Cooperative Society Nomination: Supreme Court Rules on Legal Heir Rights

The Supreme Court of India, in Civil Appeal No. 4646 of 2006, addressed a significant dispute regarding property nomination in a cooperative society. The case was brought by Indrani Wahi, the appellant, against the Registrar of Cooperative Societies and others, challenging the rejection of her nomination as the rightful successor of her late father’s membership in the Sarbar View Cooperative Housing Society Limited.

Background of the Case

The appellant’s father, Biswa Ranjan Sengupta, was a member of the Sarbar View Cooperative Housing Society Limited and had been allotted a flat in Salt Lake City, Kolkata. Under Section 79 of the West Bengal Cooperative Societies Act, 1983, he nominated his daughter, Indrani Wahi, as the rightful successor to his share and interest in the cooperative society.

Following his death on July 22, 2003, Indrani Wahi applied to have her name registered as the owner of the flat. The cooperative society approved the request and passed a resolution to transfer the membership in her name. However, her brother, Dhruba Jyoti Sengupta, and her mother, Parul Sengupta, objected, arguing that the nomination should have been in favor of the mother.

The Deputy Registrar of Cooperative Societies rejected the nomination, stating that the appellant, being a married daughter, did not fall within the definition of “family” under Section 79 of the Act. The appellant challenged this decision before the High Court, which ruled in her favor. However, the judgment was overturned by the Division Bench, prompting her appeal to the Supreme Court.

Legal Issues Considered

• Whether a cooperative society nomination overrides succession laws.
• Whether the Deputy Registrar was justified in rejecting the nomination based on the appellant’s marital status.
• Whether the cooperative society was bound to transfer membership as per the nomination.

Petitioner’s Arguments

The appellant argued that her father had lawfully nominated her as the successor, and under Section 79 of the West Bengal Cooperative Societies Act, the cooperative society was legally obligated to transfer membership to her. She contended that the rejection of her nomination solely on the basis of her being a married daughter was discriminatory and baseless.

Her counsel submitted:

“The cooperative society is mandated to honor the nomination made by the deceased member and transfer membership accordingly. The rejection of the nomination on the basis of marital status is unjust and contrary to the provisions of the Act.”

Respondent’s Arguments

The respondents, including the Deputy Registrar and the appellant’s brother, contended that the nomination under Section 79 did not grant absolute ownership rights and that the legal heirs had a right to challenge the transfer. They relied on precedents suggesting that a nominee acts merely as a custodian and does not acquire ownership.

The Deputy Registrar argued:

“As the deceased had a family, the nomination in favor of Indrani Wahi cannot be accepted as per Section 79 of the West Bengal Cooperative Societies Act. A letter of administration or succession certificate is required.”

Supreme Court’s Observations

The Supreme Court examined the provisions of Sections 79 and 80 of the West Bengal Cooperative Societies Act, 1983, and concluded that the cooperative society was bound to transfer membership to the nominee. The Court noted:

“A cooperative society is legally obligated to honor the nomination made by a deceased member under Section 79 of the Act. The rejection of the nomination solely on the basis of marital status is unsustainable in law.”

The Court clarified that while nomination ensured the smooth transfer of membership in a cooperative society, it did not override succession laws, and the legal heirs were still entitled to assert their rights separately.

Judgment and Directives

The Supreme Court ruled in favor of the appellant, directing the cooperative society to transfer membership to Indrani Wahi. The key directives were:

• The cooperative society must transfer membership to the nominee as per Section 79 of the West Bengal Cooperative Societies Act, 1983.
• The rejection of the nomination on the ground of marital status was incorrect and unsustainable.
• The legal heirs could assert their rights through separate succession proceedings if they wished to challenge the nominee’s ownership.
• The appeal was allowed, and the Division Bench’s judgment was set aside.

The Court emphasized:

“The nominee is entitled to have the membership transferred in her name, but this does not affect the inheritance rights of legal heirs, who may pursue their claims separately.”

Key Takeaways from the Judgment

• Nomination in a cooperative society is binding on the society, but it does not determine absolute ownership.
• A nominee is legally entitled to have membership transferred in their name.
• Legal heirs can assert their inheritance rights through separate legal proceedings.
• Marital status cannot be used as a ground to reject a cooperative society nomination.

Implications of the Judgment

The Supreme Court’s ruling establishes a significant precedent for cooperative societies across India. It clarifies that nominations must be honored as per statutory provisions, while also protecting the rights of legal heirs. The decision safeguards the interests of nominees, preventing arbitrary rejection of their claims while ensuring that succession laws remain applicable in inheritance disputes.

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Download Judgment: Indrani Wahi vs Registrar of Coopera Supreme Court of India Judgment Dated 09-03-2016-1741854029463.pdf

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