Shankar Nair
Mr Shankar Nair has posed a short question: how can a Joint Purchaser (Associate Member) appoint nominee for his share in the Flat.
I C Naik
There are several baffling bye laws in both the subsequent Model Bye Laws approved by the Commissioner and Registrar of Cooperative Societies (2001 and in 2009) as also in the new Model 2013 (Draft) posted on official website of the State Government. Use this URL to look at the same:
The Associate Member seems to be a hot favorite in the office of the Commissioner and Registrar of Cooperative Societies Maharashtra Pune to create confusion in the minds of management of cooperative housing societies. One reader of www.indiancooperative.com some time back rightly suggested to dispense with the concept of ASSOCIATE MEMBERSHIP to get rid off the headache it can give to the Committee. But sounds like a maxim that “if the headache is not leaving the head, chop the head off!!!”.
Bye-Law No 34 [Model 2001, 2009 and 2013 (Draft) reads as under:
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.
My candid advice is : Having regard to the overall scheme of cooperative housing societies, not to burden its management too much about membership issues, I have to call for red alert against inserting the phrase namely “and in proportion with the shares and interest held by the deceased member, in case property is purchased by member and associate member jointly.” I would add that the intention is not bad as it’s a reflection of the State’s concern to protect the legal right of the Joint owner of the property and the flurry of potential complications seem to have escaped attention of the drafter of this Bye Law.
Even the transfer of Property Act 1882 (still in force) recognizes [44. Transfer by one co-owner] that when one of two or more co-owners of immoveable property transfers his share of such property or any interest therein, the transferee acquires such share or interest. It however also says that “ Where the transferee of a share of a dwelling-house belonging to an undivided family is not a member of the family, nothing in this section shall be deemed to entitle him to joint possession or other common or part enjoyment of the house.”
So this later part in this section is a source of strength to my argument. In fact there is a conflict in State Law (Section 30 of the M C S Act 1960 ) and Central law (Section 44 as above) and of course the Central law is final.
It would have been better if Section 30 has built in a similar preventive clause for Joint owner’s share in the interest in the capital/property of the society.
I would try to reason out the red alert in the following.
1.The management of the housing societies is not required to take cognizance of the joint ownership of the member’s share and interest in the capital/property of the society. For the management for all purposes the Cooperative Society Law lay emphasis in dealing with the first holder (original member as is referred to in some Bye Laws) as a member of the Society.
(i) For getting admitted as a member of cooperative housing society, the Bye Law 19 requires the applicant to send, along with the application for membership of the society, a certified copy of the agreement,(duly stamped) entered in to by him with the Promoter (Builder) under section 4 of the Ownership Flats Act. Or transferor under Section 4 of the Ownership Flats Act.
(i) In this no distinction is made if there were joint purchasers of the flat.
(ii) Joint Purchasers are not required to specify their respective shares.
(ii) Even for Registration of the agreement under Maharashtra ownership of Flat Act no such requirement is specified.
(iii) The Associate member is not given any express right in the society management except that of voting in the general body meeting if the original is not able to make it, so his vote does not go waste [Section 27(8)]
(iv) The Cooperative Society Law vide Section 24(2), keeps it open to original members of the cooperative society to confer any of their individual rights to Associate member by specifying the same in the Bye Laws: 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.”
(v) In Section 27(8) there is no mention of Associate Member.
(vi) All three Models have same numbers of Bye Laws providing for right of Associate member. Bye-Law No 25 says. “No associate member shall have any rights or privileges of a member except as provided under Section 27(2) of the Act.”
(vii) Section 27(2) reads “(2) Where a share of a society is held jointly by more than one person, the person whose name stands first in the share certificate, if present, shall have the right to vote. But in his absence the person whose name stands second, andin the absence of both, the person whose name stands next, and likewise, in theabsence of the preceding persons the person whose name is next on theshare certificate, who is present and who is not a minor, shall have the right to vote.
(viii) In fact Happy Go Lucky Bye Laws have identical provisions as above except that numbers are 26 and 27 in place of 25 and 26.
2.Section 30 of the M C S Act 1960 is in Chapter VII – MEMBERS AND THEIR RIGHTS AND LIABILITIES. It’s Sub-Section (1) reads as under:
a. Section 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:
b. The Society recognizes the original member as holder of the share or interest in the capital/property as reasoned out in Paragraph 1 above.
c. The Rule 25 referred to in Section 30 reads as under: “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.
d. As aforesaid nominating a person is a right of a member which no Bye Laws confer on the Associate member. Even for his share if any as a joint purchaser, right of appointing nominee is vested in the original member.
e. Transfer of only the deceased member’s share in the Capital/property of the Society (flat) leaving out the share of the associate member without a nominee,(as the Associate does not have a right to nominate) will create an uncertainty about the ownership/liability to society in respect of that share.
f. More over upon death of the original member as per Bye-Law No 60 of Happy Go Lucky c h s (Bye-Law No 58 in all other Models)associate member ceases to be a member of the Society. Bye Law 62A requires the Committee to inform the Associate member that he has ceased to be the member. How can he deal with any share in the Capital/property of the Society, when he is not a member?
So where are we?
If Happy Go Lucky C H S goes by my advice, as there is little choice, it cannot be ruled out that the Registering Authority will let go the Bye-Law No 36 of Happy Go Lucky C H S as it is and without insisting for inserting the above phrase therein.
The response to such pressure could be to ask for informal approval to making further amendments to several Bye Laws as under:
1. Amend Bye Law 19 for Joint Purchasers to specify their respective Shares.
2. Provide this right of nomination to Associate member under Bye-Law No 25 only to a nominee who is a member of the undivided family of the original member.
3. Amend Bye-Law No 34 to enable Associate member to file nomination jointly with the original member, and a provision that a member in case of death shall be registered as Associate member.
4. Prescribe a new Nomination form to be used by Joint holders providing an undertaking the nominee of Associate member.
5. Also amend Bye Law 60 that Associate member having his name in purchase agreement with a share specified then he shall continue to be Associate member.
6. Change the Form 14(2) wherein multiple Nominees are possible but Associate cannot nominate so provide for a form for him.