order to encourage cooperative movement, the Bihar legislature introduced Section 9A by the Stamp (Bihar Amendment) Act, 1988, the effect of which is that an instrument relating to transfer of a premises by a Cooperative Society to its members shall not be chargeable with stamp duty. Section 9A has the effect of creating a right in favour of cooperative societies and also of imposing a statutory duty on the authorities; a right in the sense that the cooperative societies can transfer premises to their members without stamp duty and a duty in the sense that instruments of transfer by cooperative societies to their members shall be registered by the authorities without any further requirement of stamp duty.
However, on the requirement of recommendation by the Assistant Registrar, Cooperative Society as a pre-condition for registering an instrument transferring premises of a cooperative society in favour of its members without stamp duty to prevent fake cooperative societies from claiming benefit of Section 9A, the Court found the same to be an irrelevant consideration leading to illegality in action.
“Such a pre-condition is clearly superfluous and in fact, unnecessary.”
The Court lucidly explained that a cooperative society in Jharkhand registered under Section 5, acquires the status of a body corporate under Section 65. Such a cooperative society will be entitled to display its name at its office, issue notices, official publications, business letters, bills of exchange, etc. in its own name. Further, as per Chapter II of the 1996 Act, under which any cooperative society in Jharkhand is registered, the certificate of registration is conclusive evidence of the existence of the cooperative society and the State and its instrumentalities are bound by this certification and no further question should arise about the existence or authenticity of the cooperative society. The certificate is a recognition and a declaration of the State that the cooperative society is continuing on statutorily maintained roll.
Stressing on simplicity in public transactions as good governance, the Court explained that in administrative law, simplicity means laws, regulations, and procedures should be clear, straightforward, and easy to understand, allowing for effortless compliance. Administrative procedures should avoid complexity, redundant requirements, and unnecessary burdens, which waste time, expense, and disturb peace of mind.
The Court observed that,
“While higher courts set aside executive decisions on the grounds of illegality if they are not founded on relevant considerations, or even when the decisions are based on irrelevant considerations, it is important to recognize the principle that executive actions that mandate certain unnecessary, excessive requirements, must equally be set aside as illegal.”
Hence, the Court noted that in lieu of the certificate granted by the Registrar, Cooperative Society, which certificate would necessarily be enclosed with the instrument presented for registration by the cooperative society for registration, the further requirement of a recommendation by the Assistant Registrar, Cooperative Society was superfluous and unnecessary.
Finding this requirement as disruptive of ease of transaction, without any value addition to the integrity of the transaction, the Court, hence, set aside the impugned Memo issued by the Principal Secretary, Department of Registration.
[Adarsh Sahkari Grih Nirman Swawlambi Society Ltd. v. State of Jharkhand, SPECIAL LEAVE PETITION (CIVIL) Diary No(s). 7678/2024, decided on 05-12-2025]
Advocates who appeared in this case:
For Petitioner(s): Mr. Rahul Arya, Adv. Mr. Ankit Ambastha, Adv. Ms. Aahana Jaiswal, Adv. Ms. Saumya Saraswat, Adv. Mr. Bhaskar Aditya , AOR
For Respondent(s): Mr. Kumar Anurag Singh, Adv. Mr. Jayant Mohan, AOR Ms. Meenakshi Chatterjee, Adv. Ms. Adya Shree Dutta, Adv. Ms. Dorjee Ongmu Lachungpa, Adv. Mr. Ankit Agarwal, Adv.