Landmark Judgement on Nomination in a Housing Society

By Legal Bureau

Nomination in a Co-operative Housing Society

A Nominee when he is not the sole legal heir, is a Trustee, for the legal heirs of the deceased. The practice of providing for Nomination is to ensure that the institutions (Bank, Insurance or a Co-operative Society) know from the Nomination as to whom to hand over the Property of the deceased on the death of the Member etc. It is, therefore, a useful legal device to have a Nomination to secure continuity of Membership on the Records of a Society.
This does not mean that the Nominee becomes the Owner in Title of that flat in a Society. The property of the deceased Member must ultimately go to his legal heirs, according to the law of Succession. However, the task of ascertaining the legal heirs of a particular person who dies is a complicated one, in most cases. Therefore, even if a Bank or a Society takes a decision in their normal routine and procedure, that a particular person is their heir of the deceased, such an opinion cannot be considered to be legally binding on anyone, including the family of the deceased. The reason is that such questions can only be decided conclusively by a Court of Law.
Therefore, on the death of a Member, it is the duty of the Society to transfer the right, title and interest of the deceased Member to the Nominee under a valid Nomination. This is made clear by a Ruling given by the Division Bench of Bombay High Court in Bombay Cases Reporter, 1998, Vol. 4, page 506. This issue is treated fully. In this case, a Member after filing a Nomination in favour of his wife revoked the Nomination and submitted a fresh Nomination in favour of someone who was not his relative. The Society, therefore, refused to accept this second Nomination. The Deputy Registrar and the Divisional Joint Registrar agreed with this second Nomination. The Deputy Registrar and the Divisional Joint Registrar agreed with this view of the Society but the Hon’ble Minister of State for Co-operation over-ruled this Ruling in a Revision Application. This was also challenged, and a judge of the Bombay High Court approved and confirmed the Ruling of the Minister of State. This was challenged in Appeal. The Division Bench, therefore, held that,
“Once there is a valid Nomination, the Society is obliged to deal with the Nomination. It is no part of its business to ascertain the heir or the legal Representative of the deceased Member. It only if there is no Nomination, that it is required to make inquiry in accordance with the procedure laid down in Sub-Rules 3 of Rule 25 of the Rules to find out. The reason for Nomination have been well summarised in 1982, Maharashtra Law Journal, pg. 65, by the Bombay High Court as under :
“It is very clear on a plain reading of Section 30 of the M.C.S. Act, that the intention of the Section is to provide for who has to deal with the Society on the death of a Member, and not to create a new Rule of Succession. The purpose of Nomination is to make certain, a person with whom the Society has to deal, and not create interest in the Nominee to the exclusion of those who in law, will b entitled to the Estate. The provisions for transferring the Share and Interest to a Nominee or to the heir or legal representative to be decided by the Society, is only meant to provide for interrugnum between the death and the full administration of the Estate and not for the purpose of conferring any permanent right on such a person to te property forming part of the Estate of the deceased. The idea of having this Section is to provide for a proper discharging to the Society, without involving the Society into the unnecessary litigation, which may take place as a result of dispute between the heirs or uncertainity as to who are the legal heirs or representatives.”
Therefore, the Society has to act upon a valid Nomination whether the Nominee is a relative, a friend or some unknown Party. The responsibility of the Society is over thereafter. However, a Nominee has the right to deal with the flat as he deems fit. He can sell it also, but he should know his responsibilities in acting in such manner. This is a matter to be settled between the Nominee and the legal heirs. If there is a Will wherein equal shares are given to the mother and the children, the mother is a Trustee for the children who are the beneficiaries. Simply because the name of the mother only is shown in the Share Certificate, she does not become the exclusive owner of the property since she is also a Trustee to look after the welfare of the children. But, as far as the Society is concerned, she is the only one with whom the society. The obligations between a mother and her children, as stated above of Trustee and beneficiaries, is an internal matter of the family, and the Society is not concerned with that. This mother has also a right to nominate someone of her choice for the flat, but that Nomination will be subject to the rights of the legal heirs (children).
Therefore, a Nominee does not become full-fledged legal owner of the flat disregarding the rights of the legal heirs of the deceased Member. The misunderstanding that a Nominee is the sole owner of the flat and the other family members are at the mercy of the Nominee is to be removed for all practical purposes. There may be as many Nominations one by one, but the last one officially recorded by a Society is to be acted upon.