Kerala High Court
J.C. Flowers Asset Reconstruction Pvt. ... vs State Of Kerala on 2 May, 2025
Author: T.R.Ravi
Bench: T.R.Ravi
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE T.R.RAVI
FRIDAY, THE 2ND DAY OF MAY 2025 / 12TH VAISAKHA, 1947
WP(C) NO. 18051 OF 2024
PETITIONER:
J.C. FLOWERS ASSET RECONSTRUCTION PVT. LTD
HAVING ITS REGISTERED OFFICE AT UNIT NO. 203-206,
2ND FLOOR, WING A, INSPIRE BKC,
BANDRA KURLA COMPLEX, BANDRA (EAST),
MUMBAI
(ACTING IN ITS CAPACITY AS TRUSTEE OF THE
JCF YES TRUST 2022-23/22),
REPRESENTED BY ITS AUTHORISED SIGNATORY
MR. BHAVYA UDANI, PIN - 400051
BY ADVS.
SRI SUNIL SHANKER
MS.VIDYA GANGADHARAN
SRI V.V.ASOKAN (SR.)(A-370)
RESPONDENTS:
1 STATE OF KERALA
REPRESENTED BY CHIEF SECRETARY,
GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM, PIN - 695001
2 INSPECTOR GENERAL OF REGISTRATION
DEPARTMENT OF REGISTRATION,
VANCHIYOOR, THIRUVANANTHAPURAM,
PIN - 695035
3 DISTRICT REGISTRAR, ERNAKULAM
DISTRICT REGISTRAR'S OFFICE,
OPP. MAHARAJA'S GROUND,
NEAR KPCC JUNCTION,
ERNAKULAM, PIN - 682016
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
2
4 THE SUB REGISTRAR
MARADU SUB REGISTRAR OFFICE,
MARADU, ERNAKULAM,
PIN - 682304
BY SRI.MUHAMMED RAFEEK, SPL.GOVT.PLEADER
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION
ON 11.04.2025, ALONG WITH WP(C).23003/2024, THE COURT ON
2.5.2025 DELIVERED THE FOLLOWING:
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
3
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE T.R.RAVI
FRIDAY, THE 2ND DAY OF MAY 2025 / 12TH VAISAKHA, 1947
WP(C) NO. 23003 OF 2024
PETITIONER:
J.C. FLOWERS ASSET RECONSTRUCTION PVT. LTD.,
HAVING ITS REGISTERED OFFICE AT UNIT NO. 203-206,
2ND FLOOR, WING A, INSPIRE BKC,
BANDRA KURLA COMPLEX, BANDRA (EAST),
MUMBAI
(ACTING IN ITS CAPACITY AS TRUSTEE OF THE
JCF YES TRUST 2022-23/21),
REPRESENTED BY ITS AUTHORISED SIGNATORY
MR. PRATIK GHORPADE,
PIN - 400051
BY ADVS.
SRI SUNIL SHANKER
MS.VIDYA GANGADHARAN
SRI V.V.ASOKAN (SR.)(A-370)
RESPONDENTS:
1 STATE OF KERALA,
GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM,
REPRESENTED BY CHIEF SECRETARY,
PIN - 695001
2 INSPECTOR GENERAL OF REGISTRATION
DEPARTMENT OF REGISTRATION,
VANCHIYOOR, THIRUVANANTHAPURAM,
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
4
PIN - 695035
3 DISTRICT REGISTRAR, ERNAKULAM
DISTRICT REGISTRAR'S OFFICE,
OPP. MAHARAJA'S GROUND,
NEAR KPCC JUNCTION, ERNAKULAM,
PIN - 682016
4 THE SUB REGISTRAR
THRIKKAKARA SUB REGISTRAR OFFICE,
THRIKKAKARA, ERNAKULAM,
PIN - 682021
BY SRI.MUHAMMED RAFEEK, SPL.GOVT.PLEADER
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 11.04.2025, ALONG WITH WP(C).18051/2024, THE COURT ON
2.5.2025 DELIVERED THE FOLLOWING:
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
5
"CR"
T.R.RAVI, J.
==========================
W.P.(C)Nos.18051 & 23003 of 2024
==========================
Dated this the 2nd day of May, 2025
JUDGMENT
The writ petitions have been filed by the Asset
Reconstruction Company, having a certificate of registration under
Section 3 of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 (for short
'SARFAESI Act'), from the Reserve Bank of India (for short 'RBI').
Ext.P1 is the certificate of registration. The petitioner in W.P.
(C)No.18051 of 2024 entered into an asset reconstruction
agreement with the Karnataka Bank Ltd. on 04.03.2024 and the
petitioner in W.P.(C)No.23003 of 2024 entered into an asset
reconstruction agreement with the Federal Bank Ltd. on
26.03.2024, copies of which have been produced as Ext.P2 in both
the writ petitions. The agreements are as required under Section
5(1)(b) of the SARFAESI Act. The agreements are drawn up on
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
stamp paper worth Rs.1 lakh. Relying on Exts.P4, P5, and P6
judgments of this Court and G.O.(Ms.)No.9/2010/TD dated
13.1.2010, the petitioner presented the agreements for registration
before the Registering Authority offering to pay Rs.25,000/- as
registration fee. The Registering Authority declined registration for
the reason that the stamp duty and the registration fee paid were
not correct. The writ petitions have been filed in the above
circumstances, seeking directions to the 4 th respondent to register
Ext.P2 assignment agreements.
2. A statement has been filed on behalf of the respondents.
It is contended by the respondents that in the light of the law
declared by this Court in Ext.P4 judgment in W.P.(C)No.19371 of
2017, Ext.P2 instrument is chargeable to duty as prescribed under
Article 21 of the Kerala Stamp Act, 1959 at the rate of 8% of the
purchase consideration and not a fixed stamp duty of Rs.1 lakh. It
is the case of the respondents that Ext.P2, by its nature, would
come within the definition of the word 'conveyance' as defined in
Section 2(d)(iv) of the Kerala Stamp Act, 1959, and since it does
not answer to any of the category of instruments covered by Article
55 of the Kerala Stamp Act, it is chargeable under Article 21(2) of
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
the Act. Reliance is also placed on Ext.P4 judgment to submit that
Section 5(1A) of the SARFAESI Act read with Section 8F of the
Indian Stamp Act, 1899 cannot be relied on to claim exemption
from payment of stamp duty. It is also submitted that G.O.
(Ms.)No.9/2010/TD dated 13.1.2010 is no longer relevant since the
Constitutional Court has already declared the law.
3. Heard Sri V.V.Asokan, Senior Advocate, instructed by
Sri Sunil Shankar, Advocate, on behalf of the petitioners and
Sri Mohammed Rafeeq, Special Government Pleader on behalf of
the respondents.
4. On the pleadings and the arguments raised, the following
questions arise for decision;
(i) Whether an Asset Reconstruction Agreement
entered into under Section 5(1)(b) of the
SARFAESI Act between a bank and an asset
reconstruction company can be subject matter of
levy of stamp duty, in the teeth of Section 5(1A) of
the SARFAESI Act?
(ii) If the answer to question No.(i) is in the
affirmative, can the State levy stamp duty in
excess of Rs.1 lakh and registration fee in excess
of Rs.25,000/-, in the light of G.O.
(Ms.)No.9/2010/TD dated 13.1.2010 and
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
Exts.P4, P5 and P6 judgments?
The counsel on either side addressed arguments referring to
the entries contained in Lists I, II, and III of the 7 th Schedule to the
Constitution of India and the powers available under Article 246 of
the Constitution of India. The question of the applicability of the
Indian Stamp Act, 1899, and its provisions to Part B States, which
have enacted legislation for the levy of stamp duty, was also
extensively argued. Detailed argument notes have also been
submitted by the counsel on either side.
ARGUMENTS ON THE SIDE OF THE PETITIONERS:
5. Reference was made to the following decisions on the side
of the petitioners:
(i) Ashok Vishnu Davare v. State of Maharasthra
[(2004) 9 SCC 438]
(ii) Life Insurance Corporation of India v. State of
Rajasthan [2024 KHC 6247]
(iii) India Cement Ltd. & Ors. v. State of Tamil Nadu
& Ors. [(1990) 1 SCC 12]
(iv) State of Andhra Pradesh and Ors. v. Mc Ddowell
and Co. & Ors. [(1996) 3 SCC 709]
(v) State of Bihar & Ors. v. Bihar Distillary Ltd. &
Ors. [(1997) 2 SCC 453]
(vi) State of NCT of Delhi v. Sanjay [2014 (9) SCC
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
772]
(vii) Chandavarkar Sita Ratna Rao v. Ashalata S.
Guram [(1986) 4 SCC 447]
(viii) Union of India & Anr. v. G.M. Kokil & Ors. [AIR
1984 SC 1022]
(ix) Dominion of India & Anr. v. Shrinbai A. Irani &
Anr. [AIR 1954 SC 596]
(x) South India Corporation Pvt. Ltd. v. Secretary,
Board of Revenue, Trivandrum & Anr. [AIR 1964
SC 207]
(xi) A. R. Antulay v. R. S. Nayak [AIR 1988 SC
1531]
(xii) Municipal Corporation of Delhi v. Gurnam Kaur
[AIR 1989 SC 38]
(xiii) Judgment in W.P.(C)No. 19371 of 2017 (Ext.P4),
(xiv) Judgment in W.P.(C)No. 22357 of 2015 (Ext.P5),
(xv) Judgment in W.P.(C)No. 22551 of 2016 (Ext.P6),
(xvi) State of Andhra Pradesh v. National Thermal
Power Corporation Ltd. [(2002) 5 SCC 203]
(xvii) Vijay v. Union of India & Ors. [2003 KLT Online
2030]
(xviii) Abdul Azeez v. Authorized Officer, Phoenix ARC
Ltd. [2024 (2) KHC 157]
6. SARFAESI Act was promulgated by the Parliament and the
legislative power can be traced to Article 246(1) read with Entry 45
of List I of the 7th Schedule of the Constitution of India. Entry 45
authorises the Parliament to legislate with respect to "banking".
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
Section 5 of the SARFAESI Act reads thus;
"5. Acquisition of rights or interest in financial
assets. (1) Notwithstanding anything contained in
any agreement or any other law for the time being in
force, any asset reconstruction company may acquire
financial assets of any bank or financial institution--
(a) by issuing a debenture or bond or any other
security in the nature of debenture, for consideration
agreed upon between such company and the bank or
financial institution, incorporating therein such terms
and conditions as may be agreed upon between
them; or
(b) by entering into an agreement with such bank or
financial institution for the transfer of such financial
assets to such company on such terms and conditions
as may be agreed upon between them.
(1A) Any document executed by any bank or financial
institution under sub-section (1) in favour of the asset
reconstruction company acquiring financial assets for
the purposes of asset reconstruction or securitisation
shall be exempted from stamp duty in accordance
with the provisions of section 8F of the Indian Stamp
Act, 1899 (2 of 1899):
Provided that the provisions of this sub-section shall
not apply where the acquisition of the financial assets
by the asset reconstruction company is for the
purposes other than asset reconstruction or
securitisation.
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
(2) If the bank or financial institution is a
lender in relation to any financial assets acquired
under sub-section (1) by the asset reconstruction
company, such asset reconstruction company shall,
on such acquisition, be deemed to be the lender and
all the rights of such bank or financial institution shall
vest in such company in relation to such financial
assets.
(2A) If the bank or financial institution is holding any
right, title or interest upon any tangible asset or
intangible asset to secure payment of any unpaid
portion of the purchase price of such asset or an
obligation incurred or credit otherwise provided to
enable the borrower to acquire the tangible asset or
assignment or licence of intangible asset, such right,
title or interest shall vest in the asset reconstruction
company on acquisition of such assets under sub-
section (1).
(3) Unless otherwise expressly provided by this Act,
all contracts, deeds, bonds, agreements, powers of
attorney, grants of legal representation, permissions,
approvals, consents or no-objections under any law or
otherwise and other instruments of whatever nature
which relate to the said financial asset and which are
subsisting or having effect immediately before the
acquisition of financial asset under sub-section (1)
and to which the concerned bank or financial
institution is a party or which are in favour of such
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
bank or financial institution shall, after the acquisition
of the financial assets, be of as full force and effect
against or in favour of the asset reconstruction
company, as the case may be, and may be enforced
or acted upon as fully and effectually as if, in the
place of the said bank or financial institution, asset
reconstruction company, as the case may be, had
been a party thereto or as if they had been issued in
favour of asset reconstruction company, as the case
may be.
(4) If, on the date of acquisition of financial asset
under sub-section (1), any suit, appeal or other
proceeding of whatever nature relating to the said
financial asset is pending by or against the bank or
financial institution, save as provided in the third
proviso to sub-section (1) of section 15 of the Sick
Industrial Companies (Special Provisions) Act, 1985
(1 of 1986) the same shall not abate, or be
discontinued or be, in any way, prejudicially affected
by reason of the acquisition of financial asset by the
asset reconstruction company, as the case may be,
but the suit, appeal or other proceeding may be
continued, prosecuted and enforced by or against the
asset reconstruction company, as the case may be.
(5) On acquisition of financial assets under sub-
section (1), the asset reconstruction company, may
with the consent of the originator, file an application
before the Debts Recovery Tribunal or the Appellate
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
Tribunal or any court or other Authority for the
purpose of substitution of its name in any pending
suit, appeal or other proceedings and on receipt of
such application, such Debts Recovery Tribunal or the
Appellate Tribunal or court or Authority shall pass
orders for the substitution of the asset reconstruction
company in such pending suit, appeal or other
proceedings."
7. Section 5(1A) was not originally included in the SARFAESI
Act. It was brought in by way of amendment with effect from
1.9.2016 after the enactment of the Enforcement of Security
Interest and Recovery of Debt Laws and Miscellaneous Provisions
(Amendment) Act, 2016. Simultaneous amendments were made to
the SARFAESI Act, the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993, the Indian Stamp Act, 1899, and
the Depositories Act, 1996. Along with the amendment of the
SARFAESI Act by inclusion of Section 5(1A), the Indian Stamp Act
was also amended by adding Section 8F. Section 8F of the Indian
Stamp Act, 1899 reads thus;
"8F. Agreement or document for transfer or
assignment of rights or interest in financial
assets not liable to stamp duty.-- Notwithstanding
anything contained in this Act or any other law for the
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
time being in force, any agreement or other document
for transfer or assignment of rights or interest in
financial assets of banks or financial institutions under
section 5 of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest
Act, 2002, in favour of any asset reconstruction
company, as defined in clause (ba) of sub-section (1)
of section 2 of that Act, shall not be liable to duty
under this Act."
8. The contention of the Senior Counsel for the petitioners,
is that a combined reading of Section 5(1A) of the SARAFAESI Act
and Section 8F of the Indian Stamp Act would show that, the
Legislature intended that no stamp duty should be levied on
agreements falling under Section 5 of the SARFAESI Act.
9. There is no dispute that the petitioner is an Asset
Reconstruction Company, which has been registered with the RBI.
One of the primary contentions raised by the respondent/State is
that even if Section 5(1A) and Section 8F are to be applied, the
result would be that no stamp duty under the Indian Stamp Act will
be payable. It is submitted that neither Section 5(1A) of the
SARAFAESI Act nor Section 8F of the Indian Stamp Act, in any
manner, prohibit the application of the Kerala Stamp Act. It is the
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
contention of the State that by exempting the document from
stamp duty under the Indian Stamp Act, there cannot be any
simultaneous exemption from the Kerala Stamp Act, concerning the
very same documents.
10. The counsel for the petitioners submits that the
SARFAESI Act has been enacted under Entry 45 of List 1 of the 7 th
Schedule of the Constitution of India. The legislative competence
of the Union of India regarding the SARFAESI Act has not been
challenged and there is no challenge to Section 5(1A) of the
SARFAESI Act which has been introduced by way of an amendment.
It is submitted that the Section specifically says that any document
executed by any Bank or financial institution under sub-section (1)
of Section 5 in favour of the Asset Reconstruction Company
acquiring financial assets for asset reconstruction or securitisation,
shall be exempted from stamp duty under Section 8F of the Indian
Stamp Act, 1899. It is submitted that the State has not challenged
the constitutionality of Section 5(1A) and the contention is that
what is exempted is only stamp duty in accordance with Section 8F
of the Indian Stamp Act and not stamp duty payable under the
Kerala Stamp Act. Coming to Section 8F of the Indian Stamp Act,
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
the said Section was introduced into the Indian Stamp Act, 1899,
by way of amendment and as a continuation of the amendment of
the SARFAESI Act by introduction of Section 5(1)A. Section 8F
starts with a non obstante clause whereby the provision has been
made applicable notwithstanding anything contained in the Indian
Stamp Act as well as in any other law for the time being in force.
The Senior Counsel appearing for the petitioners submits that given
the non obstante clause, the application of Section 1(2) of the
Indian Stamp Act, 1899 as well as the application of the Kerala
Stamp Act stands excluded and any agreement or other document
for transfer or assignment of right or interest in financial assistance
of Banks or financial institutions under Section 5 of the SARFAESI
Act is exempted from the liability to duty.
11. The legislative competence of the Central Government to
enact the SARFAESI Act and the Indian Stamp Act is conceded and
hence, though elaborate arguments were advanced regarding the
source of power under Article 246 of the Constitution of India, the
various entries dealing with banking and stamp duty under Lists 1
to 3 of the Seventh Schedule and the scope of Entry 44 in List 3 of
the Seventh Schedule, there is no necessity to go into the said
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
questions. There can also be no challenge to the proposition that
Section 5(1A) of the SARFAESI Act grants exemption from stamp
duty in respect of any document executed between a Bank and an
Asset Reconstruction Company, regarding acquisition of financial
assets for asset reconstruction or securitisation. What needs to be
considered is the effect of the words "in accordance with the
provisions of Section 8F of the Indian Stamp Act, 1899" in Section
5(1A). If stamp duty is levied on an instrument of the nature
specified in Section 5 of the SARFAESI Act, in accordance with
Section 8F, such a levy cannot be justified in the teeth of Section
5(1A) of the SARFAESI Act, since the exemption will operate.
12. Coming to the question of applicability of the Indian
Stamp Act and the Kerala Stamp Act, both of which are admittedly
within the legislative competence of the Central Government and
the State government respectively, the Indian Stamp Act has its
source of power in Entry 91 of List 1 of Seventh Schedule, which
says that the Parliament can fix rates of stamp duty in respect of
bill of exchange, cheques or promissory notes, bills of lading,
letters of credit, policies of insurance, transfer of shares,
debentures, proxies and receipts. The Entry is specific, and none of
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
the items mentioned in the Entry deal with stamp duty in respect of
agreements of the nature specified in Section 5 of the SARFAESI
Act. Entry 63 in List 2 of the 7 th Schedule, on the other hand,
specifically says of rates of stamp duty in respect of documents
other than those specified in the provisions of List 1 concerning
rates of stamp duty. Entry 44 of List 3 gives power to the Centre
and the State to levy stamp duty. Thus, there is a power available
both to the Centre and the State to levy stamp duty and to
legislate regarding the rates of stamp duty of specified items. As
far as Kerala is concerned, the Indian Stamp Act as well as the
Kerala Stamp Act have distinct fields of operation, which can only
be as guided by the entries in the respective Lists in the Seventh
Schedule. The Indian Stamp Act will apply with regard to the stamp
duty payable on instruments specified in Entry 91 of List 1.
13. The next question is regarding how Section 8F of the
Indian Stamp Act must be understood. True, the Section begins
with a non obstante clause. The way a non obstante clause should
be interpreted is no longer res integra. In State (NCT of Delhi) v.
Sanjay [2014 (9) SCC 772], the Hon'ble Supreme Court held
that the purpose of a non obstante clause is to give overriding
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
effect to the provision over some contrary provision that may be
found within the same enactment or some other enactment. [See
also the judgment in Patharam Milk Producers Co-operative
Society Ltd. v. State Co-operative Election Commission
(2023 (4) KLT 143]. The operation of all the provisions of the
Indian Stamp Act as well as the provisions of any other Act will
thus stand suspended, for the purpose of giving effect to Section 8F
of the Indian Stamp Act. However, Section 8F does not appear to
grant exemption from all laws relating to levy of stamp duty. After
referring to the type of documents which are entitled to exemption,
in the operative portion of the Section, the exemption is restricted
to "duty under this Act", meaning thereby duty under the Indian
Stamp Act. If all the words of the Section are to be given meaning,
which is the golden rule of interpretation, it can only mean that,
there can be no levy of stamp duty under the Indian Stamp Act.
That is to say, there is no omnibus exemption from stamp duty
under any other enactment. Neither Section 5(1A) of the SARFAESI
Act, nor Section 8F of the Indian Stamp Act, state anything about
exemption being granted to the stamp duty payable under any
other enactment. It is settled law that a provision granting
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
exemption has to be strictly construed and the Court cannot by an
interpretative process, expand the scope of the exemption, by
reading into the provision such aspects, which in the opinion of the
Court ought to have been included. I am hence of the opinion that
the first contention of the counsel for the petitioners that there is a
total exemption from stamp duty is not legally sustainable, even on
a plain reading of the statutory provision.
14. The next question is whether the liability to pay stamp
duty should be as per the Government Order No.G.O.(Ms)
No.9/2010/TD dated 13.01.2010 in the light of Exts.P4, P5 & P6
judgments. G.O.(Ms) No.9/2010/TD dated 13.01.2010 is extracted
below:
"GOVERNMENT OF KERALA
Abstract
Taxes Department - Registration - Capping the stamp duly and
Registration fee payable on Security / Assignment of debt
whether secure or insecure by a charge over movable or
immovable properties - Limiting the concession to M/s. Asset
Reconstruction Company (India) Ltd. (ARCIL) only and
constitution of an empowered Committee -sanctioned-orders
issued.
Taxes Department
GO(Ms) No.9/2010/TD Thiruvananthapuram dated 13-01-2010
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
Read: 1. Letter No.LOGFY0806363 dated 17/9/2008 from
ARCIL Ltd.
2. Letter No. RRA/10879/2007 dated 17/7/2007 from
the Inspector General of Registration,
Thiruvananthapuram
ORDER
1. In the letter read 1st paper above, the Executive Vice
President, Asset Reconstruction Company (India) Ltd. (ARCIL)
registered under the Securitization and Reconstruction of
Financial Assets and Enforcement of Security Fund Act, 2002 has
placed a proposal before Government for capping the stamp duty
and registration fee payable on any assignment of debts whether
secure or insecure by a charge over movable or immovable
properties to a nominal amount not exceeding rupee one lakh and
rupee twenty five thousand respectively in order to encourage
construction activities by utilizing the high levels of Non-
Performing Assets (NPA), roughly estimated at Rs.2600 crore
noted in the accounts of various banking firms.
2. In the letter cited 2nd paper above the Inspector General of
Registration has recommended reduction of stamp duty as rupee
one for every thousand rupees subject to the maximum of rupees
one lakh and the Registration fees of rupee one for every
thousand rupees subject to a maximum of rupees twenty five
thousand on securitization/assignment of debt.
3. Government have examined the matter in detail and are
pleased to accept the proposal for capping the stamp duty and
registration fee to an amount not exceeding Rs. One Lakh only
and Rupees Twenty five thousand only respectively payable on
securities / assignment of debt whether secure or insecure by a
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
charge over movable or immovable properties. Limiting the
benefit to Asset Reconstruction Company (India) Limited (ARCIL).
Sanction is also accorded to constitute an empowered committee
with the Principal Secretary (Taxes) as convener, Additional Chief
Secretary (Finance), Principal Secretary (Industries) as members
to consider the cases of ARCIL and make securitization /
suggestion thereof to Government.
By order of the Governor,
P. MARA PANDIYAN,
Principal Secretary "
15. A reading of the Government Order would show that it
was issued on the basis of letters from the Executive Vice
President, Asset Reconstruction Company India Ltd., and the
Inspector General of Registration, Thiruvananthapauram. The
Inspector General had recommended a reduction of the stamp duty
on securitisation/assignment of debt. The order says that the
Government has examined the matter in detail and is pleased to
accept the proposal for capping the stamp duty and registration fee
to an amount not exceeding Rs.One Lakh only and Rupees Twenty
five thousand only respectively, limiting the benefit to Asset
Reconstruction Company (India) Limited (ARCIL). The order also
says that sanction has been accorded to constitute an empowered
committee to consider the cases of the ARCIL and to make
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
recommendations and suggestions thereof to the Government.
16. The above Government Order is followed by G.O.(Ms)
No.110/2013 on 10/2013/TD dated 21.05.2013, which reads thus:
"GOVERNMENT OF KERALA
Abstract
Taxes Department - Registration - Capping the stamp duty and
registration fee payable on security/assignment of debt whether
secure or insecure by charge over movable or immovable
properties - Limiting the concession to M/S. Asset Reconstruction
Company (India) Limited (ARCIL) only - Constitution of High
Power Committee - Sanctioned - Orders issued.
TAXES (E) DEPARTMENT
GO(MS)No.110/2013/TD. Dated,Thiruvananthapuram,21/05/2013.
Read:-1. GO(MS)No.9/2010/TD. Dated 13/01/2010.
2. Letter no. CLG./HP/FY12/8010 dated 15/11/2012 from the
Managing Director & CEO, ARCIL.
ORDER
As per the Government Order read above, the Government of Kerala
had approved the proposal for capping the stamp duty and
registration fee, to an amount not exceeding Rupees One lakh and
Rupees twenty five thousand respectively, payable on
securities/assignment of debt whether secure or insecure by a charge
over movable or immovable properties, limiting the benefit to Asset
Reconstruction Company (India) Limited (ARCIL), Sanction was, also
accorded to constitute an Empowered Committee, with the Principal
Secretary (Taxes) as Convenor, Additional Chief Secretary (Finance),
Principal Secretary (Industries) as Members, to consider the cases of
ARCIL, and make recommendation/suggestion thereof to Government.
2. However, the Committee as stated in the Government Order read
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
above has not been constituted so far, because of which the proposal
for adjudication of assignment agreement submitted to the Inspector
General of Registration, Kerala, by the ARCIL is pending with the
Inspector General of Registration. Hence, the Managing Director &
Chief Executive Officer of ARCII., as per the letter read as 2nd paper
above, has requested the Government to constitute the Committee as
stated in the Government Order read above, to consider the cases of
ARCIL, and make recommendations/suggestions thereof to
Government.
3.Government have examined the matter in detail, and are
pleased to constitute a High Power Committee with the
Secretary (Taxes) as Convenor, the Additional Chief Secretary
(Industries) and the Principal Secretary (Finance) as Members,
to consider the cases of ARCIL, and make recommendations/
suggestions thereof to Government.
By Order of the Governor,
A. AJITH KUMAR,
SECRETARY TO GOVERNMENT."
17. It can be seen from the Government Order dated
21.05.2013 that the committee, as stated in the earlier
Government Order, had not been constituted, and the proposal for
adjudication of assignment agreements submitted to the Inspector
General of Registration by ARCIL was still pending. The
Government Order says that a committee was constituted as per
the order. Admittedly, no orders have so far been issued by the
committee, and the matter still appears to be pending. In Ext.P4
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
judgment, a learned Single Judge of this Court considered the issue
regarding the liability to pay stamp duty on such agreements. The
learned Single Judge held that Section 8F of the Indian Stamp Act
does not apply to the State of Kerala. The learned Judge went on
to consider whether the agreements mentioned in Section 5 of the
SARFAESI Act come under Article 55C of the Schedule to Kerala
Stamp Act, 1959 and held that the Instruments in question will not
come under Article 55 of the Schedule to the Kerala Stamp Act.
The learned Judge, thereafter, relying on the judgments of this
Court in WP(C) No.22357/2015 and 22551/2016 wherein this Court
had directed registration at the rate suggested in the Government
Order dated 13.01.2010, held that the petitioners before the Court
are also entitled to the same benefits on the principle of parity.
Even though arguments were advanced to submit that the above-
mentioned judgment had been rendered per incuriam, given my
finding that the exemption under Section 8F is limited to levy under
the Indian Stamp Act, there is no necessity to go into the question.
18. On the question of applicability of the Government Order
dated 13.01.2010, the Special Government Pleader submitted that
the Government Order was for the limited purpose of dealing with
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
cases of ARCIL and cannot be applied universally in all cases. It is
submitted that the said order cannot be treated as a statutory
order having the force of law. It is further submitted that the
Government Order dated 13.01.2010 is not an order under Section
9 of the Kerala Stamp Act, issued following the procedure laid down
therein. It is also submitted that Ext.P5 judgment had been
challenged in a review petition, which is still pending before the
Court. As far as Ext.P6 judgment is concerned, it is submitted that
the only direction to the Government was to consider the
representation submitted and that the Court had not made any
declaration regarding the reliefs. Regarding Ext.P4 judgment, the
Special Government Pleader submits that the said judgment cannot
be treated as a precedent. It is submitted that no mandamus can
be issued to restrain the Government from enforcing the provisions
of law regarding the stamp duty payable. Reliance is placed on the
judgment of the Hon'ble Supreme Court in R. Muthukumar V. The
Chairman and Managing Director, TANGEDCO & Ors. [2022
(1) SCR 577], to contend that there can be no negative equality.
W.A.No.2007/2024 challenging the judgment in WP(C)
No.19371/2017 is also stated to be pending before a Division
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
Bench. Regarding the judgment in Abdul Azeez V. Authorised
Officer, Phoenix ARC Ltd. [2024 (2) KHC 157], the Special
Government Pleader submits that the said judgment is dated
10.01.2024 and has been rendered without reference to the
judgment in WP(C) No.19371/2017 which is dated 07.12.2023,
concerning the chargeability of the instruments of similar nature
and Section 2D read with Article 21 of the Kerala Stamp Act, 1959
and hence cannot be treated as a precedent. In Abdul Azeez
(Supra), the learned Single Judge held that what is transferred by
a Bank to an Asset Reconstruction Company is only the economic
interest and there is no conveyance of property or proprietary
interest and such conveyance will not fall in any of the categories
mentioned in Article 22 of the Kerala Stamp Act. This Court held
that Article 22 would apply only when there is a sale of immovable
property and since the Bank has not conveyed any property and
what is transferred is only the debt and the right to recover the
debt, the said Article can have no application. The said judgment
was rendered in a dispute between the debtor and the Asset
Reconstruction Company and was not a dispute between the Asset
Reconstruction Company and the State regarding the stamp duty
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
payable. The said judgment cannot bind the State in any manner.
The Special Government Pleader has a case that what would apply
is Article 21 of the Kerala Stamp Act and that the document in
question would fall within the ambit of a conveyance under Section
2(d)(iv) of the Kerala Stamp Act. However, so long as the State has
not challenged Exts.P4, P5, and P6 judgments, I do not think that
relief should be denied to the petitioners to the extent of the relief
granted in those judgments. While I hold that Section 8F of the
Indian Stamp Act will not apply, I also find that the petitioners are
entitled to relief on the second question raised in these cases.
19. The writ petitions are hence allowed in part. There will be
a direction to the 4th respondent to register Ext.P2 assignment
agreements by extending the benefit granted to the petitioners in
Exts.P4, P5, and P6 judgments, based on the rates suggested in
the Government Order dated 13.01.2010 within one month from
the date of receipt of a copy of this judgment. It is made clear that
this direction will be subject to any final determination of stamp
duty based on any amendment to the Stamp Act. It is also made
clear that this Court has not gone into the merits of the contention
of the State that stamp duty is payable by treating the agreement
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
in question as a conveyance under Section 2(d)(iv) of the Kerala
Stamp Act, under Article 21 of the Schedule to the Act, since it is
an aspect to be considered while the Government is taking further
steps on the Government orders referred above.
Sd/-
T.R.RAVI
JUDGE
dsn
Corrigendum dt.12.5.2025
In para.5, party names in decision No.(i) shall be read as
"Hindustan Lever & Anr. v. State of Maharashtra & Anr." instead of
"Ashok Vishnu Davare v. State of Maharasthra".
Sd/--
T.R.RAVI
JUDGE
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
APPENDIX OF WP(C) 18051/2024
PETITIONER'S EXHIBITS
Exhibit P1 TRUE COPY OF THE CERTIFICATE OF
REGISTRATION DATED 24.07.2019
Exhibit P2 TRUE COPY OF THE ASSIGNMENT AGREEMENT
DATED 04.03.2024
Exhibit P3 TRUE COPY OF THE ACKNOWLEDGEMENT CUM
RECEIPT DATED 18.04.2024 ISSUED BY THE
REGISTRATION DEPARTMENT, GOVERNMENT OF
KERALA
Exhibit P4 TRUE COPY OF THE JUDGMENT OF THIS HON'BLE
COURT IN WP[C] NO.19371 OF 2017 DATED
7.12.2023
Exhibit P5 TRUE COPY OF THE JUDGMENT OF THIS HON'BLE
COURT IN WP[C] NO.22357 OF 2015 DATED
16.9.2015
Exhibit P6 TRUE COPY OF THE JUDGMENT OF THIS HON'BLE
COURT IN WP[C] NO.22551 OF 2016 DATED
2.6.2023
W.P(C)Nos.18051 &
23003 of 2024
2025:KER:33403
APPENDIX OF WP(C) 23003/2024
PETITIONER'S EXHIBITS
Exhibit P1 TRUE COPY OF THE CERTIFICATE OF REGISTRATION
DATED 24.07.2019
Exhibit P2 TRUE COPY OF THE ASSIGNMENT AGREEMENT DATED
26.03.2024
Exhibit P3 TRUE COPY OF THE ACKNOWLEDGEMENT CUM RECEIPT
DATED 04.06.2024 ISSUED BY THE REGISTRATION
DEPARTMENT, GOVERNMENT OF KERALA
Exhibit P4 TRUE COPY OF THE JUDGMENT OF THIS HON'BLE
COURT IN WP[C] NO.19371 OF 2017 DATED
7.12.2023
Exhibit P5 TRUE COPY OF THE JUDGMENT OF THIS HON'BLE
COURT IN WP[C] NO.22357 OF 2015 DATED
16.9.2015
Exhibit P6 TRUE COPY OF THE JUDGMENT OF THIS HON'BLE
COURT IN WP[C] NO. 22551 OF 2016 DATED
2.6.2023
