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 the property of the deceased Member in the society to a Tikam 8/11 Wp. 12468 of 222.odt person or persons on the basis of testamentary documents or succession certificate or legal heirship certificate or document of family arrangement executed by the persons, who are entitled to inherit the property of the deceased Member or to a person duly nominated in accordance with the rules:
Provided that, society shall admit nominee as a provisional Member after the death of a Member till legal heir or heirs or a person who is entitled to the flat and shares in accordance with succession law or under will or testamentary document are admitted as Member in place of such deceased Member:
Provided further that, if no person has been so nominated, society shall admit such person as provisional member as may appear to the committee to be the heir or legal representative of the deceased Member in the manner as may be prescribed.”
Thus as of now in terms of Section 154B-13, as inserted w.e.f. 9th March, 2019, 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 the 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 a member in place of the such deceased member.
MY CONCLUSION AND COMMENTS :
Here is my blog on the same issue:
Ingredients of Section 154 (B) 13 :
The nominee/ legatee should be admitted as a member
- testamentary documents or ;
- succession certificate or ;
- legal heir-ship certificate or;
- document of family arrangement executed by persons, who are entitled to inherit the property of deceased member or;
- to a person duly nominated in accordance with the Rules;
- if no person has been so nominated, society shall admit such person as provisional member as may appear to the committee to be the heir or legal representative of the deceased Member in the manner as may be prescribed
There are incidents where Managing Committee does not transfer/transmit shares for a decade. They neither admit nor reject. In such cases, there is auto-deemed membership. But still, members avoid litigation because one has to pay to own a lawyer and also the lawyer of society. I have come across such incidents. Members are not willing to fight and do not adopt other processes. Especially single ladies or widows. Government must impose heavy penalties if Committee defaults.
Probate/Letters of Administration is not a document of title. It’s permission to administer the estate of the deceased. In such case, if all the legal heirs have given a No Objection Certificate there shall not be an insistence on Probate which is a very expensive, long-drawn-out process, and also chances are there of majority Probate application converted to suit and property is stuck in litigation for decades. This affects heirs and also single woman’s rights. She will have to compromise her share with her in-laws even if the flat is a self-acquired property.
Moreover, Managing Committee hides agreements from AGM under the garb of the Law of Privacy which is the main ground of manipulation. They act on their own people’s application and avoid on-step members.
There are incidents where the wife of a Committee Member informs on the phone about the non-transfer of shares in such cases.