The Act requires a member to nominate a person/s to whom his share and interest in the co-operative society shall be transferred by the society in the event of such member’s death. There has been some ambiguity on legal rights of nominees’ vis-à-vis the legal heirs. It is to be noted 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). In this article, we seek to give clarity on the fundamental principles of law pertaining to the nomination under MCS Act, 1960.

• Objectives of Nomination
• Who can Nominate?
• Who can be Nominated?
• Procedure to Record Nomination
• Role of Nominee after Death of Member
• Role of Society after Death of Member
• Procedure When There is No Nomination
• Rights of Nominee
• Rights of Nominee and Rights of Legal Heir
• Conclusion

Objectives of Nomination under MCS Act, 1960:

The purpose of nomination under MCS Act, 1960 is to ensure a smooth transfer of rights and avoid potential disputes among legal heirs. The objectives of nomination can be summarized as follows:

• Legalising Legacies: Nomination is a strategic move to safeguard a legacy. Members commonly nominate their children or relatives, designating them as legal heirs. This is crucial, especially when minors are involved, as they cannot legally hold title to the property. The nomination process protects the rightful heirs and ensures that the property remains within the family fold.
• Legal Compliance: Many societies require members to nominate a person or persons to avoid complications later. This helps the society ensure compliance with rules and makes it easier to update records when necessary.
• Avoids Disputes: By nominating someone, the member can help reduce the likelihood of disputes between legal heirs after their passing. While a nominee is not the ultimate legal heir (which is determined by inheritance law), the nomination simplifies the initial process of transfer within the cooperative society.
• Interim Custodian: The nominee is essentially an interim custodian of the property. The final ownership rights are subject to inheritance laws and claims from legal heirs, but the nomination provides a stopgap solution to manage the property and society-related affairs.
• Operational Convenience: The society typically deals with the nominee as the legal point of contact after the death of a member. This makes day-to-day functioning easier as the nominee can participate in meetings, pay maintenance fees, and manage the flat’s upkeep until final legal formalities are completed.
• Streamlining Procedures for the Society: For the cooperative housing society, having a nominee ensures there is a clear line of communication and responsibility for managing the unit. This helps avoid administrative delays in handling member affairs after their death.

A nomination in a cooperative housing society provides a provisional solution for ownership transfer and prevents unnecessary legal complications, while still allowing the legal heirs to claim their rights under the applicable inheritance laws.

In Ramdas Shivram Sattur v. Rameshchandra and Others, 2009 (3) BomCR 705, case, the Bombay High Court, clarifying the legality of the nominee, held that, Section 30 of the Act, which prescribes provision on transfer of interest on death of member, does not lay down any special rule of succession altering the rule of succession laid down under the personal law. It further stated that the role of the nominee who has been validly appointed under the provisions of the Act is only to represent the legal heirs of the deceased member while dealing with the society, and no interest in the property is created in favour of the nominee to the exclusion of those who in law are entitled to the estate of a deceased member.

In Karan Vishnu Khandelwal Vs Chairman/Secretary, Vaikunth CHS Ltd ( Writ petition No- 12468 of 2022) case, the Bombay High Court clarified that a ‘Nominee (in whose name a Nomination Form has been validly submitted by the deceased Owner) shall be admitted, only as a provisional member, 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 member in place of such deceased member. The Nominee is thus entitled to become only a provisional member who is not eligible to sell the flat till the Society is provided with court order granting ownership to any Legal heir(s).

In Indrani Wahi v. Registrar of Co-operative Societies and Others (Civil Appeal 4930/2006) (“Indrani Wahi Judgment”) case, 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..

Who can Nominate?

According to Section 25(1) of the MCS Act, 1860 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 life time and where the nomination is made by a statement, such statement shall be signed by the member and attested by one witness.

• The original member of the society who is Title Owner of the property can nominate in prescribed format in his life time. This prerequisite underscores active participation and belonging within the societal structure.
• Only individuals who are mentally fit and over the age of 18 are eligible to engage in the nomination process. This ensures that those making nominations are of sound mind, and capable of making informed decisions.
• Such statement of nomination shall be signed by the member and attested by two witness.
• Such document of nomination shall be deposited with the society during the member’s life time
• Such nomination made may be revoked or varied by any other nomination made in accordance with the prescribed procedure.
• Nomination is a function of individual affiliations and organisational capacities should stay out of it. Hence, corporate entities, including partnership firms, LLPs, private/public companies, trusts, NGOs, HUFs, and societies, are barred from participating in nomination.
• 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.

Who can be Nominated?

• The person to be nominated must be a living Indian citizen at the time of nomination.
• Legal heirs, relatives, or beneficiaries are prime candidates for nomination. This stresses the importance of lineage and familial ties in the nomination process.
• There may be non-legal heirs and beneficiaries as well.
• A solicitor or lawyer or custodian can be appointed as nominee. This fulfils the trust and guardianship roles in the nomination dynamics.
• Nominees cannot nominate themselves for the same position as he is not a Title Owner.

Procedure after Receiving Application of Nomination:

The nomination process unfolds through a series of structured steps, ensuring transparency and adherence to regulations.

• According to sub rule no. 32 and 33, the member can make an application in the prescribed from to the society for nomination.
• The acknowledgement of the nomination by the secretary shall be deemed to be the acceptance of nomination by the secretary.
• No fees shall be charged for recording the first nomination. If member has revoked his first application in writing, then after that every fresh nomination shall be charged a fee of Rs. 50/-
• Society has no right to refuse nomination.
• If member has registered his nomination then earlier deemed to be cancelled.
• On receipt of the nomination it is binding on the secretary to register the nomination in the register book within seven days by taking note in the first managing committee meeting. Similarly to adopt the same procedure as per sub Section 33 is binding for second time nomination was given by cancelling previous nomination.
• The Nomination Register and the Original Nomination Form, should be preserved life-long in the Society’s records, failure of which would imply and invite Criminal prosecutions, subject to certain parameters.
• The Nomination Register and Nomination Form shall NOT be mutilated /altered /modified, under any circumstances, without the written approval of the ward cooperative registrar, that too after following due procedure of law.
• The Photo Copy of the Original Nomination (of Society’s record) shall not be given to “anybody” under any circumstances, failure of which would imply and invite Criminal prosecutions, subject to certain parameters.
• Society should not give any type of NOC to the nominee.
• Society should not allow any meeting or proceedings of the society.
• A Nominee has no “Title-Ownership” right over the deceased Title-Owner aka Members Property (Flat), hence is not liable “in any possible manner”, for any civil liability or claim or auction or attachment proceedings, whatsoever.

Role of Nominee after the Death of Nominator (Original Member):

• In the event of death of the member nominee / nominees shall submit the application for membership.
• If there / are more than one nominee on the death of a member, such nominee shall make joint application to the society and indicate the name of the nominee who should be enrolled as member. The other nominees shall be enrolled as its Associate member unless the nominees indicate otherwise.
• The nominees shall also file an Indemnity bond in the prescribed form indemnifying the society against any claims made to the shares and interest of the deceased member in the capital/ property of the society by any of them.
• A person has made nomination to the membership by nominating anyone. That nomination do not supposed acquired full right of ownership to them. They have to approach competent court and legal ownership to society and beneficiary of shares and interest in property of society and concerned person provides legal and proper documents to society.
• Nomination given to member by society because of makeable the member to issue correspondence after original member’s death. Member is airing membership by nomination as trustee of property and not acquiring ownership right.

Role of the Society after the Death of Member:

• The managing committee of the society shall verify the nomination form duly submitted by the deceased member and the Will of the deceased member duly probated by the appropriate court through the executor of the Will or the letters of administration or the succession certificate obtained from civil court under the Indian Succession Act 1925.
• The Society will act on the nomination immediately on death of the member and transfer the share or interest to the nominee, without waiting to find out who the actual owner of the share or interest is, so that there is no hindrance in the functioning of the society. Apart from this, the nomination has no legal effect and it cannot deprive the heir or legatee of his right to the share or interest of a deceased member. Nomination cannot override the general law of succession.
• When a nomination is made in accordance with law, the society cannot make any inquiry or invite any objection. The share or interest of the deceased member must be transferred in the name of such nominee/s.
• In the absence of any person being nominated, the society shall transfer the share or interest to such person as may appear to the managing committee to be the heir or legal representative of the deceased member provided he is duly admitted as a member of the society.

Procedure where there is No Nomination by Member:

• Bye law No. 35 provides that where a member of the society dies without making a nomination or no nomination comes forward for transfer, the society after knowing this shall display such a notice in the prescribed form exhibited on the notice board of the society. It shall also publish such notice in at least two local newspapers having wide circulation.
• The society should invite claims regarding property or objections of deceased member through this notice.
• The Managing Committee by considering the claims received after the notice should select the legitimate representative of the deceased member as per provisions of the bye laws No. 17 (a) and 19. Provided that he gives indemnity bond along with his application for membership in the prescribed form indemnifying the society against any claims made to the share and interest of the deceased member in the capital property of the society at any time in future by any person above taking and the society could approve the membership.
• If there are more than one person then such nominees shall make a joint application to the society. Society should give first person membership and to others co-membership. Such person should not be owner by this transfer. He should be a trustee. The society should make aware of this fact to them.
• Society should also make aware to them that legal heirship certificate from the competent court regarding ownership of the property is essential.
• However, if there is no consensus among the person came forward after this notice the society can inform to all such members claiming heirship that they should bring legal heirship certificate from the competent legal machinery and then only membership will be transferred.

Rights of Nominee:

• Upon the death of the member, the nominee will be entitled to all the rights in the member’s shares to the exclusion of all other persons, provided the prescribed procedure for nomination is followed.
• The shares of the member are transferred to the nominee, which transfer will effectually discharge the society against any other person making a demand. But such a transfer of shares cannot and does not result in vesting of the flat in such nominee.
• As stated above, such nominee is merely a trustee for the estate of the deceased until the estate passes by will or intestacy. The nominee shall hold the flat/unit in trust until all the heirs are brought on record and shall not have the right to ownership and shall not create any third party interest.
• The society is not concerned with disputes amongst the heirs of the deceased. Section 30 of the Maharashtra Cooperative Societies Act allows the society to transfer the shares of the member to a nominee and the transfer will be valid against any demand made by any other person upon the Society.

Distinction between Rights of Nominee and Rights of Legal Heir

The rights of a nominee and the legal heirs in the context of a cooperative housing society can differ significantly, as they are governed by different principles.

Rights of Nominee	Rights of Legal Heir
A nominee in a cooperative housing society is essentially a trustee or custodian of the deceased member’s share in the property.	Legal heirs have the right to the deceased person’s property as per the laws of succession. In India, this could be governed by personal laws (Hindu Succession Act, Muslim Personal Law, etc.), or by a will if one exists.
The nominee is not the owner of the property but acts as a temporary caretaker.	The legal heirs can claim their share of the property, even if someone else has been nominated.
After the death of the original member, the society usually transfers the flat and share certificates to the nominee, giving them the right to represent the deceased in matters related to the society (like paying maintenance fees, attending meetings, etc.).	Legal heirs are the true beneficiaries of the deceased’s property. Even though the nominee may have received temporary rights over the flat and share certificates, the legal heirs have the legal right to the property under inheritance laws.
The cooperative society transfers the deceased member’s shares to the nominee, but this transfer is subject to legal inheritance procedures.	In case of a conflict between the nominee and the legal heirs, the legal heirs have the upper hand.
The nominee holds the property on behalf of the legal heirs until a final legal determination is made.	Courts have repeatedly ruled that the nominee is merely a trustee and the rightful ownership of the property must go to the legal heirs as per the applicable succession laws.
The nominee does not have full ownership rights over the property. While they can manage the property and represent it within the society, they do not automatically become the legal owner, unless they are also a legal heir or explicitly named in a will.	Once legal heirs establish their claim, they can partition, sell, or transfer the property as per mutual agreement or through legal procedures.

If a member of a cooperative housing society nominates their spouse, but their children are legal heirs under succession law, the society will transfer the shares and flat to the spouse (nominee) after the member’s death. However, the children (legal heirs) can claim their share of the property, and ultimately, the property will be divided among them according to the law. Thus, while a nominee can manage and temporarily represent the property in the society, the ultimate ownership rights lie with the legal heirs under inheritance law.

Conclusion:

In a cooperative housing society, nomination serves as an administrative tool that facilitates the smooth and immediate transfer of a deceased member’s shares and management rights to a nominee. However, it is important to understand that the nominee is not the ultimate owner of the property but merely a custodian or trustee. The nominee can represent the deceased member’s interests in the society but does not have absolute ownership rights unless they are also a legal heir. The true ownership of the property is determined by inheritance laws, and the legal heirs have the final say in claiming their rightful share of the property, as per the applicable succession rules. Courts in India have clarified that the nomination does not override the rights of legal heirs; it is intended only to facilitate a smooth transition in society matters.

Thus a nomination provides a provisional solution for society administration. It ensures continuity in the management of the flat but does not determine legal ownership. Legal heirs retain the ultimate right to inherit the property, which can be contested and distributed according to the law. To avoid future disputes, it’s important for members to complement nominations with clear wills or succession plans to ensure their intentions are honoured.