In a significant ruling, the Kerala High Court has held that there is no absolute exemption from stamp duty for asset reconstruction agreements under Section 8F of the Indian Stamp Act, read with Section 5(1A) of the SARFAESI Act. The Court clarified that such agreements do not enjoy a blanket waiver from the provisions of the Kerala Stamp Act.
The petitions were filed by J.C. Flowers Asset Reconstruction Pvt. Ltd., a registered Asset Reconstruction Company (ARC), challenging the refusal by the Registering Authority to register two asset reconstruction agreements. These agreements were entered into with Karnataka Bank Ltd. and Federal Bank Ltd., respectively.
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The petitioner had offered to pay ₹1 lakh as stamp duty and ₹25,000 as registration fee in line with G.O.(Ms.) No. 9/2010/TD, but the registering authority rejected it, claiming incorrect fee and duty. The petitioner relied on previous High Court judgments and government orders for support.
The main issues considered by the Court were:
- Whether stamp duty can be levied under Kerala Stamp Act despite the exemption under Section 5(1A) of the SARFAESI Act and Section 8F of the Indian Stamp Act.
- Whether stamp duty can exceed ₹1 lakh and registration fee exceed ₹25,000 in light of the government order and prior judgments.
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After examining the laws, the Court observed:
“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 stamp duty payable under any other enactment.”
The Court emphasized the golden rule of interpretation, stating that statutory provisions granting exemptions must be strictly construed. Exemptions under Section 8F apply only to duties under the Indian Stamp Act, not to State laws like the Kerala Stamp Act.
However, the Court also took into account previous decisions, particularly WP(C) Nos. 19371/2017, 22357/2015, and 22551/2016, which extended benefits under the government order capping duty and fees.
Accordingly, the Court ruled:
“The petitioners are entitled to the same benefit as extended in previous judgments, based on G.O.(Ms.) No. 9/2010/TD.”
Still, the Court maintained that this direction is subject to future legislative changes and that it has not decided the validity of stamp duty classification under Article 21 of the Kerala Stamp Act treating such agreements as conveyance.
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The ruling highlights the coexistence of Central and State stamp duty laws and underlines the limited scope of exemptions provided under Central laws.
Quote Highlight:
“There is no omnibus exemption from stamp duty… Section 8F only exempts duty under the Indian Stamp Act, not under other laws like the Kerala Stamp Act.” – Justice T.R. Ravi
Case No: WPC Nos. 18051 & 23003 of 2024
Case Title: J.C. Flowers Asset Reconstruction Pvt. Ltd v. State of Kerala and others
Counsel for the Petitioners: Sunil Shanker, Vidya Gangadharan, V.V.Asokan (Sr.)
Counsel for Respondents: Muhammed Rafeek, Spl. Govt. Pleader
