Simplicity in public transactions good governance, says SC, quashes rule for co-op societies

New Delhi, Dec 5 (PTI) Observing that simplicity in public transactions is "good governance", the Supreme Court on Friday struck down a 2009 directive of the Jharkhand government that imposed additional hurdles on cooperative societies seeking stamp-duty exemptions.

A bench of Justices P S Narasimha and Atul S Chandurkar held that executive actions mandating "unnecessary, excessive requirements" are illegal and liable to be set aside.

"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," Justice Narasimha, who authored the verdict, said.

The Jharkhand government had issued the directive, making the registration of property transfer documents by cooperative societies contingent upon an additional verification from the assistant registrar of the Cooperative Societies.

The verdict said while higher courts set aside executive decisions on the grounds of illegality if those are not founded on relevant considerations, it is important to recognise the principle that executive actions that mandate certain unnecessary, excessive requirements must also be set aside as illegal.

"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 court held.

Giving reasons, it said once a cooperative society is registered and a certificate is issued, it is 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," the bench said.

It held the requirement to be "superfluous, redundant and illegal".

Setting aside the Jharkhand High Court's decision, the apex court allowed the appeal of Adarsh Sahkari Grih Nirman Swawlambe Society Limited.

The society had challenged the high court's refusal to intervene in the state government's insistence on an extra approval step before granting stamp-duty exemption under the stamp law.

The dispute traces back to a memo dated February 20, 2009, issued by the principal secretary of the Jharkhand government's Department of Registration.

The memo directed district sub-registrars to grant stamp-duty exemption under section 9A only after obtaining a recommendation from the assistant registrar of the Cooperative Society, confirming the existence of the society.

The society, registered under a state law, had challenged the memo on the grounds that it created an unnecessary barrier to efficient transfer of property to its members and ran contrary to statutory requirements.

A single-judge bench as well as a division bench of the high court had upheld the memo, holding that the additional verification ensured that only genuine societies availed the stamp-duty benefits. PTI SJK RC