Adarsh Sahkari Grih Nirman Swawlambi Society Ltd. vs The State Of Jharkhand & Ors.

REPORTABLE 2025 INSC 1389 IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF 2025 ARISING OUT OF SLP (C) No. OF 2025 DIARY NO. 7678 OF 2024

ADARSH SAHKARI GRIH NIRMAN SWAWLAMBI SOCIETY LTD. ...APPELLANT(S)

VERSUS

THE STATE OF JHARKHAND & ORS. …RESPONDENT(S)

JUDGMENT

1. Delay condoned. Leave granted.

2. Simplicity in public transactions is good governance. Constitutional

courts uphold this virtue to strengthen the rule of law and ensure access

to justice. 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.

Signature Not Verified

2.1 While higher courts set aside executive decisions on the grounds of Digitally signed by Jayant Kumar Arora Date: 2025.12.05 17:22:23 IST Reason:

illegality if they are not founded on relevant considerations, or even when

1 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.

2.2 On this principle, we have held that the Memo issued by the

Principal Secretary, Department of Registration, mandating an additional

recommendation of Assistant Registrar, Cooperative Society of the

existence of a Cooperative Society, as a pre-condition for registration of a

document under Section 9A of the Indian Stamp (Bihar Amendment) Act,

1988 as illegal. The reason is simple. 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. We have held that when the certificate serves the purpose, the

additional requirement is unnecessary. We have also noted that the Memo

requiring recommendation from Assistant Registrar, Cooperative Society

is based on irrelevant considerations and it does not offer any value

addition to the integrity of the transaction as alleged.

3. Section 9 of the Indian Stamp Act, 18991 empowers the government

to reduce, remit or compound stamp duties on various instruments.

Section 9A was inserted by the Indian Stamp (Bihar Amendment) Act,

1 Hereinafter referred to as the “Stamp Act”.

2 1988, exempting payment of stamp duty on instruments relating to

transfer of premises by Cooperative Societies to their members. For ready

reference, Section 9A is reproduced below –

“Section 9A. Notwithstanding anything contained in any rule or orders under clause (a) of section 9 reducing or remitting the duty on an instrument or class of instruments in force immediately before the date of commencement of this section, any instrument, so far as it relates to premises of a Co- operative Society registered or deemed to be registered under any law relating to the Co-operative Society for the time being in force, executed by or on behalf of or in favour of such society or by an officer or member in favour of another member and relating to business of such society shall be chargeable with duty under this section read with articles indicated in Schedule I-A:

… Provided further that an instrument relating to transfer of premises by a Co- operative Society to be registered in favour of its members shall not be chargeable with duty:

…”

4. Problem arose in 2009, when the Principal Secretary to the

Department of Registration (respondent no. 2) 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. The Memo addressed by the Principal Secretary to all District

Sub-Registrars of the State is reproduced below –

“Jharkhand Government Registration Department File No 1/Ni Vi 1079/08 By, Shri Sudhir Prasad, Principal Secretary Registration Department, Jharkhand, Ranchi

To, All District Sub Registrars, All Sub Registrars Ranchi Dated …..2009

3 Subject: - Regarding giving guidelines for exemption of stamp duty and registration fee in the deed submitted for registration by the Cooperative Societies.

Sir,

In relation to the above-mentioned subject, it is said that under Section 9A of the Indian Stamp Act, there is complete exemption in stamp and registration fees in the deed presented for registration for transfer of land and properties by registered Cooperative Societies. To ensure that unfair advantage is not taken, it will be essential that you ensure that-

1. In case of registration of co-operative societies, exemption will be given only when this matter is recommended by the Assistant Registrar, Co- operative Society.

2. The registrar will receive such recommendation and submit it to the District Under Registrar. In the absence of such recommendation, exemption will not be given.

Please consider this as urgent.

Yours Faithfully SD/-

Principal Secretary Registrar Department, Jharkhand, Ranchi.

Memorandum No.: 494 Dated: 20.02.2009”

5. The appellant is a cooperative society, registered under Section 5 of

the Jharkhand Self-Supporting Cooperative Societies Act, 1996 2, working

with the aim and object of providing housing and other utilities to its

members. As the letter issued by the Principal Secretary adversely

affected their freedom to transfer property with expedition and efficiency,

they approached the High Court by filing a writ petition under Article 226

of the Constitution of India, inter alia raising the following grounds -

(i) That by mandating approval by the Assistant Registrar before registration of a transfer, a new tier has been created as a hurdle, which is ultra vires the Stamp Act.

2 Hereinafter referred to as “the Cooperative Societies Act, 1996”.

4

(ii) That the Memo directly impinges on the independence and self-reliance envisaged for co-operative societies under the 1996 Act.

(iii) That the Assistant Registrar has no authority whatsoever to grant or reject approval to transfers by a co-operative society to its members pursuant to an executive instruction that is contrary to and restrictive of powers of the registering authority under a central legislation, that is, the Registration Act, 1908 3.

(iv) That respondent no. 2 has passed the impugned Memo without providing co-operative societies an opportunity of hearing and has thereby perpetuated gross violation of principles of natural justice.

6. The Single and the Division Benches of the High Court refused to

exercise judicial review for the following reason -

(i) The impugned letter is not in contravention to the Stamp Act, generally, or section 9A, in particular. Rather, the requirement under the letter is necessary to ensure that only validly registered cooperative societies get the benefit.

(ii) Under section 34 of the Registration Act, the registering authority has powers to make inquiries as to the executants and their representatives as well as proper stamping and verification of the document presented for registration. However, this power does not extend to examination of validity of registration of a cooperative society and of satisfaction of conditions for availing stamp duty exemption under section 9A of the Stamp Act.

(iii) The impugned executive instruction is intended towards simplifying the process and for benefit of the co-operative societies.

7. While Mr. Rahul Arya, Advocate, reiterated appellant’s submissions

before the High Court, Mr. Kumar Anurag Singh, Advocate appearing for

the State, underscored the spirit of Section 9A and submitted that it is

necessary to ensure that fake cooperative societies do not avail the

benefit of the exemption. He also submitted that the Principal Secretary,

Department of Registration is the competent authority to issue

3 Hereinafter referred to as “the Registration Act”.

5 administrative directions to ensure payment of stamp duty and registration

of the document and therefore entitled to direct grant of exemption only

on the recommendation of the Assistant Registrar, Cooperative Society.

8. The legality of the Memo issued by the Principal Secretary,

Registration Department is subjected to judicial review in the context of

the power vested in him under the Registration Act. Though the appellants

have faintly raised jurisdictional questions about the legitimacy of the so-

called power vested in the Principal Secretary on the ground that it is

unrelated to the statutory provision, the High Court has not examined this

position at all. Even before us, the submission is confined to the exercise

of the power being “arbitrary and unreasonable”, rather than it being

without jurisdiction. We will therefore confine our enquiry to the exercise

of power.

9. Administrative law has well recognised the principal of an

administrative decision becoming unlawful if the decision fails to take into

account relevant considerations, or even when it takes into account

irrelevant considerations. Judicial review of administrative action on the

ground of illegality would then require consideration of provision of the

statute, rules or regulations, or even a policy empowering exercise of such

power or discretion. This process may seem to be a simple case of

interpretation of the laws, however as judicial review is in the realm of

public law, constitutional courts have the duty to ensure that the power or 6 discretion is exercised in furtherance of the purpose and object of the

statute, the rule or the regulation, or for that matter implementation of a

policy. In this process while accounting for relevant and irrelevant

considerations that may influence the decision, the court also takes into

account the broader principles of rule of law and good governance.

Irrelevant consideration includes insistence or performance of acts or

submission of documents, which neither have relevance nor are value

additions to the purpose or object of law or policy in place. Instead, they

are demonstrably superfluous and unnecessary, consuming limited time

and human resource. This also has a direct bearing on efficiency and good

governance. It appears to us 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.

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. It is this endeavour of the Principal Secretary that is

subjected to judicial review. We will examine the legality of this decision.

10. The Indian Stamp Act is a fiscal enactment, primary object of which

is to raise and collect revenue for the State. The power of the State to

impose and collect stamp duty and prevent evasion also extends to

7 reducing, remitting or compounding duties, if the State is of the opinion

that such a measure is necessary. 4

11. In order to encourage cooperative movement, the Bihar legislature

introduced Section 9A by the Indian 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.

12. 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 is, in our opinion, an irrelevant consideration leading

to illegality in action. Such a pre-condition is clearly superfluous and in

fact, unnecessary. The following is the explanation.

4 See Section 9 of Indian Stamp Act.

8

13. A cooperative society in Jharkhand, like the appellant herein,

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.6 in its own name. The effect of being a body corporate is

in fact evident from Section 5(7) of the Act, which declares that, “where a

cooperative society is registered, the certificate of registration signed and

sealed by the Registrar shall be conclusive evidence”. A cumulative

reading of Chapter II of the 1996 Act, under which any cooperative society

in Jharkhand is registered, is that the certificate of registration is

conclusive evidence of the existence of the cooperative society. 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.

5 Section 6 Cooperative Society to be a body corporate

(1) The Cooperative Society shall be a body corporate by the name under which it is registered having perpetual succession and a common seal. The Cooperative Society shall be entitled to a acquire, hold and dispose of property, to enter into contracts on its behalf, to institute and defend suits and other legal proceedings and to take all such steps necessary to achieve its objectives. (2) All transactions entered into in good faith prior to registration, furtherance of the purposes of the Cooperative Society shall be deemed to be transactions of the Cooperative Society after registration. (3) A Cooperative Society may be registered with limited liability and it shall have the word "limited" as suffix to its name.

6 See Section 7 of the 1996 Act.

9

14. 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 is superfluous and unnecessary. This

requirement, in our opinion, is disruptive of ease of transaction, without

any value addition to the integrity of the transaction. Such question would

not arise in the teeth of the statutory declaration under Section 5(7),

wherein a certification of the cooperative society by the Registrar,

Cooperative Society is a conclusive proof.

15. In view of the above, we have no hesitation in holding that the

impugned Memo issued by the Principal Secretary, Department of

Registration is set aside on the ground of illegality, as it seeks to rely on a

superfluous and redundant requirement.

16. For the reasons stated above, the Appeal is allowed against the

judgment and order of the High Court of Jharkhand in LPA No. 553 of

2022.

………………………………....J. [PAMIDIGHANTAM SRI NARASIMHA]

………………………………....J. [ATUL S. CHANDURKAR]

NEW DELHI;

DECEMBER 05, 2025 10