The Supreme Court has invalidated a Jharkhand Government memorandum that forced cooperative societies to secure a recommendation from the Assistant Registrar before claiming stamp duty exemption. The Court held that executive actions that require unnecessary and redundant procedural steps are unlawful and must be struck down.
A Bench of Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar allowed an appeal by Adarsh Sahkari Grih Nirman Swawlambi Society Ltd., overturning the Jharkhand High Court’s refusal to quash the memorandum.
The challenged memorandum, issued on February 20, 2009, directed District Sub-Registrars to grant exemption under Section 9A of the Indian Stamp (Bihar Amendment) Act, 1988 only if the registration documents were supported by a recommendation from the Assistant Registrar, claiming the step was necessary to prevent misuse.
Section 9A exempts stamp duty on property transfer documents executed by cooperative societies in favor of their members, aimed at promoting cooperative housing and ensuring registration without payment of stamp duty.
The appellant argued that the memorandum created an additional approval mechanism not contemplated in the law, undermined autonomy of cooperative societies, and conferred unauthorized powers on the Assistant Registrar without statutory basis.
While the High Court upheld the memorandum, stating that it helped ensure proper verification, the Supreme Court disagreed. The Court stressed the importance of simplicity in public administration and held that unnecessary procedural layers waste time, increase cost, and violate the purpose of the statute.
The Bench found that once a cooperative society is registered under Section 5 of the Jharkhand Self-Supporting Cooperative Societies Act, 1996, the certificate issued under Section 5(7) is conclusive proof of its legal existence. Introducing further verification, such as a recommendation from the Assistant Registrar, was deemed superfluous and contrary to statutory finality.
The State’s defense that the step was intended to check fraudulent societies was rejected, with the Court stating that executive instructions cannot override or rewrite statutory provisions.
The Supreme Court set aside the High Court’s judgment and declared the memorandum illegal, holding that it imposed an unauthorized and burdensome extra layer of scrutiny.
Case: Adarsh Sahkari Grih Nirman Swawlambi Society Ltd. v. State of Jharkhand
Civil Appeal arising from SLP(C) Diary No. 7678 of 2024
