SUCCESSION, TRANSFER, AND TRANSMISSION OF SHARES IN SOCIETY

A peculiar case came up. The deceased a Hindu was a sole member of society. It was his self-acquired property. He dies suddenly without leaving a WILL. But the wife is a nominee. Out of wedlock, they have only one daughter who is major and unmarried. Wife applies for transmission of shares as per nomination. Shares are transferred by the society without any endorsement that it’s transferred in trust as a nominee or get succession certificate.

Now this widow, gifts 50% share to her daughter. This happens when parties prepare documents without consulting a lawyer to save money on professional charges. I am saying this because the daughter has by succession 50% right in the property as a member died intestate without leaving a WILL. There was no need of executing the Deed of Gift.

The twist is the case comes now, she applies for endorsement and transfer of 50% share ( which is otherwise there under the law) to the society. After several years Society takes opinion and now seeks a Succession Certificate. How far society is justified?

  1. We must first refer to bye-laws
  2. If there is a single nominee and if he demands payment of the value of Shares and interest of the deceased Member, in the capital/property of the Society, the Society shall acquire the same and pay him the value thereof as provided under the bye-law No.63. If, however, there are more nominees than one and if they demand payment of the value of the shares and interest of the deceased Member in the capital/property of the Society, the Society shall acquire the same and pay them value thereof as provided under the bye-law referred to above in the proportion mentioned in the nomination form. If no proportion is mentioned in the nomination form, the payment shall be in equal proportion.

Bye-law 135 (v). The managing committee of the Society shall take necessary precautions to see that no injustice is done to any widow in the cooperative housing Society after the death of a Member before transferring the flat in her name. In such cases, Society shall verify the nomination form duly submitted by the deceased Member or succession certificate /heirship certificate obtained from the Civil Court under the Indian Succession Act 1925 or Will of the deceased Member duly probated by the Civil Court through the executor of the will. After verifying and taking legal guidance Society then only can take appropriate action within the time limit to avoid further legal complications. This procedure can be followed in all cases after the death of a Society Member

  1. Section 30 of Maharashtra Cooperative Societies Act, 1960 provides that:

Section 30 – Transfer of interest on the death of a member

(1) On the death of a member of a society, the society shall transfer the share or interest of the deceased member to a person or persons nominated in accordance with the rules, or, if no person has been so nominated to such person as may appear to the committee to be the heir or legal representative of the deceased member.

Provided that, such nominee, heir, or legal representative, as the case may be, is duly admitted as a member of the society:

Provided further that, nothing in this sub-section or in section 22 shall prevent a minor or a person of unsound mind from acquiring by inheritance or otherwise, any share or interest of a deceased member in a society.

(2) Notwithstanding anything contained in sub-section (1), any such nominee, heir or legal representative, as the case may be, may require the society to pay to him the value of the share or interest of the deceased members, ascertained in accordance with the rules.

(3) A society may pay all other moneys due to the deceased member from the society to such nominee, heir or legal representative, as the case may be.

(4) All transfers and payments duly made by a society in accordance with the provisions of this section shall be valid and effectual against any demand made upon the society by any other person.

  1. Maharashtra Cooperative Societies Rules , 1961    2. Nomination of persons:- For the purpose of transfer of his share or interest under sub-section (1) of Section 30, a member of a society may, by a document signed by him or by making a statement in any book kept for the purpose by the society nominate any person or persons. Where the nomination is made by a document, such document shall be deposited with the society during the member’s lifetime and where the nomination is made by a statement, such statement shall be signed by the member and attested by one witness.

(3) (i) Where a member of a society has not made any nomination, the society shall on the member’s death, by a public notice exhibited at the office of the society, invite claims or objections for the proposed transfer of the share or interest of the deceased within the time specified in the notice.

(ii) After taking into consideration the claim or objections received in reply to the notice or otherwise, and after making such inquiries as the committee considers proper in the circumstances prevailing, the committee shall decide as to the person who in its opinion is the heir or the legal representative of the deceased member and proceed to take action under Section 30.

MY ANALYSIS :

  1. Please note that the Probate/Letters of Administration/ Succession Certificate is not a document of title but it’s a method of distribution of the property of the deceased by executors.
  2. My View

In this case, Society management has shown ignorance and unlettered of law. They transfer the share certificate to the nominee after taking NOC from the daughter. Now after 5-6 years they seek a succession certificate to transfer 50% of the share in a property to the daughter who is the only child, which is already there. In my view this demand is absurd.

In my view what society can do is to take a personal guarantee on Rs.500/- stamp paper duly notarized and can enter the name of the daughter on the basis of the gift deed which is duly registered. Another point is the said flat is the self-acquired property of the deceased member so if the wife and daughter are living they have the first right in the property as per Hindu Law.

 

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Is Succession Certificate mandatory? Read the following link

https://shrutidesai.in/can-society-insist-on-succession-certificate-for-transfer-and-sale-of-a-flat-and-share-certificate-attached-thereto/

 

SHRUTI DESAI

6th September,2022