Nominee in the shares of a co-op society is not the owner

Nominee in the shares of a co-op society is not the owner

Due to the pandemic, many deaths of senior citizens happened in our country which is now likely to steer to the large load of litigation flooding our courts. Increasing death toll may cause a rise in succession and property-related disputes Posing problems with inheritance. Our law of succession is more or less settled as a result of various judgments of the Supreme Court and therefore the High Courts, the competing rights of the nominee, and therefore the legal heir has always been a matter of debate. This Debate will cover aspects of the inheritance of bank accounts, fixed deposits, and shares during a company.

But the foremost significance of all is that the aspect of inheritance of immovable property. There are situations where a member of the society is expired leaving quite 1 legal heir and having one person as a nominee in society record, in such a situation in whose favor shares are going to be transferred and who is going to be the owner???

Supreme Court held After some initial conflicting judgments of varied High Courts, the Supreme Court in 2016, within the landmark case held that a co-operative society was bound by the nomination made by the deceased which it had been sure to transfer the shares to the nominee. However, the transfer of shares in such a fashion doesn’t confer any right, title, or interest over the property in favor of the nominee.

The Supreme Court further held that it’s always hospitable for the legal heirs to pursue their case for succession or inheritance as per law. Therefore, co-operative societies must transfer the shares within the name of the nominee on the death of a member. This doesn’t mean that the nominee becomes the owner of the property. The nominee merely holds the property in trust for the legal heirs. The legal heirs of the deceased can always approach the acceptable court to stake their claim to their share of the deceased’s property including the flat/apartment in question.

Despite this clear position in law, several housing societies, once the shares were transferred s to the nominee as a member, allowed the nominee to transfers the Flat without insisting on getting the no-objection from the opposite heirs, who could also be otherwise entitled to the shares. Such societies freely gave their NOCs purchasable of the flat to 3rd parties.

the Maharashtra Co-operative Societies Act, 1960, which governs the law associated with societies including housing societies in Maharashtra, earlier provided under section 30 that the society, ‘Shall’ transfer the shares and therefore the membership of the Society to the Nominee. As such, the nominee then became a daily member of the Society.
Amendment by an Ordinance.

The Act has since been amended by way of an Ordinance in 2019 later enacted as a neighborhood of the law through an amendment within the same year. As per the newly introduced Section 154B-13 of the Maharashtra Co-operative Societies Act, 1960 (which override section 30 mentioned above), a society can transfer the interest of a deceased member within the flat only he produce a succession certificate, Letter of administration, Probate of WILL or heirship certificate or document of family arrangement has been produced by the legal heirs of the deceased member or person/ s entitled to the flat.

In view of the above, it is highly recommendable to file the testamentary petition through lawyers in Mumbai to avoid dispute between legal heirs, in case of death of a member of the society.