Rights of Nominee v/s Rights of Legal Heirs – Property in a housing society

Posted In:

The rights and position of a nominee has been of significant interest and debate for sometime now. There has been some ambiguity on legal rights of nominees vis-à-vis the legal heirs. Here we seek to give clarity on the fundamental principles of law pertaining to the rights of nominee members under the Maharashtra Co-operative Societies Act, 1960 (“the Act”).

The Act requires a member to nominate a person/s to whom his share and interest in the co-operative society shall be transferred by the society in the event of such member’s death. The society is required to transfer the share or interest of the deceased member to such nominee(s), and if no such person is nominated, then, to the heir or legal representative of the deceased member.

One of the pertinent legal questions that has been put to test time and again before various courts is whether the rights of nominees prevail over those of the successors/legal heirs inter alia regarding the shares and interest of a member in a co-operative housing society.

In this context, we have analyzed 2 judgments which give certain clarity in this regard:

i. In the matter of Ramdas Shivram Sattur v. Rameshchandra and Others[1] (“Ramdas Sattur Judgment”), the Hon’ble Bombay High Court, clarifying the legality of the nominee, held that, Section 30 of the Act, which prescribes provision on transfer of interest on death of member, does not lay down any special rule of succession altering the rule of succession laid down under the personal law. It further stated that the role of the nominee who has been validly appointed under the provisions of the Act is only to represent the legal heirs of the deceased member while dealing with the society, and no interest in the property is created in favour of the nominee to the exclusion of those who in law are entitled to the estate of a deceased member. This view was also taken by the Hon’ble Bombay High Court in Shashikaran Ashok Parekh v. Rajesh Virendra Agarwal & Others. [2]

ii. In the matter of Indrani Wahi v. Registrar of Co-operative Societies and Others[3] (“Indrani Wahi Judgment”), Indrani Wahi (being a married daughter) was made a nominee member by her father Biswas Ranjan Sengupta. The Deputy Registrar of Co-operative Societies did not accept her membership on the ground that Indrani Wahi being a married daughter did not fall within the definition of ‘family’ under the West Bengal Co-operative Societies Act, 1983. This order was challenged by Indrani Wahi  before the Hon’ble High Court of Calcutta and was further appealed before the Hon’ble Supreme Court by Indrani Wahi, wherein the Hon’ble Supreme Court while allowed the transfer of share and interest of her deceased father in the society in favour of Indrani Wahi as a nominee, however, the Hon’ble Supreme Court also specifically observed in this regard that such a transfer in favour of a nominee would have no relevance to the issue of title between the inheritors or successors to the property of the deceased and it would be open to the other members of the family to pursue their case of succession or inheritance, in consonance with law..

Conclusion

Based on the observations of the aforementioned Hon’ble Courts in the Ramdas Suttar Judgment and Indrani Wahi Judgment read with the Act, it can be concluded that the method of nomination in a co-operative housing society does not create any right, title and interest of the nominee in the property of the nominator. The nominee merely performs the function of receiving and holding the property of the deceased nominator until the time the legal heir(s) of the deceased nominator is established and the property is transferred in favour of such legal heir(s).

Endnotes:

[1] Ramdas Shivram Sattur v. Rameshchandra and Others, 2009 (3) BomCR 705
[2] Ashok Parekh v. Rajesh Virendra Agarwal & Others, 2012 (4) Mh.L.J. 370
[3] Indrani Wahi v. Registrar of Co-operative Societies and Others, (2016) 6 SCC 440

Authors:
Nohid Nooreyezdan, Senior Partner
Alpesh Parekh, Counsel
Sharul Jain, Associate

Date: January 23, 2020