Post Ordinance: Managing Succession in MAHA-CHS

By I C Naik

Every flat-owner’s desire is a hassle free transfer of the flat to his/her successor(s) after his death. Every Flat-purchaser must acquire membership of the Society to enjoy rights of occupying the flat. This right is as per the allotment letter issued by the Society. This letter is now made compulsory for all the housing societies including all the registered housing societies   in Maharashtra. Over the years Succession Management has not been hassle free. Where the nomination procedure as prescribed under the cooperative society regulatory regime was meticulously adhered to by the concerned flat-owner he would not find it burdensome at all.

In a judgment delivered in 2006 the veracity of similar provisions in West Bengal Housing Society case was upheld by the Apex Court in CIVIL APPEAL No.4646 OF 2006; Indrani Wahi  Vs Registrar Of Coop. Societies & Ors. The Apex Court allowed nominee’s plea of admitting her to the membership of the Society on the basis of valid nomination registered by his father. The Hon. Court however clarified that the ownership right under applicable succession law was left open to adjudication by the appropriate court if so required by any claimant.

Now Maharashtra has a recent State Ordinance promulgated on March 9^th 2019 amending the MCS Act 1960 with view to provide a simpler regulatory regime for housing societies in Maharashtra. A cursory look at the over-all scheme of the ordinance, creates serious doubts if it inspires a common member, a confidence in simplification in general and  succession management in particular. The reason seems to be, post Ordinance the Housing Society law is officially fragmented over the following five places:

1. Exclusive Chapter: “XIII-B Co-Operative Housing Societies”
2. Sections of the MCS Act 1960: Not applicable to housing societies.
3. Sections : applicable  mutatis mutandis to housing societies
4. Sections : continuing for all societies including housing societies
5. Rules: to be prescribed for giving effect to various provisions.

We are going to study the regulatory regime post ordinance concerning the succession management. Ease of managing succession has been made possible so far by Section 30 of the MCS Act 1960, which is equally in force for all cooperative societies post ordinance also: text of this section and the concerned Rules are extracted below:

S.30(1)“On the death of a member of a society, the society shall transfer the share or interest of the deceased member to a person or persons nominated in accordance with the rules* or, if no person has been so nominated to such person as may appear to the committee to be the heir or legal representative of the deceased member;

Provided that, such nominee, heir or legal representative, as the case may be, is duly admitted as a member of the society:”

 *Rules 25/26 of the MCR 1961;

25. Nomination of persons:- 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.

 (2) The nomination made under sub-rule (1) may be revoked or varied by any other nomination made in accordance with that sub-rule.

If there was no nomination by any member the Management Committee was authorized to identify the transferee, who is the heir or legal representative of the deceased in the opinion of the Management Committee.

A very recent step taken by the Government of Maharashtra is the promulgation of the Maharashtra Co-operative Societies (Amendment) Ordinance, 2019 on 9th March 2019 which came in to effect at once. Eventually this ordinance should be converted in to a State legislation hopefully before the current Assembly completes its tenure in October 2019.  The 9^th March Ordinance has however added some avoidable hassles for nominees before enjoying the ownership rights as a member even after his admission to membership.

Prominent feature of the Ordinance is an insertion of an exclusive “CHAPTER XIII-B CO-OPERATIVE HOUSING SOCIETIES. This chapter has a provision on nomination on the lines of Section 30 of the MCS Act 1960. This section 154B-13 is extracted below:

Section 154B-13: 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 heir ship 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 law 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.

In Indrani Wahi Vs Registrar Of Coop. Societies & Ors (supra) the Apex Court gave full marks to provisions of West Bengal law (similar to Section 30 of the MCS Act 1960) without disregarding the Succession Law. But the cooperative societies law has not been undermined (assuring ease of managing Housing Society by its voluntary members) at all. Succession under Section 154B-13 has accorded much wider pace to Law of Inheritance over ease of managing a Housing Society unfortunately. Nominee is admitted to membership of the Housing Society only provisionally having only right of voting [mischief of the 1^st Proviso to Section 154B-13]. Even Associate member can join the Management Committee with the consent of the original member but provisional member a rightful inheritor is devoid of such right as he does not have an original member. He must now run to the Court. Is this an ease of managing succession?