A Nominee can only be a ‘Provisional Member’ of a Society

A Nominee can only be a ‘Provisional Member’ of a Society : Bombay HC’s recent Judgement

By :- Amit K Vyas

( views are strictly personal)

?The Bombay H.C has in a?recent judgement dated 9 November 2022 in the case of Karan Vishnu Khandelwal Vs Chairman/Secretary, Vaikunth CHS Ltd ( Writ petition No- 12468 of 2022)?clarified that a ‘Nominee (in whose name a Nomination Form has been validly submitted by the deceased Owner) shall be admitted, only as a provisional member, till?legal heir or heirs?or a person entitled to the flat and shares in accordance with Succession Law?or under Will or testamentary?document?or?admitted as member in place of such deceased member. The Nominee is thus entitled to become only a provisional member who is not eligible to sell the flat till the Society is provided with court order granting ownership to any Legal heir(s).

The said Bombay H.C judgement stipulates that in terms of Section 154B-13, as inserted w.e.f. 9th March, 2019, a ?Society is empowered to transfer?share, right, title and interest of the deceased member in the society to a person, on the basis of (i) testamentary documents or (ii) succession certificate or (iii) legal heir-ship certificate or (iv) document of family arrangement executed by persons, who are entitled to inherit the property of deceased?member or (v) to a person duly nominated in accordance with the Rules.?However, the first proviso appended thereto, clarifies that a nominee shall be admitted, only as a provisional member, within the meaning of Section 154B -1 (18) (c) of the MCS Act??till legal heir or heirs or a person entitled to the flat and shares in accordance with Succession Law or under Will or testamentary document or admitted as member in place of such d e ce a se d m e m be r.

?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, the following judgements give definite clarity on the aspect of nomination:

?Leading S.C case law in this regard: - In the matter of?Indrani Wahi v. Registrar of Co-operative Societies and Others?(Civil Appeal 4930/2006) ("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..

?Other relevant Bombay H.C Orders:

In the matter of?Ramdas Shivram Sattur v. Rameshchandra and Others (2009 (3) Bom CR 705) 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 Ashok Parekh v. Rajesh Virendra Agarwal & Others (2012 (4) Mh.L.J. 370)

Conclusion: - Based on the observations of the Hon’ble Courts 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)