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PREVAILING LAW RELATING TO THE TRANSFER AND TRANSMISSION OF SHARES ON THE DEATH OF A MEMBER  SHORTCOMINGS

November 14, 2022

 This  blog comes in wake of a judgment I came across of the Bombay High Court in the matter of  Karan Vishnu Khandelwal Omdham Cooperative Housing Society Ltd. Vs Deputy Registrar -K-West In this matter facts of the case were as under: Mannalal Surajmal Khandelwal (deceased) was owner of a flat no.1 and by virtue thereof, was entitled to share certificate. The deceased during his lifetime registered a nomination in the name of Petitioner- his grandson. The nomination was acknowledged by the managing committee of the society in it’s meeting held on and made an entry in the nomination register. Mr. Mannalal Khandelwal died intestate on 20thJanuary, 2011, leaving behind, Rajendra Mannalal Khandelwal (Son- Respondent No.2); Krishnakumar Mannalal Khandelwal (Son); and Petitioner- son of Vishnu Mannalal Khandelwal (predeceased son of deceased). That upon demise of Mannalal Surajmal Khandelwal, Respondent No.2 – Rajendra M. Khandelwal, made an application to the society, inter alia, seeking transfer of membership and the share certificate in his name. Along with the application, he submitted a No Objection cum Declaration’ and indemnity bond made and executed by Krishnakumar Mannalal Khandelwal. This way, the Respondent No.2 claimed 2/3rdshare and interest in the flat and sought transfer of proportionate interest in flat and claimed membership. The application was rejected by the society on 8thAugust, 2018. Whereafter, the Respondent No.2 preferred an appeal under section 23 (2) of the Maharashtra Societies Act (‘MCS Act’ for short), being Appeal No. 09 of 2019 before the Deputy Registrar. The Petitioner sought intervention in the said appeal. The Intervention was allowed. The Deputy Registrar vide order dated 8thFebruary, 2021 allowed the appeal and held that since the Respondent No.2 has acquired 2/3rdright in flat No.1, to that extent, his interest be noted in the society record. In consequence, the Deputy Registrar acknowledged 2/3rdundivided right of the Respondent No.2 and 1/3rdundivided right of the Petitioner in flat No.1 and directed to make entries in the society records. In revision, the Divisional Joint Registrar upheld the order of the Deputy Registrar and dismissed the revision application of the Petitioner. Feeling aggrieved by that order, the Petitioner has filed this petition. MATTER BEFORE BOMBAY HIGH COURT WHEN ERROR OF LAW OCCURRED The matter when came up before the Bombay High Court, the court observed that Registrar passed the impugned order in haste may be at the behest of respondent No.2. Therefore, the impugned order not only suffers from gross irregularity being passed in breach of principles of natural justice but also against the law, and therefore, deserves to be quashed and set aside. While passing the Judgement Bombay High Court relied upon Indrani Wahi Vs. Registrar of Co-operative Societies (Civil Appeal 4930/2006), held that the cooperative society was bound by nomination made by the deceased and it was bound to transfer the shares to the nominee While passing the Judgment Hon’ble Court it relied upon the provisions of Section 154-B(2) of Maharashtra Cooperative Societies (Amendment) Act, 2019. In any event, by. It reads under:     “154-13. On the death of a Member of a society, the society shall transfer share, right, title and interest in […]

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