Kozhikode District Co-operative Travel & Tourism Development Society and Centre for Professional Education (KTDS) Ltd. v. District Registrar (General), Kozhikode District; Commissioner of Land Revenue; State of Kerala

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE THE ACTING CHIEF JUSTICE MR.HRISHIKESH ROY & THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR** **THURSDAY, THE 28TH DAY OF JUNE 2018 / 7TH ASHADHA, 1940** **WA.No. 1835 of 2016 IN WPC. 26495/2012** **AGAINST THE JUDGMENT IN WP(C) 26495/2012 of HIGH COURT OF KERALA DATED 20-11-2015** ## **APPELLANT(S)/RESPONDENTS 1 TO 3 IN WPC** - **1 THE DISTRICT REGISTRAR (GENERAL) KOZHIKODE DISTRICT, KOZHIKODE, PIN 673001** - **2 THE COMMISSIONER OF LAND REVENUE** - **THIRUVANANTHAPURAM 695001** - **3 STATE OF KERALA REPRESENTED BY THE SECRETARY TO GOVERNMENT, REVENUE DEPARTMENT, THIRUVANANTHAPURAM 695001** **BY ADV.GOVERNMENT PLEADER SRI.HANIL KUMAR M.H** ## **RESPONDENT(S)/PETITIONER IN WPC:** **KOZHIKODE DISTRICT CO-OPERATIVE TRAVEL & TOURISM DEVELOPMENT SOCIETY AND CENTRE FOR PROFESSIONAL EDUCATION (KTDS) LTD.NO. 2882, REPRESENTED BY ITS HONORARY SECRETARY** **BY SMT.NAMITHA JYOTHISH BY SRI.T.A.SHAJI (SR.) BY SRI.ATHUL SHAJI** **THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 28-06-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **WA.No. 1835 of 2016 () IN WP(C).26495/2012** ## **APPENDIX** ## **PETITIONER(S)' ANNEXURES:** **ANNEXURE 1 :TRUE COPY OF THE COUNTER AFFIDAVIT FILED IN WPCNO.26495/2012 DATED 9.9.2013** ## **RESPONDENTS ANNEXURES:NIL** **//TRUE COPY//** **P.A TO JUDGE** **HRISHIKESH ROY, Ag.C.J. & A.K.JAYASANKARAN NAMBIAR, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - W.A.No.1835 of 2016 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 28[th] day of June, 2018** ## **JUDGMENT** ## **A.K.JAYASANKARAN NAMBIAR ,** ## **J.** The respondents in the writ petition are the appellants before us, and they impugn the judgment dated 20.11.2015 in W.P. (C).No.26495 of 2012. The writ petition was filed by the respondent society, which is registered under the Kerala Cooperative Societies Act, 1969. It would appear that the Joint Registrar of Cooperative Societies, Kozhikode, by order dated 08.02.2008, permitted the society to purchase 45 cents of land in Kozhikode in Sy.Nos.128/2 Pt, 132/Pt in Block No.7 and 8 of Ward No.7 in Nagaram village in Kozhikode district, from M/s.Common Wealth Trust (India) Limited. The offer made by the society, pursuant to an order of this court that permitted the Common Wealth Trust to sell the land for settling the Provident Fund dues that had become payable by them, was accepted by this court and permission was granted to the company to sell the land in favour of the society. An amount of Rs.4,61,25,000/- was paid by the society on 16.09.2008, and thereafter, this court by an order dated 16.10.2008 in I.A.No.12820 of 2008 in W.P(C).No.5177 of 2005 permitted the execution of a sale deed in favour of the society. An issue arose in connection with the payment of stamp duty on the said sale transaction. Contending that the Vendor company, namely M/s.Common Wealth Trust (India) Limited was also a member of the society, the society claimed exemption from stamp duty relying on Ext.P1 Government Order dated 08.10.1960. 2 **W.A.No.1835 of 2016** Taking note of the contention of the society, the sale deed was provisionally registered but subsequently by Ext.P2 order dated 12.07.2011, the 2[nd] respondent demanded an amount of Rs.41,51,250/- as stamp duty and also penalty, which was quantified @ 10 times the stamp duty. The sale deed was also impounded. Aggrieved by the decision of the 2[nd] respondent, the society filed an appeal against Ext.P2 order and immediately thereafter, approached this court through W.P(C).No.129 of 2012, which was disposed by Ext.P10 judgment directing the Land Revenue Commissioner to dispose the appeal. Ext.P11 order dated 14.08.2012 , produced in the writ petition, is the order of the Land Revenue Commissioner rejecting the appeal. The reason cited by the Land Revenue Commissioner for rejecting the appeal was that the purchase of land was not within the object of the society. The society thereafter paid the amount demanded under protest so as to get a release of the sale deeds, and immediately thereafter, it approached this court through W.P(C).No.26495 of 2012 seeking to quash Exts.P2 and P11, as also claiming a refund of the amounts paid with interest from 18.09.2012. 2. A counter affidavit was filed in the writ petition on behalf of the respondents, and thereafter, the writ petition was disposed by judgment dated 20.11.2015, which is impugned before us. The reasoning of the learned Single Judge is to be found in paragraphs 8 and 9 of the judgment, which read as follows: 3 **W.A.No.1835 of 2016** “8. Going by Ext.P4, Clause 4(3) of the bye-law, it reads as follows:- “To purchase or take on long lease land for providing infrastructure facilities for establishing educational institutions and tourism centers and to construct buildings wherever necessary.” It is apposite and profitable to extract Clause 1(a) of Ext.P1, which reads as follows: “The whole stamp duty with which under the Kerala Stamp Act 1959 (Act 17 of 1959) instruments executed by or on behalf of any registered Cooperative Society or instruments executed by “any officer of such society or member in his own capacity or/and in the capacity of a Guardian of minor” and relating to the business thereof and decisions, award or orders of the Registrar of the Arbitrators under the said Co-operative Societies Act.” 9. On an analysis of the above Clause, indisputably, one of the objectives of the society is to purchase land for providing infrastructural facilities for establishing educational institutions and tourism centres and construct building wherever it is necessary. Going by Ext.P17, it is seen that the petitioner society has applied for sanction to purchase the aforesaid property and in the application the petitioner has specifically stated that the said purchase is intended to fulfill the objectives of the society as contemplated under Clause 4(3) of the bye-law and the same is seen referred to in Ext.P17 order granting permission to purchase the said land issued by the Joint Registrar of Co-operative Societies. On a close reading of Clause 4(3), it is discernible that the functioning of the society itself would come within the expression “business purpose” contemplated under Clause 1(a) of Ext.P1. The mandate under Clause 1(a) is that the purchase must be related to the business of the society. Thus, on a conjoint reading of Clause 1(a) of Ext.P1 and Clause 4(3) of Ext.P4, there is no room for doubt that the nature of the activity contemplated under Clause 4(3) of Ext.P4 would fall under the expression “related to the business” provided under Clause 1(a) of Ext.P1. If that be so, the petitioner is entitled to get exemption from 4 **W.A.No.1835 of 2016** payment of stamp duty as provided under Clause 1(a) of Ext.P1 Government Notification. Going by the order passed in appeal by the 2[nd] respondent, it is seen that the 2[nd] respondent has considered neither Clause 1(a) of Ext.P1 nor Clause 4(3) of Ext.P4. In short, the 2[nd] respondent has not applied his mind over the matters which are required to be considered for granting exemption under Clause 1(a) of Ext.P1.” 3. The learned Single Judge essentially found that the transaction in question being one that was in connection with the business of the society, the benefit of remission of stamp duty had to enure for the benefit of the society, and hence, the payment of stamp duty effected by the society was directed to be refunded within a period of six months. In the writ appeal now filed by the appellants herein, the main contention that is urged, placing reliance on the Full Bench judgment of this court in Sub Registrar, Palakkad and Others v. Kerala State Co-operative Consumers Federation Ltd., Kochi [2015 (1) KHC 17] is that the provisions of Ext.P1 Government Order had to be read in the context of Section 40 of the Co-operative Societies Act, 1969, and as modified thereby, and when so read, it had to be held that the benefit of the exemption contemplated under the said Section would be available only in respect of instruments executed by or on behalf of the society or by a member in relation to the business of such society. 5 **W.A.No.1835 of 2016** 4. We heard Sri.Hanil Kumar.M.H, the learned Special Government Pleader for the appellants and the learned Senior counsel Sri.T.A.Shaji duly assisted by Sri.Athul Shaji for the respondent. 5. On a consideration of the facts and circumstances of the case and submissions made across the bar, we find that, the issue regarding the manner in which the terms of Ext.P1 Government Order are to be interpreted is no longer res integra as a Full Bench of this court has, in the decision in Sub Registrar, Palakkad and Others v. Kerala State Co-operative Consumers Federation Ltd., Kochi [2015 (1) KHC 17] clearly found that on a conjoint reading of Section 40 and 110 of the Cooperative Societies Act, 1969, the terms of Ext.P1 Government Order would stand modified to the extent indicated in Section 40 of the Co-operative Societies Act. It would be profitable to notice the specific findings on the Full Bench at paragraphs 21 to 23 which read as follows: “21. However, both under S.40(1)(a) of the Kerala Act and Clause 1(a) of SRO.No.75/60, the benefit of remission is allowed only in respect of documents executed by or on behalf of the society or by its officer or member. In cases where societies purchase properties, in view of S.55 of the Transfer of Property Act, since the executant of the instrument is not the society but the vendor of the property, the requirement of execution of the instrument by or on behalf of the society as provided in S.40(1)(a) of the Kerala Act and Clause 1(a) of SRO.No.75/60 is not satisfied. 22. It was argued that in view of S.30 of the Kerala Stamp Act, if, by an agreement, a society undertakes the liability to bear the 6 **W.A.No.1835 of 2016** stamp duty, it should be entitled to the benefit of exemption. It may be possible for a society to undertake the liability to bear the stamp duty. But such a society can get the benefit of exemption only if S.40(1)(a) of the Kerala Act is attracted. Therefore, by a mere agreement between the society and another, the stamp duty due to be paid to the Government cannot be avoided. 23. It was contended that S.40(1)(a) provides for benefit in favour of member and that SRO.No.75/60 also provides member in his own capacity or/and in the capacity of a guardian of minor as the beneficiaries of the notification. First of all, we have already stated that the notification cannot be understood divorced from the statutory provisions of S.40(1)(a). If that be so, in the absence of any further enabling provisions, the Government could not have made the member in his own capacity and/or in the capacity of a guardian of minor as the beneficiaries of exemption or remission of stamp duty. Here, the provisions of the notification understood in the context of S.40 of the Kerala Act makes it clear that the member mentioned therein should be acting on behalf of the society and executing an instrument in that capacity to claim the benefit of exemption as provided therein. Therefore, if a member of the society is executing a document in his own capacity or in the capacity of a guardian of a minor, he cannot avail the benefit of remission of stamp duty.” The aforesaid discussion found was necessary by the Full Bench to answer the questions that were referred to the Full Bench, which are indicated in paragraph 26 of the said judgment that reads as follows: “26. For the aforesaid reasons, we answer the question referred to the Full Bench thus: (1) SRO No.75/60 issued under S.35 of the TC Act and S.30 of the Madras Act is saved by virtue of S.110(2) of the Kerala Act only to the extent it is not inconsistent with the provisions of the 7 **W.A.No.1835 of 2016** Kerala Act. (2) SRO No.75/60 should be understood within the limitations of S.110(2) and S.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.” 6. It would be clear from a perusal of the Full Bench judgment, that for an exemption from Stamp duty to be available under Section 40(1)(a), in the context of a sale of property in favour of a Co-operative Society by a member of such a society, the member of the society should be seen as executing the instrument of sale either on behalf of the society, or in relation to the business of such society. On the facts of the instant case, we find that the sale by M/S.Common Wealth Trust India Limited of its property in favour of the society was with a view to liquidate the Company's liability to the Provident Fund Department. The object of the sale was therefore not in connection with or relating to the business of the society, and hence the execution of the instrument of sale by the Company cannot be viewed as one that was done on behalf of the society. Under the such circumstances, we cannot find ourselves in agreement with the finding of the learned Single Judge that, since the purchase was to be effected for and on behalf of the society, the benefit of the exemption under Ext.P1 Government Order would be available to the society. In particular, we note 8 **W.A.No.1835 of 2016** that the learned Single Judge mistook the mandate of Ext.P1 Notification as indicating that the purchase had to be related to the business of the society. As already noted above, the mandate of Ext.P1 Notification, as modified by Section 40 (1) (a) of the Co-operative Societies Act, is to grant the exemption only in such cases where an instrument was executed by or on behalf of the the society, and therefore, could not be a reference to any purchase effected by the society in which event an instrument would not be executed by the society. Thus, for the reasons stated above, we allow the writ appeal by setting aside the impugned judgment and dismissing the writ petition. Sd/- **HRISHIKESH ROY ACTING CHIEF JUSTICE** **A.K.JAYASANKARAN NAMBIAR JUDGE** mns **W.A.No.1835 of 2016** 9