Rights of Nominee V/s Rights of Heirs

There existed some ambiguity about the Rights of a Nominee versus the Rights of an Heir under the Maharashtra Co-operative Societies Act, 1960 and this has been subject to a lot of discussion. This ambiguity was compounded further as the Nomination Form under Appendix 14 (Under Bye-Law 32) also has a column for filling in the Share of each Nominee (percentage) and mentions that upon death of the member the shares and interest in the flat should be transferred to the nominee.

This ambiguity between the rights of a Nominee versus an Heir has been laid at rest by various judgments including that of the Supreme Court of India.

The law is settled beyond doubt that if the deceased member had made a valid nomination, the Society is bound to transfer the shares to the name of the Nominee. Such nomination does not create any right, title or interest in the shares/flat in favour of the nominee the nominee does not become the owner of the shares/flat.. The nominee only holds the shares as a trustee for the heirs of the deceased member who are entitled to the estate of the deceased member till such time as the same is transferred to their names. The nominee is merely someone with whom the society can deal with after the death of the member. The MCS Act does not lay down any special rule as to succession. The relevant personal law of succession will continue to apply and the heirs of the deceased will be entitled to ownership rights in the said shares and flat.

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