Rights of Nominee v/s Rights of Legal Heirs – Property in a housing society

There has been some ambiguity on legal rights of nominee’s vis-à-vis the legal heirs.

One of the pertinent legal questions that have been put to test time and again before various courts is whether the rights of nominees prevail over those of the successors/legal heirs inter alia regarding the shares and interest of a member in a co-operative housing society.

In the matter of Indrani Wahi v. Registrar of Co-operative Societies and Others (“Indrani Wahi Judgment”), Indrani Wahi (being a married daughter) was made a nominee member by her father Biswas Ranjan Sengupta. The Deputy Registrar of Co-operative Societies did not accept her membership on the ground that Indrani Wahi being a married daughter did not fall within the definition of ‘family’ under the West Bengal Co-operative Societies Act, 1983. This order was challenged by Indrani Wahi before the Hon’ble High Court of Calcutta and was further appealed before the Hon’ble Supreme Court by Indrani Wahi, wherein the Hon’ble Supreme Court while allowed the transfer of share and interest of her deceased father in the society in favour of Indrani Wahi as a nominee, however, the Hon’ble Supreme Court also specifically observed in this regard that such a transfer in favour of a nominee would have no relevance to the issue of title between the inheritors or successors to the property of the deceased and it would be open to the other members of the family to pursue their case of succession or inheritance, in consonance with law.

Based on the observations of the aforementioned Judgment read with the Act, it can be concluded that the method of nomination in a co-operative housing society does not create any right, title and interest of the nominee in the property of the nominator. The nominee merely performs the function of receiving and holding the property of the deceased nominator until the time the legal heir(s) of the deceased nominator is established and the property is transferred in favour of such legal heir(s).

Transfer of interest on death of a Member.

Section 154B-13 of MCS Act

“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 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 Act 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.”

It is therefore clear that till any one of these documents (testamentary documents or succession certificate or legal heirship certificate or document of family arrangement) are produced by the legal heir, Provisional Member cannot be treated as regular Member.

A Family Arrangement is an agreement between members of the same family, intended to be generally and reasonably for the benefit of the family, either by compromising doubtful or disputed rights or by preserving the family property or the peace and security of the family by avoiding litigation or by saving its honour. The intention of the arrangement is to shield the family from long drawn litigation or perpetual strives which mark the unity and solidarity of the family and create hatred and bad blood between the various members of the family. Family arrangements are governed by a special equity peculiar to themselves, and will be enforced if honestly made, although they have not been meant as a compromise, but have proceeded from an error of all parties, originating in mistake or ignorance of fact as to that their rights actually are, or of the points on which their rights actually depend.

Validity of family Arrangements

Family Arrangements are rarely invalidated, as the Courts accord sanctity to their principal objectives of avoiding disputes and ensuring cordial family relations. Family Arrangements are likened to agreements under the law. Hence, they must satisfy all of the requirements of a legally enforceable agreement, such as the absence of fraud, undue influence or coercion. This is also why settlement memoranda cannot provide for future transfers which are contingent on the survival of certain family members until such future time, as uncertainties render agreements void.

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