Law Firm in India
March 11, 2023In this article, we will look at the rights of nominee as against the rights of the legal heirs in a housing property in light of the relevant judgments.
The issue surrounding the rightful ownership of assets post the death of the owner of the assets has been time and again dealt with. After the death of the owner of the assets, the question arises as to the rightful ownership between the two- the legal heir and the nominee. The legal heir is the person who is either appointed as one by the deceased through a will or if the deceased died intestate, then the legal heirs are defined as prescribed under the relevant succession law.
A nominee, on the other hand, is the person who is wilfully nominated by the owner of the asset to receive the benefits once he dies.
The ambiguity on the legal rights of the nominee vis-à-vis that of the legal heirs has been discussed in respect to several assets, including properties in housing societies.
Co-operative societies are governed by state legislation. Below is the legal position under different states: -
Maharashtra Co-operative Societies Act 1960- The Act under Section 25 states that the membership in a co-operative society of a member lapses on his death, however, his rights, interests and shares don’t extinguish. Thus, the provision of nomination by the member is made. As per Section 30, the rights and shares of a deceased member in a co-operative society shall be passed on to the nominee and in case of non-existence of nominee, then such shares shall be passed on to the legal heirs.
In 2019, the law was amended to suggest that the nominee shall never be treated as the owner of the share or benefit of the deceased in a housing or cooperative society.
The amendment proposed in 2019 states that once the rightful legal heirs submit a legal heir certificate to the housing society, they are required to transfer the share of the deceased to the legal heir. And when, during the pendency of obtaining such certificate, if the share is transferred to the nominee, then the nominee shall not be treated as the owner and he will not be allowed to transfer or deal with the property without a no-objection certificate from the people claiming to be the heirs. The amendment reaffirms that the nominee shall only hold the property in trust till the time legal heirs are not brought on record and he shall only act as a representative of legal heirs and not the owner.
West Bengal Co-operative Societies Act 1983- Section 79 of the Act states that a member of a co-operative society shall nominate a person in whose favour the interests and shares of such member shall be transferred in event of his death. Under Rule 127 of the West Bengal Co-operative Societies Rules, 1987, it is mentioned that the nomination can be made in favour of any member of the family, in writing, and if the member has no family, then the nomination can be in favour of any person.
Delhi Co-operative Societies Act, 1972- Section 26 of the Act states that on the death of a member of a co-operative society, the interest held by him shall be transferred to any person named as his nominee or if no nominee exists, then to such person who is the legal heir of such deceased member.
Rule 35 of the Delhi Co-operative Societies Rules 1973 provides for the nomination of a person, stating that a member of any co-operative society can nominate a person in writing and the statement of nomination shall be signed by him and one witness. On the demise of the member, the co-operative society is bound to transfer the interest to the nominee or successor, as the case may be.
Uttar Pradesh Co-operative Societies Act, 1965- Section 24 of the Act states that a member of a co-operative society should nominate a person who shall be getting the interest or share of such person in event of his death, and if no such nomination is made, then the legal heirs or the legal representatives shall come forth.
In this case, the Bombay High Court relied on the judgment given in the case of Sarbati Devi v Usha Devi and stated that as per Section 30 of the Maharashtra Co-operative Societies Act, the nomination is done under the act not to supersede or create an exception against the general principle of succession.
The court laid down that the role of a nominee in case of housing property shall be limited to that of a representative of the legal heirs of the deceased member and in no manner shall he/she be the successor replacing the rightful legal heirs. No rights and benefits are created and extended towards the nominee when the legal heirs are there. A similar observation was put forth by the Bombay High Court in the case of Shashikaran Ashok Parekh v. Rajesh Virendra Agarwal & Others.
The Indrani Wahi judgment is a much talked about judgment regarding rights of the nominee and legal heirs in housing property. In this case, Biswas Ranjan Sengupta had made his married daughter, Indrani Wahi a nominee member however, Deputy Registrar of Co-operative Societies didn’t accept the nomination on the ground that Indrani Wahi, being the unmarried daughter, didn’t fall under the definition of ‘family’ given under the West Bengal Co-operative Societies Act 1983.
The order given by the Registrar was then challenged by Indrani Wahi in the Calcutta High Court, from where she subsequently appealed to the Supreme Court of India. The Hon’ble Supreme Court of India finally put a full stop to the matter by stating that the share and benefits owned by Biswas Ranjan Sengupta will be transferred to Indrani Wahi since Sengupta had passed away. However, while pronouncing this judgment, the court made it explicitly clear that any transfer of interest to the nominee shall not hamper the rights of the legal heirs, who are free to pursue a suit of inheritance or succession under the law.
The above cases and laws put together suggest that it is the duty of the co-operative or housing society to transfer the deceased’s share in the property to the nominee mentioned by him, but he is only in the representative capacity and shall never be deemed to be the owner of such property. The nominee only holds the property in trust and the legal heirs shall be the ultimate owners as they are free to pursue a suit for inheritance or succession and once they obtain the relevant order, they can submit it to the housing society that in turn is required to transfer the property in the name of the rightful legal heirs or successors.
In finality, it can be concluded that the rule is for the nominee to stand only as a representative of the legal heirs and it is the legal heirs who will have the ownership rights in the housing property and not the nominee.
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