Membership of a housing society represents a right in the share of the capital/property of the housing society. It is a transferable right against consideration or by inheritance. As a matter of simplicity of management the Society State cooperative law has taken recourse to the nomination facility and conferred necessary right to a member and prescribed procedure for smooth transfer under above Section and Rules.
This is explained briefly as under:
The Law:
1. The managing committee is obliged to transfer the share or interest of the deceased member to person(s) nominated, provided that, such nominee(s), is/are duly admitted as members of the society:
2. If no person has been so nominated transfer is to be made to such person as may appear to the committee to be the heir or legal representative of the deceased member as per procedure explained below.
3. The Committee is required to pay to him the value of the share or interest of the deceased members, ascertained in accordance with the rules if the nominee, heir or legal representative, may so require.
4. The managing committee is protected by provision that “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.”
The Procedure:
1. 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 one or more persons.
2. Where the nomination is made by a document, such document shall be deposited with the society during the member’s life time
3. Where the nomination is made by a statement, such statement shall be signed by the member and attested by one witness.
4. The nomination made under sub-rule (1) may be revoked or varied by any other nomination made in accordance with that sub-rule.
5. 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.
6. The name and address of every person nominated for the purposes of sub-section (1) of section 30 and any revocation or variation of such nomination shall be entered in the member’s register kept under rule 32.
The Conflict
BACKGROUND
1. Associate members are of two types.
a. One whose name appears in agreement with the Builder certified copy of which a member is required to submit along with membership application.
b. The other who is admitted against application of original member to admit a person as Associate member against payment of entrance fee.
c. Name in both the cases appear second on the Share Certificate.
2. Rights of Associate members
Section 24 (2) provides that ‘A nominal member shall ordinarily not have any of the privileges and rights of a member, but such a member, or an associate member, may, subject to the provisions of sub-section (8) of section 27, have such privileges and rights and be subject to such liabilities of a member, as may be specified in the by-laws of the society.
The Issue
Nominating a person is a statutory right of a member which obliges the Committee to transfer deceased member’s share to such nominee. The member may not nominate a person obliging the Committee to look for rightful transferee. General notion amongst members is that joint owner or Associate member steps in to the shoes of original member upon his death without any hassles. Provisions of Section 30 as we saw earlier do not support this notion. So the Joint purchaser being part owner, unless nominated, cannot be admitted to membership just because he is a Joint Purchaser or an Associate Member.
The Solution is easy
a. Section 24(2) allows cooperative society to confer rights on Associate Member through the ByeLaws. Section 23 of Goa Co-operative Societies Act 2001 directs cooperative societies to admit the Joint Member (corresponding to ‘Associate member’ under the M C S Act 1960) as a member when the first named member dies. Registered Nominee takes the place of Joint Member and his name is entered second on the Share Certificate.
b. As the M C S Act 1960 has left it to a cooperative society to confer rights of members to Associate members through a Bye Law provision, the societies can amend the Bye Laws and confer the right to be admitted as member with the first name on the share certificate upon death of the first named member. The nominee can be admitted as a second member.
UNSOLICITED ADVICE
Housing societies having Bye Laws as per 1984 Model are well advised to take this course as soon as possible because the Model Bye Laws 2001, 2009 1nd 2013 (draft) have some mischievous provision as reproduced below. :
a. Bye-Law No 34.Subject to the provisions of the Section 30 of MCS Act 1960 bye-law No. 17A or 19, on the death of a member, the society shall transfer the shares and interest of the deceased member in the Capital/Property of the society to the Nominee/Nominees and in proportion with the shares and interest held by the deceased member, in case property is purchased by member and associate member jointly.
b. Following note proposed to be added to bye-law no 34 under model 2013 is deadlier:
“Note:- In case of acquiring membership on the basis of nomination, such member shall hold the flat/unit in ‘Trust’ till all the Heirs are brought on record and shall not have the right to ownership and shall not create the third party interest.”
c. The implication of this note is that the nominee has to proactively look for heirs and get the No Claim letters from each one, before selling his share in the capital/property of the Society. If this note is inserted members are making the life of their heirs a hell. This note corrodes the right of member and is in not in conformity with the provisions of Section 30 of the M C S Act 1960. It is unimaginable that in spite of this clear interpretation, such a note is being proposed by the Commissioner and Registrar of Cooperative Societies.
—I C Naik