Supreme Court Strikes Down Redundant Cooperative Society Registration Requirement in Jharkhand

Apex Court Finds Additional Recommendation Mandate by Assistant Registrar Illegal, Upholding Ease of Transaction Principles

In a significant ruling, the Supreme Court of India has struck down an executive decision by the Jharkhand government that mandated an additional recommendation from the Assistant Registrar, Cooperative Society, for the registration of documents related to cooperative societies. The decision came in response to an appeal filed by the Adarsh Sahkari Grih Nirman Swawlambi Society Ltd., challenging the legality of a memo issued by the Principal Secretary, Department of Registration.

The Supreme Court bench, comprising Justices Pamidighantam Sri Narasimha and Atul S. Chandurkar, ruled that the requirement, as outlined in the memo, was not only unnecessary but also superfluous, thereby disrupting the ease of transactions. The court highlighted that the certificate of registration issued under Section 5(7) of the Jharkhand Self-Supporting Cooperative Societies Act, 1996 serves as conclusive proof of a society's existence, making any additional recommendation redundant.

The judgment emphasized the principle of judicial review, stating that an administrative decision becomes unlawful if it is based on irrelevant considerations or fails to consider relevant factors. The court found that the memo’s requirement for an additional recommendation was an irrelevant consideration and thus constituted an illegality.

The case arose after the Principal Secretary issued a memo in 2009, mandating that exemption under Section 9A of the Indian Stamp (Bihar Amendment) Act, 1988, be granted only upon the recommendation of the Assistant Registrar, Cooperative Society. This move was purportedly intended to prevent fake cooperative societies from misusing stamp duty exemptions.

The Supreme Court, however, noted that the registration certificate itself is sufficient to establish the authenticity of a cooperative society, and any further requirement hampers the efficiency and simplicity desired in public transactions. By setting aside the requirement, the court has reaffirmed the importance of streamlining administrative processes to ensure good governance.

The ruling is expected to have a far-reaching impact on cooperative societies in Jharkhand, facilitating smoother transactions and reinforcing the statutory rights granted under the Indian Stamp Act and the Jharkhand Self-Supporting Cooperative Societies Act.

Bottom Line:

Administrative law - Executive decision mandating additional recommendation by Assistant Registrar, Cooperative Society for registration of documents held illegal - Certificate of registration of cooperative society is conclusive proof under Section 5(7) of Jharkhand Self-Supporting Cooperative Societies Act, 1996, making additional requirement redundant and superfluous.

Statutory provision(s): Section 5(7) of Jharkhand Self-Supporting Cooperative Societies Act, 1996, Section 9A of Indian Stamp Act (Bihar Amendment) Act, 1988, Section 9 of Indian Stamp Act, 1899.

Adarsh Sahkari Grih Nirman Swawlambi Society Ltd. v. State of Jharkhand, (SC) : Law Finder Doc Id # 2818280