Kerala High Court
The District Registrar vs Peringandoor Service Co-Operative ... on 24 September, 2019
Equivalent citations: AIR 2020 KERALA 53, AIRONLINE 2019 KER 442 (2019) 4 KER LT 265, (2019) 4 KER LT 265
Bench: C.T.Ravikumar, N.Nagaresh
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR
&
THE HONOURABLE MR.JUSTICE N.NAGARESH
TUESDAY, THE 24TH DAY OF SEPTEMBER 2019 / 2ND ASWINA, 1941
WA.No.1361 OF 2018
AGAINST THE JUDGMENT DATED 04-02-2015 IN WPC 18759/2012
OF HIGH COURT OF KERALA
APPELLANTS/RESPONDENTS IN WPC:
1 THE DISTRICT REGISTRAR,
OFFICE OF THE DISTRICT REGISTRAR,
THRISSUR-680001.
2 THE SUB REGISTRAR
VADAKKANCHERI-680623,
THRISSUR DISTRICT.
BY GOVERNMENT PLEADER SMT. K.R DEEPA
RESPONDENT/PETITIONER IN WPC:
PERINGANDOOR SERVICE CO-OPERATIVE BANK LTD. NO.297
REP.BY ITS PRESIDENT, P.O.ATHANI,MULAKKUNATHUKAVU,
THRISSUR DISTRICT,PIN-680681.
R1 BY ADV. P.N.MOHANAN
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 09-08-2019, THE
COURT ON 24-09-2019 DELIVERED THE FOLLOWING:
WA. No.1361 OF 2018
2
[CR]
JUDGMENT
~~~~~~~~~ Nagaresh, J.
Appellants 1 and 2, the District Registrar and Sub Registrar, who were respondents 1 and 2 in W.P.(C) No.18759/2012, challenge judgment dated 04.02.2015 therein whereby the learned Single Judge quashed Ext.P10 order and Ext.P11 notice demanding stamp duty.
2. The facts emerging from the pleadings are as follows:-
The respondent herein is the petitioner in W.P.(C) No.18759/2012 (hereinafter referred to as 'the petitioner' for clarity) and is a Primary Agricultural Bank. The petitioner wanted to install Poly House and Tissue Culture Lab and Nursery. Government sanctioned ₹5.60 lakhs as grant towards share capital and subsidy, for that purpose. The WA. No.1361 OF 2018 3 Bank decided to construct a godown and shopping complex for procuring agricultural products and marketing the same.
3. For this purpose, the Bank resolved to purchase 16.480 cents of land for ₹82,23,520/- from one of its members. Ext.P3 resolution dated 31.12.2010 was passed to that effect. The Joint Registrar of Co-operative Societies granted sanction for purchase as per Ext.P4, on 28.02.2011. Thereupon, an agreement for sale of property was executed on 12.03.2011. Ext.P6 sale deed dated 09.05.2011 was executed and presented for registration on the same day at Sub Registrar's Office. The Sub Registrar numbered the sale deed as No.P/8.
4. Ext.P7 is a notification issued by the Government of Kerala in exercise of its powers under Section 35 of Travancore Cochin Co-operative Societies Act, 1951 and Section 30 of the Madras Co-operative Societies Act, 1952. As per Ext.P7 notification dated 08.10.1960, the whole stamp duty and registration fee shall be remitted to Co-operative Societies on instruments executed by or on behalf of any WA. No.1361 OF 2018 4 registered Co-operative Society, if the instrument is executed by any officer of such society or member in his own capacity if it related to the business of the Society. In view of the said notification, the stamp duty was not paid by the petitioner.
5. The Sub Registrar, however, referred Ext.P6 sale deed to the Registrar to determine stamp duty and to clarify whether the document is exempted from payment of stamp duty. The Registrar thereupon issued Ext.P8 notice dated 14.03.2012 stating that the instrument is impounded and requiring explanation from the petitioner. The petitioner gave Ext.P9 reply dated 30.05.2012. The Registrar issued Ext.P10 order dated 08.06.2012 directing the petitioner to pay ₹5,83,331/- towards stamp duty and ₹25/- as penalty. Consequently, the Sub Registrar also issued Ext.P11 notice. The petitioner contended that the legal issue was adjudicated in favour of Societies by this Court in Ext.P12 judgment in W.P.(C) No.19009/2010 filed by the Thrissur District Co-operative Bank and in view of Ext.P12 judgment, Ext.P10 order and Ext.P11 notice are legally unsustainable. WA. No.1361 OF 2018 5
6. The appellants contested the writ petition. In the counter affidavit filed by the 1st appellant, execution of Ext.P6 deed is admitted but the 1st respondent stated that the document was impounded and not registered. The appellants, to refute the claim of the petitioner - Bank, relied on judgment of this Court in W.P.(C) No.17973/2010 dated 19.11.2011. In the said judgment, it was held that since the business of the Co-operative Bank is 'Banking business', remission can only be granted to instruments related to its banking business. Appellants stated that Ext.P6 document is also ineligible for stamp duty remission on the same ground.
7. Furthermore, there are at least four orders of the Land Revenue Commissioner - Appellate authority holding that similar documents are not exigible to stamp duty remission. Mere recital in the document that purchase of property is for business purpose, is not sufficient to get remission. The appellants further pointed out that it has not been mentioned in the document that the landed property is purchased for installing Poly House and Tissue Culture Lab WA. No.1361 OF 2018 6 and Nursery. The 1st respondent has not found anything in the document, related to the business of the bank.
8. The learned Single Judge, after hearing the appellants and the petitioner, found that Ext.P6 sale deed has already been registered without collecting stamp duty and in the light of the Full Bench judgment reported in Sub Registrar v. Kerala State Co-operative Consumers Federation Limited [2015 (1) KLT 443], the learned Single Judge quashed Exts.P10 and P11. Aggrieved by the judgment of the learned Single Judge, the appellants have come up in appeal.
9. The learned Government Pleader urged the following points/grounds, in support of the writ appeal:
(1) The petitioner's business is banking, the property has been purchased for purpose unrelated to banking business and hence the instrument is exigible to stamp duty.
(2) The recitals in Ext.P8 deed do not disclose that land is purchased for the business of the Society.
(3) In the Full Bench judgment in Sub Registrar v.
WA. No.1361 OF 2018 7 Kerala State Co-operative Consumers Federation Limited [2015 (1) KLT 443], it has been held that the transactions already concluded need not be re-opened and in this case the transaction is not concluded and hence the appellants can insist on payment of stamp duty.
(4) In the Full Bench judgment, it has been clearly stated that Ext.P1 notification cannot be understood divorced from the statutory provisions of Section 40(1)(a) of the Kerala Co-operative Societies Act and a Society will get the benefit of exemption only if Section 40(1)(a) is attracted. The petitioner is therefore not entitled to exemption/remission.
(5) The learned Single Judge has evidently proceeded on the basis that the instrument is already registered. Since the instrument is not actually registered but impounded prior to registration, the judgment cannot stand. We shall consider these arguments on the basis of factual position emerging in the case.
10. The first contention of the learned Government WA. No.1361 OF 2018 8 Pleader is that the petitioner is an entity doing banking business, that the property is purchased for business other than banking and hence stamp duty remission cannot be granted. The petitioner is a primary agricultural bank. Ext.P1 is its bye-laws. The objects of the petitioner contained in Clause 3 of the bye-laws of the Bank make it abundantly clear that it is an agricultural co-operative bank. One of the objectives as contained in Clause 3(7) is to help its member in cultivating seeds. Ext.P2 proceedings of Registrar of Co-operative Societies show that the government has extended financial aid to the petitioner to start Poly House and Tissue Culture Lab and Nursery. Ext.P3 resolution of the petitioner would show that land was purchased for starting Poly House and Tissue Culture Lab also. Ext.P4 proceedings of the Joint Registrar (General) would show that the Joint Registrar has approved expenditure for the purchase of land. When the bye-laws make it clear that the petitioner is an agricultural co-operative bank and the financial aid by the government and the resolution of the petitioner shows that WA. No.1361 OF 2018 9 the land in question was purchased for related activities, the appellants cannot be heard to contend that business of the petitioner is banking and hence, it is not eligible for exemption from/remission of stamp duty.
11. Further argument is that Ext.P6 instrument does not have any recital that the land is purchased for any specific activity related to the business of the petitioner. We have perused Ext.P6, which contains a recital that the property is purchased for business related to the petitioner and is executed in pursuance of Ext.P3 resolution. Ext.P3 resolution clearly states the purposes for which the property is sought to be purchased. The intention of the petitioner is therefore clear. We are of the opinion that the description and recital as to the purpose for which land is being purchased as made in Ext.P6, is sufficient for availing exemption from or remission of stamp duty, and Ext.P6 satisfies Section 28 of the Kerala Stamp Act, 1959. The argument of the appellants based on the judgment in Sub Registrar (supra) is also untenable. In the said Full Bench WA. No.1361 OF 2018 10 judgment, this Court held as follows:
"25. For the aforesaid reasons, we answer the question referred to the Full Bench thus:
(1) SRO No. 75/60 issued under Section 35 of the TC Act and Section 30 of the Madras Act is saved by virtue of Section 110(2) of the Kerala Act only to the extent it is not inconsistent with the provisions of the Kerala Act.
(2) SRO No. 75/60 should be understood within the limitations of Sections 110(2) and 40(1)(a) of the Kerala Act.
(3) The benefit of remission of stamp duty is available only in respect of instruments executed by or on behalf of a society or by an officer or member thereof and instrument so executed should be relating to the business of the society.
(4) The benefit of remission can be claimed by the society only if, but for such remission, the society, an officer or the member as the case may be, would have been liable to pay such stamp duty.
It is clarified that the conclusions in this order shall not be made use of for re-opening WA. No.1361 OF 2018 11 transactions which have become final or to make fresh demands on that basis."
In the case on hand, Ext.P6 document was executed by the President of the Board, on behalf of the petitioner. But, for Ext.P7 notification, the petitioner would have been liable to pay stamp duty. The argument of the appellants is that the Full Bench has clarified that transactions which have become final as on the date of Full Bench order need not be re-opened and that the transaction in this case has not become final. We are unable to agree to such proposition. The petitioner satisfied the conditions (1) to (4) laid down by the Full Bench. Even as per the counter affidavit filed by the appellants in the writ petition, the document was executed and presented for registration on 09.05.2011. The document has been assigned a number also. The document was impounded by the appellants on untenable grounds. The appellants therefore cannot take a stand that the transaction is not complete. As far as the seller and appellants are WA. No.1361 OF 2018 12 concerned, the transaction is complete at the moment Ext.P6 was signed and presented for registration. The fact that the appellants unreasonably impounded the document, therefore, cannot be a reason to burden the petitioner with payment of stamp duty.
12. Section 40(1)(a) of the Kerala Co-operative Societies Act reads as follows:
"40. Exemption from certain taxes, fees and duties - (1) The Government may, by notification in the Gazette, remit in respect of any class of societies -
(a) the stamp duty chargeable under the Kerala Stamp Act, 1959 (17 of 1959), in respect of any instrument executed by or on behalf of a society or by an officer or member thereof and relating to the business of such Society, or any class of such instruments, or in respect of any award or order made under the Act, in cases where, but for such remission the society, officer or member, as the case may be, would be liable to pay such stamp duty."
The Full Bench of this Court has held in the judgment in Sub WA. No.1361 OF 2018 13 Registrar (supra) that Ext.P7 SRO No.75/60 is saved and it should be deemed to have been issued under the Kerala Co-operative Societies Act. It should be followed to the extent permissible under the Krala Co-operative Societies Act, 1969. Therefore, notification on stamp duty exemptions legally granted under Travancore Cochin Co-operative Societies Act, 1951 and Madras Co-operative Societies Act, 1952 will continue to enure to the benefits of societies in Kerala as long as such notifications are not in variance with Section 40(1)(a) of the Kerala Co-operative Societies Act, 1969. We do not find any conflict or variation in Ext.P7 notification and Section 40(1)(a) of the Act, 1969.
13. True, the learned Single Judge in impugned judgment has observed that Ext.P6 deed is registered. It is a fact that the deed was executed, presented for registration and was assigned a registration number also. The appellants, instead of registering the deed, impounded the same and demanded stamp duty and penalty on unsustainable grounds. Therefore, the said observation of WA. No.1361 OF 2018 14 the learned Single Judge has not affected the outcome of the writ petition. We are therefore of the view that Exts.P10 and P11 were rightly quashed by the learned Single Judge.
In view of our findings as stated above, the writ appeal fails and it is accordingly dismissed.
Sd/-
C.T. RAVIKUMAR, JUDGE Sd/-
N. NAGARESH, JUDGE aks/13.08.2019