Executive instructions cannot impose superfluous conditions that defeat statutory stamp duty exemptions granted to cooperative societies

The Supreme Court of India has held that an executive instruction which imposes an additional and unnecessary precondition for availing a statutory stamp duty exemption is illegal and liable to be set aside. The Court ruled that once a cooperative society is duly registered and issued a certificate of registration, executive authorities cannot insist on further verification requirements that have no statutory basis.

Allowing the appeal, the Court set aside a memorandum issued by the Principal Secretary, Department of Registration, Jharkhand, which required a recommendation from the Assistant Registrar, Cooperative Society as a precondition for granting stamp duty exemption under Section 9A of the Indian Stamp (Bihar Amendment) Act, 1988. The Court held that such a requirement was superfluous, based on irrelevant considerations, and disruptive of lawful transactions.

Case Background

The appellant is a cooperative housing society registered under Section 5 of the Jharkhand Self-Supporting Cooperative Societies Act, 1996. The society was established with the objective of providing housing and allied facilities to its members. In the course of transferring premises to its members, the society sought the benefit of stamp duty exemption available under Section 9A of the Indian Stamp (Bihar Amendment) Act, 1988.

The dispute arose when the Principal Secretary, Department of Registration, Jharkhand, issued a memorandum in February 2009 directing District Sub-Registrars to grant stamp duty exemption under Section 9A only upon production of a recommendation from the Assistant Registrar, Cooperative Society. Aggrieved by this additional requirement, the appellant society challenged the memorandum as being contrary to law.

What The Lower Authorities Held

The appellant approached the High Court of Jharkhand by filing a writ petition under Article 226 of the Constitution of India. The society contended that the impugned memorandum created an unauthorised hurdle, was ultra vires the Stamp Act, and violated the statutory autonomy granted to cooperative societies under the 1996 Act.

Both the Single Judge and the Division Bench of the High Court declined to interfere. The High Court held that the memorandum was not contrary to Section 9A of the Stamp Act and that the requirement of a recommendation from the Assistant Registrar was necessary to ensure that only validly registered cooperative societies availed the exemption. The High Court further held that the executive instruction was intended to simplify the process and prevent misuse.

The Court’s Reasoning

The Supreme Court examined the legality of the impugned memorandum in the context of administrative law principles governing exercise of executive power. The Court confined its inquiry to whether the exercise of power by the Principal Secretary was arbitrary, unreasonable, or based on irrelevant considerations.

The Court emphasised that administrative decisions become unlawful when they either ignore relevant considerations or rely on irrelevant ones. It observed that insistence on unnecessary or redundant requirements that do not advance the purpose of the statute amounts to illegality.

Irrelevance of the additional requirement

The Court noted that the stated objective of the memorandum was to prevent so-called “fake” cooperative societies from availing stamp duty exemption. However, the Court found that this objective was pursued through an irrelevant mechanism. Once a cooperative society is registered under the applicable law and issued a certificate of registration, its existence and continuation stand conclusively established.

The Court held that requiring a recommendation from the Assistant Registrar, Cooperative Society added no value to the integrity of the transaction. Such a recommendation neither enhanced verification nor served any statutory purpose, given the conclusive nature of the registration certificate.

Impact on ease of transaction

The Court observed that the impugned requirement disrupted the ease and efficiency of lawful property transactions by cooperative societies. It created an additional administrative tier without statutory sanction, leading to delay, uncertainty, and unnecessary expenditure of time and resources.

The Court underscored that simplicity in public transactions is a component of good governance and that administrative authorities must avoid creating avoidable procedural burdens.

Statutory Interpretation

The Court analysed Section 9 of the Indian Stamp Act, 1899, which empowers the State to reduce, remit, or compound stamp duty. It further examined Section 9A of the Indian Stamp (Bihar Amendment) Act, 1988, which provides a complete exemption from stamp duty for instruments relating to transfer of premises by a cooperative society to its members.

The Court held that Section 9A creates a statutory right in favour of cooperative societies and imposes a corresponding statutory duty on registering authorities to register such instruments without demanding stamp duty. The provision does not contemplate any additional precondition such as a recommendation from another authority.

Reading Section 9A alongside Section 5(7) of the Jharkhand Self-Supporting Cooperative Societies Act, 1996, the Court held that the certificate of registration issued by the Registrar is conclusive evidence of the existence of the cooperative society. In light of this statutory declaration, any further verification requirement was held to be superfluous and legally unsustainable.

Constitutional / Policy Context

While the case did not involve a direct constitutional challenge, the Supreme Court situated its analysis within settled principles governing the exercise of executive power in administrative law. The Court reiterated that executive instructions must operate within the bounds of statutory authority and cannot supplant or modify rights created by legislation.

The Court emphasised that where a statute confers a benefit or exemption in clear terms, administrative authorities are duty-bound to facilitate its implementation rather than erect additional barriers. Any executive action that frustrates the object of the statute, even if ostensibly issued to prevent misuse, must withstand scrutiny on the touchstone of relevance, necessity, and legality.

In this context, the Court underscored that cooperative societies are statutory bodies governed by a comprehensive legislative framework. Once the legislature has entrusted the Registrar with the authority to register and regulate cooperative societies, parallel verification mechanisms created through executive instructions undermine statutory certainty and administrative coherence.

Limits on Executive Power

The Supreme Court reiterated that executive power cannot be exercised in a manner that adds conditions to a statutory scheme unless the statute itself expressly or by necessary implication permits such supplementation. Executive instructions are intended to fill in procedural details where the statute is silent, not to introduce substantive restrictions on statutory rights.

In the present case, the Court found that the requirement of obtaining a recommendation from the Assistant Registrar, Cooperative Society was neither procedural nor ancillary. Instead, it operated as a substantive precondition that effectively curtailed the statutory exemption available under Section 9A of the Stamp Act.

The Court held that such an approach amounted to an impermissible exercise of power, as it subordinated a statutory mandate to an administrative discretion not contemplated by law.

Rejection of the State’s Justification

The State defended the impugned memorandum on the ground that it was intended to prevent misuse of stamp duty exemption by so-called “fake” cooperative societies. The Supreme Court rejected this justification, holding that the concern, even if genuine, was addressed through an irrelevant and ineffective mechanism.

The Court observed that the statutory framework already provides safeguards against fraudulent registration of cooperative societies. The Registrar of Cooperative Societies is empowered to scrutinise applications, cancel registration where warranted, and take action against entities that violate the law.

In light of these statutory safeguards, the Court held that requiring an additional recommendation from the Assistant Registrar did not meaningfully advance the stated objective. Instead, it merely duplicated existing checks and introduced avoidable administrative complexity.

Effect on Registration Authorities

The Court also considered the implications of the impugned memorandum for registration authorities. It noted that District Sub-Registrars are statutory functionaries whose duties are circumscribed by the Stamp Act and the Registration Act.

By directing Sub-Registrars to insist on a recommendation not contemplated by statute, the memorandum placed them in an untenable position. Compliance with the executive instruction would require them to disregard the clear mandate of Section 9A, while non-compliance could expose them to administrative consequences.

The Court held that such a situation is incompatible with the rule of law, which requires clarity and consistency in the exercise of statutory functions.

Why This Judgment Matters

This judgment reinforces a fundamental principle of administrative law: statutory benefits cannot be diluted by executive fiat. It serves as a reminder that administrative convenience or apprehensions of misuse cannot justify the imposition of conditions that have no statutory foundation.

For cooperative societies, the ruling provides certainty that statutory exemptions granted to them will be honoured in accordance with law. For registration authorities, it clarifies that their duties must be discharged strictly in conformity with statutory provisions.

More broadly, the decision affirms that good governance requires not only vigilance against misuse but also restraint in the exercise of executive power.

Final Outcome

The Supreme Court allowed the appeal and set aside the judgments of the Single Judge and the Division Bench of the Jharkhand High Court. The impugned memorandum issued by the Principal Secretary, Department of Registration, Jharkhand, was quashed.

The Court held that the appellant cooperative society was entitled to the stamp duty exemption under Section 9A of the Indian Stamp (Bihar Amendment) Act, 1988, without being subjected to the additional requirement of obtaining a recommendation from the Assistant Registrar, Cooperative Society.

Case Details

• Case Title: Adarsh Sahkari Grih Nirman Swawlambi Society Ltd. v. State of Jharkhand & Others
• Citation: 2025 INSC 1389
• Court & Bench: Supreme Court of India; Abhay S. Oka J. and Pankaj Mithal J.
• Date of Judgment: 5 December 2025