The Bombay High Court has reaffirmed that a nominee under the Maharashtra Cooperative Societies Act, 1960, does not acquire absolute ownership of cooperative society property. The Court held that the legal heirs of the deceased member are entitled to their respective shares, and exclusive membership cannot be granted to a nominee who holds only a fractional interest. This decision reinforces the binding precedent of the Supreme Court in Indrani Wahi vs Registrar of Cooperative Societies.
The Verdict
The petitioners, legal heirs of the deceased member, won. The Bombay High Court held that a nominee under the Maharashtra Cooperative Societies Act, 1960, is not an absolute owner but merely a trustee for distribution among legal heirs. The Court quashed the order granting exclusive membership to the nominee and directed that legal heirs may seek associate membership in proportion to their inherited shares.
Background & Facts
Ishwardas Sharma, a member of a cooperative housing society in Mumbai, died on 10 September 1999. He was co-owner of a flat with his wife, Ratnadevi Ishwardas Sharma, each holding a 50 percent share. Ishwardas had nominated Ratnadevi as the nominee for his share. After his death, Ratnadevi continued to hold her own 50 percent share and the nominated 50 percent share. She later executed a registered gift deed on 3 November 2020, transferring her entire interest - claimed to be 100 percent - to her daughter-in-law, respondent No.5.
The cooperative society, acting on this deed, granted exclusive membership to respondent No.5. The petitioners, who are the grandchildren of Ishwardas and legal heirs of his son Rajkumar (who died in 2019), challenged this decision. They contended that Ishwardas’s 50 percent share could not pass to Ratnadevi by nomination alone, but must devolve upon his legal heirs under succession law. The petitioners sought to be recognized as associate members with proportional rights.
The matter reached the Bombay High Court after the Deputy Registrar upheld the society’s decision. The petitioners filed a writ petition under Article 226 of the Constitution, seeking quashing of the membership order and recognition of their rights.
The Legal Issue
The central question was whether a nominee under the Maharashtra Cooperative Societies Act, 1960, becomes the absolute owner of the deceased member’s share, or whether the nominee holds the share only as a fiduciary for distribution among the legal heirs.
Arguments Presented
For the Petitioner
The petitioners relied on the Supreme Court’s judgment in Indrani Wahi vs Registrar of Cooperative Societies (2016) 6 SCC 440, which unequivocally held that nomination under the Act does not confer ownership. They argued that the 50 percent share of Ishwardas devolved upon his legal heirs - his wife, two sons, and one daughter - under the Hindu Succession Act, 1956. Ratnadevi, as nominee, could not claim ownership of that share, and therefore could not gift 100 percent of the flat to respondent No.5. The petitioners asserted their right to associate membership in proportion to their inherited shares.
For the Respondent
Respondent No.5 contended that Ratnadevi, having been nominated for Ishwardas’s share and already owning 50 percent in her own right, became the absolute owner of the entire flat. She argued that the gift deed was valid and the society’s decision to grant exclusive membership was lawful. She further claimed the petition had become infructuous because the society had already implemented the membership order, rendering judicial intervention academic.
The Court's Analysis
The Court began by examining the statutory framework of the Maharashtra Cooperative Societies Act, 1960. It noted that the Act does not contain any provision conferring ownership upon a nominee. The Court then turned to the binding precedent of the Supreme Court in Indrani Wahi, which clarified that nomination is a procedural mechanism for facilitating transfer to legal heirs, not a mode of testamentary succession.
"The nominee is merely a fiduciary who holds the property for the benefit of the legal heirs and is under an obligation to distribute it among them."
The Court emphasized that the nominee’s role is limited to receiving the property and ensuring its lawful distribution. It rejected the respondent’s argument that Ratnadevi’s ownership of her own 50 percent share, combined with nomination, amounted to 100 percent ownership. The Court held that the deceased’s share must pass through the chain of succession, and cannot be absorbed by the nominee.
The Court also dismissed the claim that the petition had become academic due to the society’s implementation of the membership order. It cited settled principles of administrative law that execution of an order does not oust the jurisdiction of the High Court to examine its legality. The Court stated:
"The fact that an order has been executed does not render the challenge academic. The Superior Court must still adjudicate the legality of the order when its validity is in question."
The Court concluded that respondent No.5 held only a 50 percent interest, and the petitioners, as legal heirs of Ishwardas, were entitled to seek associate membership in respect of their respective shares.
What This Means For Similar Cases
This judgment has significant implications for cooperative housing societies across Maharashtra. Practitioners must now treat nominations as non-transferable instruments of convenience, not instruments of ownership. Any attempt to transfer full membership based solely on nomination will be legally unsustainable.
Future applications for membership must account for the full succession chain. Societies are now on notice that granting exclusive membership to a nominee without verifying the existence and shares of other legal heirs constitutes a violation of statutory and constitutional rights. Associate membership applications by legal heirs must be processed without undue delay.
The ruling also clarifies that challenges to membership orders remain justiciable even after implementation. This prevents societies from using procedural finality to evade judicial review. Practitioners should advise clients to file writ petitions promptly upon denial of associate membership, as delay in seeking interim relief does not bar substantive adjudication.
