A housing society’s transition to a more formal cooperative structure often entails a new set of responsibilities for both residents and management committees. Questions about membership, share certificates and nominations in a cooperative housing society (CHS/the Society) may appear routine, but they can become complicated when property documents are held by lenders, former members are yet to complete membership formalities, or a member dies, leaving a nominee behind.
 
These situations also highlight the importance of following the Society’s registered bye-laws and the applicable cooperative law, while keeping proper records and ensuring that members understand the distinction between society membership, nomination and succession. This week’s questions address some of these practical issues, including the procedure for obtaining share certificates, dealing with residents who have not completed membership formalities, making nominations in cases of joint ownership and transferring society shares following the death of a member.
 
Membership, Share Certificates and Nominations in a Newly-formed Housing Society
 
Question: Ours is a Society which was recently converted from an owners’ association to a CHS.
1. Please guide how a member can get his share certificate when his property is mortgaged with a bank or financial institution and the original documents are with the lender.
2. Some of the old members (10 out of 112 members) from the owners' association, even after repeated reminders, are not ready to join the CHS. What should the managing committee do now?
3. Nomination – In case of joint ownership (husband and wife), is it necessary to make a nomination? If they have only one daughter, can they nominate her?
 
Answer: Reply to your first query: If the flat-owner is eligible for membership of the Society, he/she should apply for membership in the prescribed form and comply with the requirements of the registered bye-laws of the Society. The fact that the original property documents are with the bank or financial institution does not by itself, prevent the owner from becoming a member or the Society from issuing the share certificate. The member should inform the lender about the Society membership, share certificate, and comply with any requirements of the lender relating to the mortgage. The Society should issue the share certificate in accordance with its registered bye-laws and applicable rules.
 
Reply to your second query: The managing committee (MC) should first issue a written notice to the remaining flat owners, informing them that the Society has been duly formed and registered and asking them to complete the necessary membership formalities within a reasonable period. The committee should maintain records of all notices and correspondence with such members.
 
If they still do not apply for membership, the MC should approach the concerned registrar/deputy registrar of cooperative societies for appropriate guidance and action under the Maharashtra Cooperative Societies Act, Rules and the registered bye-laws of the Society. The MC should not treat such flat owners as trespassers or take steps to remove them from their flats merely because they have not completed the membership formalities.
 
Reply to your third query: In the case of joint ownership, each joint member should make a separate nomination in respect of his/her respective share, in the prescribed nomination form. Husband and wife can nominate the same person, including their daughter, as the nominee for their respective shares.
 
However, nomination is for the purpose of transferring or granting provisional membership in the Society after a member's death. It does not, by itself, determine the final succession or ownership rights in the property which may be governed by applicable succession law.
 
Transfer of Society Shares to a Nominee after a Member’s Death
 
Question: I live in a CHS flat owned by my father for the past 50 years. I am the legal nominee of the said flat. After the death of my father, I submitted all the required documents, such as Appendix 15, form no15-A, a copy of the share certificate, the death certificate of my father and transfer fees, to the Society for the transfer of the shares in my name. After several reminders, verbally and in writing, last month I received a letter from the Society asking me to submit a succession certificate from the court, stating that the mere nomination form is not sufficient to transfer the shares in my name. I humbly request that you advise whether what the Society is asking is fair and what further steps I can take to have the shares transferred into my name. Seeking your expert advice and guidance.
 
Answer: If you are the validly nominated person of the deceased member, the Society should consider your application in accordance with Section 30 of the Maharashtra Co-operative Societies Act, 1960, and the applicable registered bye-laws of the Society. A succession certificate is not automatically required merely because the deceased member has left a nominee. However, depending on the circumstances of the case, including any dispute over legal heirs or competing claims, the Society may require appropriate succession or other legal documents.
 
You should, therefore, ask the Society in writing to inform you of the specific provision of the Act, Rules or registered bye-laws under which it is asking you to submit a succession certificate, and the reason for such requirement in your particular case.
 
If the Society does not give a satisfactory reply, you may submit a written complaint to the deputy registrar of cooperative societies having jurisdiction over your Society, enclosing copies of your application, nomination documents, share certificate, death certificate, correspondence with the Society and the Society’s letter asking for the succession certificate. You should request that the deputy registrar examine whether the Society has complied with the applicable provisions regarding the transfer of the deceased member's shares and interest to the nominee.
 
It is also important to remember that nomination does not, by itself, finally decide the inheritance or ownership rights in the flat. The nominee is admitted for the purposes provided under the cooperative society law, subject to the rights of the legal heirs under the applicable succession law.
 
You should, therefore, first obtain the Society’s written reasons for demanding a succession certificate and, if necessary, seek appropriate directions from the concerned cooperative department authority.
 
 
  NOTE
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Disclaimer: The guidance provided in these columns and on our Legal Helpline is on the sole basis of the facts provided by the reader/questioner and does not amount to formal legal advice in any form whatsoever. 
 
(Shirish Shanbhag has an MSc in Organic Chemistry, a Diploma in Higher Education, and a Diploma in French and has completed his LL.B. in first class in 2021. Before his retirement, he was a junior college teacher at Patkar College from July 1980 to May 2012, teaching theoretical and practical chemistry. Post-retirement in 2012, he started providing guidance and counselling to people on several issues, specifically focusing on cooperative housing society-related matters. He has over 30 years of hands-on experience in all matters about housing societies and can provide out-of-box solutions for any practical issue.)