AHUJA NITESH
“LEGAL POSITION OF NOMINEE IN CO-OPERATIVE SOCIETY”
“Co-operative general society” as defined in section 2 (15) of the Maharashtra Co-operative Societies Act, 1960 means a society not falling in any of the classes of societies defined by the other clause of this section
.
According to Section 2(16) of The Maharashtra Cooperative Societies Act “Co-operative Housing Society” means a society the object of which is to provide its members with open plots for housing, dwelling houses or flats; or if open plots, the dwelling houses or flats as already acquired to provide its members common amenities and services.
The word nominee means a person who holds or acquire right, property or any other kind of liability incurred on behalf of others. Nominee means a trustee. Nominal ownership is a trust ownership. A nominee holds a property on behalf of other legal heirs.
Thus the simple meaning derived from above proposition is that a nominee cannot be a real owner but, in fact a trustee who has legal control of property that is kept or invested for another person, company or organization.
Procedure for nomination by a member of co-operative society is provided in bye laws of the cooperative Housing society, bye law no. 32, which runs. A member of the society may by writing under his hand in the prescribed form, nominate a person or persons to who the whole or part of the shares and /or interest of the members in the capital/property of the society shall be transferred in the event of his/her death.
Further no fees shall be charged for recording the first nomination.
Ø A members may revoke or vary his nomination, at any time, by making an application, in writing under his hand to the to the secretary of the society.
Ø Every nomination made, shall be recorded in register of nomination “within 7 clear days’’ from the date on which resolution to accept the nomination was recorded in minutes of managing committee.
Ø Every fresh nomination shall be changed a fee of Rs 100/-
Transfer of shares/of interest on event of death of member to a nominee It is clearly provided in section 30 of the Maharashtra co-operative societies act, 1960 (Act no. XXIV of 1961 Mah) that, on the death of a member of society, the society shall transfer the share or interest of the deceased member to person or persons nominated in accordance with the rules and byelaws.
Analysis of section 30
A nominee comes into picture only on death of the member
The society shall transfer the shares of the deceased member to nominated person.
Interpretation of section 30 of The M.C.S. Act 1960
It is clear on the plain reading of the section, that the intention of the society is to provide for whom has to deal with the society on the death of member rather than to create a new rule of succession.
The object is to avoid confusion in case there are disputes between the heirs and legal representatives and to obviate the necessity of obtaining legal representation and to avoid uncertainties as to with whom the society should deal to get proper discharge.
From requirements for making nomination, one may feel that nomination is will but Nomination is not a will
REAL STATUS OF A NOMINEE
The provision of nomination is found in various Acts for example L.I.C provident fund Gratuity but nomination does not create any right/title or interest in favour of.
In a recent case under the Insurance Act, the supreme court in Smt. Sarbati Devi V. Smt. Usha Devi reported in A.I.R 1984 Sc 346, held that it does not confer any beneficial interest in the nominee and other heirs can claim in accordance with law of succession governing them. Therefore nominee is mere trustee with whom the Society can initially or prima facie deal with and after the death of a member, all the heirs of the deceased member will have a right of succession to the property and nominee cannot exclude other heirs.
Since the provisions of ordinary succession law will not be affected by nomination, it is clear that society will have to transfer the shares in the name of nominee irrespective of any objection being raised by any other person until the aid objections obtain relief in the normal court against nominee and society.
GOPAL VISHNU GHATNEKAR
V/S
MADHUKAR VISHNU GHATNEKAR
1982, Mah L.R 122: 1982, Mh. L.J. 65:
A.I.R. 1982 Bom 482 (SJ)
The Bombay High court has held ‘’Even when a person is nominated or even when a person is recognized as an heir or a legal representative of the deceased member by virtue of the law governing succession are not lost and the nominee or the heir of legal representative, as the case may be hold the shares or interest of deceased for disposal of the same in accordance with the law’’.
The relation created between the society and nominee continues and subsists only till the estate is administered, either by the person entitled to administer the same or the courts or the rights of the heirs or persons entitled are decided in a court of law. Thereafter, the society will be bound to follow such decision. Execution of nomination does not create any title.
It is necessary to file Indemnity Bond by the nominee ?
In 2009, the Bye Laws were amended and as per Bye law no. 34 it is mandatory to file an indemnity bond by the nominee indemnifying the society against any claims made to the shares/ Interest of the deceased member
Rights Exercised by the nominee
As per Bye law No.26 ‘’A nominal member shall have no rights such as member till the original member is alive’’.
In view of the aforesaid facts and provisions of law governing rights of nominal member, the society has no other alternative except to transmit the shares in the name of the nominee and the person aggrieved may move to court of competent Jurisdiction for setting aside the decision in favor of nominee and obtaining relief for himself, since the society has to deal temporarily with the legal nominee who has been nominated by the deceased member on the records of the society.
A nominal member cannot inspect the records of the society. Nominal member cannot exercise any rights till the original member is surviving. Further a nominee cannot participate in Elections of society. The Maharashtra Cooperative Societies Act, 1960 does not confer to the nominee the to participate in discussion in the Annual General Body Meetings.
After the transfer of shares of cooperative society in favour of the Nominee, nominee cannot deal with the property (sale or transfer), till the period of one year has elapsed from the date of transfer of the shares in favour of the nominee. The reason behind this is that the Legislature has given period of 1year to the interested person to move the Court of competent jurisdiction for obtaining appropriate relief and for setting aside the decision of the Managing Committee or Registrar of Cooperative Societies in favour of the Nominee.
In the column TIMES PROPERTY dated Aug. 15th,2009, Legal Counsel, Advocate Rajan Hiranandani, while answering to the queries raised, stated that Nominee is only the Caretaker (trustee). Though the nominee may get Shares or property transferred in his name, but he would act only as trustee of the said property. He further added that, if a person does not make a Will, all next of his kin will become entitled to ownership of the property in event of his death, as per the law of succession applicable to him.
Advocate Jai Chinai in Times Property dated 10-02-2001, while giving legal guidelines has stated that, ‘’Once there is a valid nomination, no society can refuse to bring such nominees on record. Even if there is any dispute, such dispute cannot come in the way of the society for bringing the names of the nominee on records. However one must remember that nomination by itself does not give any ownership rights to the nominee.’’
NOTE
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The Maharashtra Cooperative Societies Act, 1960(Act 24 of1961. Mah.)
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The Bye Laws of Cooperative Housing Society.
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The Maharastra Cooperative Societies Act, 1960 as amended by Mah.2 of 2011.
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Smt. Sarbati Devi V. Smt. Usha Devi, AIR 1984 SC 346
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Gopal V Ghatnekar V. Madhukar V Ghatnekar, AIR 1982 Bom 482(SJ).
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Bye Laws of Cooperative Housing Society, as amended in 2009
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The Times of India- Times Property AUGUST 15, 2009 Pg. 9.
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The Times of India- Times Property FEBRUARY 10, 2001.
