A Study (Critique)

1.PREAMBLE

It is commonly known (or expected to be known/beware) that in respect of the property rights in/to an Apartment, its ‘owner’ has to decide, even while alive, as to whom (one or more persons) he intends those rights should, on his demise, instantly pass on.

And, in order to give effect to such intention, broadly speaking, there are two options open:

One is to execute a WILL; and the other is to submit to, and have placed on the record of his housing association, a ‘NOMINATION’.

Even so, a controversy has been floated around – impudently, or unwittingly so, – whether or not, owner of an Apartment should resort / have recourse to both the referred options. To put it differently, in essence, the point of controversy raised in limited quarters is , – as to why, having decided to, and executed a WILL,  a NOMINATION is at all necessary.

Owner-of-Apartment---Concepts-of-Transmission

2. Some of the recent bizarre developments, as is not but expected, have turned out to be a source of provocation for- nay an irritant to, -those having vested interests or concerns, directly or indirectly; particularly, those who own and hold a property of the special kind namely, Apartment or Flat in a building complex. In the indicated circumstances riddled with confusion, the proposition chosen for an analytical study herein, – with a view to try and bring about clarity, is this: –

Why Nomination is a Must /inevitable; Not just an Option open?

For such a study, the two special legislative enactments in force in Karnataka,- the Karnataka Ownership Flats Act and the Karnataka Apartment Ownership Act (for short, KOFA and KAOA) (and, in Maharashtra , the  MOFA and MAOA) respectively governing the construction and sale of Flats and Apartments have mainly been kept in focus, and covered.

3. There could, -in own firm opinion, founded on pure/unadulterated “common sense”, more so stubbornly stemmed on courage of conviction, – conceivably be no scope whatsoever for any genuine doubt on the related aspects set out below:

3.1. The concepts of ‘Transfer’ and ‘Transmission’ are fundamentally distinct and connote divergent ideas.

‘Transfer’ is strictly a legal concept, which has been specially defined in legislative enactments; such as, the Transfer of property Act, the taxation laws- both direct and indirect tax Acts, so on so forth.

In contrast, ‘Transmission’ is, however, an idea having its origin in the so-called principles of ‘common law’, having its roots principally in ‘common sense’.

3.2. Any transaction having the characteristics of, and in order to be treated as, a ‘transfer’ (within its legal and/or dictionary or any other sensible meaning) is, as mandated / envisaged by the applicable law (s), required to be evidently effected by a person only during his life time- that is, who is alive/in existence.

3.3. The concept of ‘heir’ or ‘legal heir’ is, by its very intrinsic nature, amenable to being construed differently, in a case-to-case basis, depending upon the person’s religion, community and section of the society to which he belongs, so on; in short, that is dependent on his ‘customary’ / ’personal’ law.

ASIDE: Being of contextual relevance, it calls for a conscious noting, that is why in the legislative enactments, -for instance, in the KAOA which is of direct relevance herein, the terms ‘person’ and ‘joint family’ have been specially defined as under:

Section 3 (of KAOA-Definition Section)

(o) “Person” includes a joint family

(l) “Joint family” means an undivided Hindu family, and in the case of other persons, a group or unit, the members of which are by custom joint in possession or residence.

3.4. Section 3 (of KAOA) –

(i) “Competent Authority” means in relation to buildings constructed or to be constructed by the Housing Board, the Secretary of the Housing Board AND IN ANY OTHER CASE, THE REGISTRAR OF CO-OPERATIVE SOCIETIES AS DEFINED IN THE CO-OPERATIVE SOCIETIES ACT 1959.

4. The need for ‘Nomination’, – in general, and in respect of the special kind of property in the form of Flats/Apartments in particular, -has off and on been made the subject matter of debates /discussions; albeit in a very limited and closed circles.

As has always been the attitude /human trait, however, the concerned lay persons, mostly gullible by nature, despite being the directly impacted lot, have miserably failed to give any serious thinking, and spare and share the individual viewpoints favourable to them. Instead, they have, in their wisdom-rather lack/want of it, – left it entirely to be faced and dealt with only when pushed into a crisis situation.

Lamentably, by and large, the assisting professionals, mostly CAs, who are supposed to have- if not a level of expertise and experience worth commendable, – a reasonably good grip of the intricacies of the law and its different multi-dimensional angles, have, for reasons not readily decipherable,  not been of much help.

To Illustrate:

4.1. Lately (as recent as in August 2021) the surrounding controversy happens to have again surfaced; and, been given an added momentum in the wake of publicity given in the print media. The Article published in economictimes.indiatimes.com, with the Title head, – “Wrong nominee and right nominee for bank A/cs, FDs, mutual funds, financial assets” is one such instance.

 Excerpts (from that Article, being of contextual relevance) (:

“ET Wealth estimates that more than Rs 82,000 crore of investor wealth is lying unclaimed in forgotten and lost investments. There are unclaimed deposits languishing in dormant bank accounts, maturity proceeds of policies idling in insurance companies and even the life savings of individuals locked up in inactive provident fund accounts.”

“If there is no nominee, then the process of claiming money by the legal heirs is quite difficult as a financial institution can demand various documents such as succession certificate, indemnity bond, etc. before the money is disbursed. It can happen that in some cases the money to be claimed is less than the cost of acquiring these documents which could make the effort unviable.”

(For More suggest to mindfully read through the cited Article)

It stands to be gathered therefrom that, the underlying thrust of the views canvassed is to the effect that ‘nomination’ is a MUST; be there a WILL or No WILL .

4.2. On this website itself, a long winding write-up has been given publicity- @

https://taxguru.in/corporate-law/nomination-in-housing-societies-in-maharashtra.html

The write-up has,- as regrettably noted,- given the impression, wrongly so, to the effect that a co-operative housing society (CHS), – though registered under the State law (the Co-operative Societies Act and the Rules framed thereunder) cannot admit a designated ‘nominee’ as a member of the Society; further, that is so, even if the nominee is, factually and actually , the successor-IN-INTERST or as one of the successors -IN- LAW, in his own rights as per the governing personal law; unless the deceased has left a ‘WILL’.

Several observations in the write-up, as pinpointed in the posted comment (s), are seen to have been extremely misconstrued and absurdly misleading. In fact, those are perplexingly not reconcilable, even with the underlying scheme of things and/or the specific provisions as embodied in the governing Act and the Rules framed thereunder.

For a sample:

The writer says, –

“c) nominee is just simply a “security guard” delegated /authorized by the deceased, to act as “care-taker” for the maintenance and upkeep of the property, till proper due procedure of succession is conducted, by the legal heirs /beneficiaries.”

Obviously, that cannot and ought not to be so, -is rather prima facie unacceptable, let alone the law, – even as a general proposition.

For, say -in the case of an owner/holder of a property – which is ‘self-acquired’ property- as clearly distinct from an inherited ‘joint family’ property, indisputably, the property owner can, on his free will/by choice, and with no impediment or restraint whatsoever, lawfully decide to whom (anyone or more) the title and all other rights/interests should devolve, as his successor-in- interest, the moment he breathes his last. To put it more emphatically, in any such case, the concept of ‘legal heir’ has no application or is of any relevance even remotely.

5. In fact, there are copious material available in public domain to be of useful help and proper guidance – provided, of course, one cares to and makes a diligent search and insightfully goes through.

5.1. A brief account of such material, on a selective basis, is furnished herein below:

♦ Nomination by a member in a co-operative housing society is an important but unavoidable responsibility to be essentially carried out to ensure smooth transfer of membership after his death to the heir/legal representative.

♦ A member, when alive, can nominate one or more persons of his choice and can revoke or vary the nomination as many times as felt necessary; same way as in respect of a WILL.

♦ Where a member of the housing society dies without making a nomination, or no nominee comes forward for transfer, the society shall invite, within one month from the information of his death, claims or objections to the proposed transfer of shares and interest of the deceased member in the capital/property of the Society, by a public notice, in the prescribed form exhibited on the notice board of the society.

♦ The managing committee of the housing association is required to consider the application for nomination from a member, approve the same and record it in the nomination register. The member should be provided with the approved copy of the nomination form for his record.

♦ On the death of a member, the society after receiving the death certificate and application for membership from the nominee/s in format under Appendix-15; following the provisions of Bye-laws no. 34, 17A, 19 and Section 30 of MCS Act 1960, should transfer the shares and interest in the capital/property of the society to the nominee/s.

SOURCE(s):

For a detailed but independent study, and if desirous of knowing more on the above mentioned viewpoints, if so inspired and curious, recommend to go through the material available @ :

1.  https://puputupu.blogspot.com/2011/04/co-operative-housing-society-act-what.html#.YUHHop0zZ2d

2. vedlegal.com › advocates-transfer-share-member

5.2. On the crucial aspect of ‘share transfer’ required to be made by the housing society to the designated nominee:

The worry or angst commonly faced with/ experienced  is not about, in isolation, simply safeguarding and protecting, or keep protected, the ownership /title in/to the property. That is more about the eligibility to exercise the power to vote as a member. If no Nomination is made, then in the interim period- that is, from the date (nay, moment) of demise of the owner/holder of the Apartment, to the point in time when the intended successor-in-interest (or successor-in-law) steps into the shoes of the deceased, – that is unless and until the Probate is granted by court, the  power to vote cannot lawfully be exercised at all.

There is no gainsaying that, therefore, under the underlying scheme of things, as mandated- impliedly if not explicitly, it is the duty and responsibility of the elected men in governance, of the common affairs of a housing society. – the ‘Managing Committee’ or by whatever be the other name by which it is called, -to issue a share certificate, in sync with the admission of a purchaser as member of the society.

6. Now, turning to the field reality, in the State of Karnataka, in the governing Act, – the KAOA (to be rtw the KOFA), so also the Rules framed there under, the above referred requirement of issue of a ‘share certificate’ to each and every member of a housing society has not been specifically provided for. So much so, for meeting such an essential requirement, which is a MUST, the specific provisions as contained in the ‘MAOA and MOFA’, in force in Maharashtra, might have to be adopted and followed.

For, after all, those are requirements which are embodied in the Co-operative Societies Act (rtw the Rules famed thereunder) and its allied legislation- the Co-operative Housing Societies Act, which is of no less but equal application to every housing society, regardless of its location, in any part of the country.

In this context, attention may have to be prudently drawn to the viewpoints as shared in the published Article, – citation: (2005) (5) Kar L J .pg. 5 to 9 – within pg. 7,8,9.

In so far as the aspect of ‘Nomination’ is concerned, as discussed in that Article, there has been a lacuna in the KAOA (rtw the KOFA) ; which has regrettably been left to be plugged in and /or suitably amended for quite long, irrationally till now.

EPILOGUE

To Sum Up:

1. Without a member’s Nomination placed and taken on the record of a housing association, no ‘transmission’ could conceivably take place; and, as such, it is the housing association who ,in the result, will be left in the lurch.

2. So long as there has been a Nomination given and is on its record, the housing association will have to simply give effect thereto by admitting the nominee as a full-fledged member, in place/substitution (as per the legal principle of ‘subrogation’) of the deceased member.

3. Housing association, in any view or by any stretch of logic or sane reasoning, is not concerned with, – whether or not the nominee alone or anyone else apart from the nominee, has a rival claim to the property, in whatsoever manner.

4. Even on a quick but earnest and diligent search, anyone really interested and having devoted common concerns, – not just for the fun/heck of it, – should be able to find more than enough helpful material in ‘public domain’, for free; so as to enable or equip anyone having vested interests and impartial concerns, to add value/positive suggestions for an insightful deliberation!

An attempt devoutly made herein above, solely for serving the purpose of the COMMON GOOD, is hoped to lead to/result in a favourable outcome. In case, however, that becomes necessary, crave leave to supplement this write-up by additionally covering each and every one of those other related aspects fervently shared in recent weeks, and readily available for viewing on this and other social websites –for instance, on FB and Linkedin.

Declaration: The personal thoughts spared and independent viewpoints impersonally shared herein -above, – that is, with intent to serve the impersonal purpose of the common good, – are to the best of my limited knowledge but firm belief founded on courage of conviction, bear out the correct, or by any reasoning or logic, a well-informed opinion. That is, however, subject/open to an intelligent review and mindful revision by anyone better equipped to post a contrarian opinion- if were considered to be a better opinion but for reasons requiring to be clearly stated!

Author Bio

More Under Corporate Law

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

September 2021
M T W T F S S
 12345
6789101112
13141516171819
20212223242526
27282930