Summary
The Supreme Court set aside a Jharkhand Registration Department memo that allowed the Section 9A stamp duty exemption for transfers by cooperative societies to their members only on a recommendation of the Assistant Registrar, Cooperative Society, holding that the requirement rested on an irrelevant consideration and was superfluous because the registration certificate under Section 5(7) of the 1996 Act is conclusive evidence of the society's existence.
Issues
- Whether an executive memo requiring a recommendation of the Assistant Registrar, Cooperative Society as a pre-condition for the stamp duty exemption under Section 9A of the Indian Stamp Act (as amended in Bihar) is legal.
- Whether an administrative requirement that is unnecessary and adds nothing to the purpose of the statute can be struck down as illegal on judicial review.
Provisions considered
- Section 9A and its second proviso, Indian Stamp Act, 1899 (as amended by the Indian Stamp (Bihar Amendment) Act, 1988)Read as exempting from stamp duty an instrument transferring premises of a cooperative society to its members; the Court held that it creates a right in favour of such societies and a corresponding duty on the authorities to register such instruments without any further requirement of stamp duty. (¶¶ 3, 11)
- Section 9, Indian Stamp Act, 1899Noted as empowering the Government to reduce, remit or compound duties; the Act is a fiscal enactment aimed at raising revenue, and the power to collect duty extends to granting such reliefs. (¶¶ 3, 10)
- Section 5(7), Jharkhand Self-Supporting Cooperative Societies Act, 1996The certificate of registration signed and sealed by the Registrar is conclusive evidence of the society's registration and existence; the State and its instrumentalities are bound by it, making a further recommendation of the Assistant Registrar superfluous. (¶¶ 2.2, 13, 14)
- Sections 5, 6 and 7, Jharkhand Self-Supporting Cooperative Societies Act, 1996A society registered under Section 5 becomes a body corporate under Section 6 and may act in its own name, which the Court relied on to show that registration settles the society's existence. (¶ 13)
Held
- An administrative decision is unlawful if it ignores relevant considerations or takes irrelevant ones into account; an insistence on acts or documents that neither bear on nor add value to the purpose of the law, and are merely superfluous, is an irrelevant consideration and can render the action illegal. (¶¶ 2.1, 9)
- Since the appellant's challenge was confined to the exercise of power being arbitrary and unreasonable, the Court examined only the exercise of the Principal Secretary's power and not whether he had jurisdiction to issue the memo. (¶ 8)
- Section 9A creates a right in cooperative societies to transfer premises to their members without stamp duty and a duty on the registering authorities to register such instruments without further stamp duty. (¶ 11)
- Requiring the Assistant Registrar's recommendation as a pre-condition for registering such instruments, in order to keep out fake societies, is an irrelevant consideration: the registration certificate under Section 5(7), which is conclusive evidence and would be enclosed with the instrument, already establishes the society's existence, and the extra step hampers ease of transaction without adding to its integrity. (¶¶ 12, 13, 14)
- The memo dated 20.02.2009 was accordingly set aside on the ground of illegality. (¶¶ 2.2, 15)
Result
Appeal allowed; the High Court's judgment in LPA No. 553 of 2022 set aside and Memo No. 494 dated 20.02.2009 of the Principal Secretary, Department of Registration, Jharkhand, quashed.