Executive Actions Mandating Unnecessary, Excessive Requirements Must Be Set Aside As Illegal: Supreme Court

The Apex Court termed such a requirement as superfluous and redundant.

The Division Bench of Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar stated,"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."

“...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", it held.

Factual Background

The appellant is a cooperative society, registered under Section 5 of the Jharkhand Self-Supporting Cooperative Societies Act, 1996, working with the aim and object of providing housing and other utilities to its members. The dispute arose in 2009, when the Principal Secretary to the Department of Registration (second respondent) issued the impugned Memo calling upon the District Sub Registrars to ensure that exemption under Section 9A would be given only when there is a recommendation of the Assistant Registrar, Cooperative Society. 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. The Single and the Division Benches of the High Court refused to exercise judicial review.

Reasoning

On a perusal of the facts of the case, the Bench 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. 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 the recommendation of the Assistant Registrar of Cooperative Society is obtained.

Highlighting that the Indian Stamp Act is a fiscal enactment, primary object of which is to raise and collect revenue for the State, the Bench noted that 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.

The Bench explained that 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.

The Bench held, “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.”

Considering 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. “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”, it added.

Thus, allowing the appeal, the Bench set aside the impugned Memo issued by the Principal Secretary, Department of Registration, on the ground of illegality.

Cause Title: Adarsh Sahkari Grih Nirman Swawlambi Society Ltd. v. The State of Jharkhand (Neutral Citation: 2025 INSC 1389)

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