transfer of shares and interest in the capital

Part 5

v                                  Issues & Replies

      Can a flat in a co-operative housing society be transferred on the basis of the nomination registered with the society?

A.  In view of the mandatory provisions under Section 30 of the MCS Act a society is bound to transfer the shares and the interest in capital/property of the society of the deceased member to his nominee if any. However it may be noted that it is settled law that the nomination does not create interest in the nominee to the exclusion of those who in law will be entitled to the estate of the deceased. However, till the matter is decided by the Competent court the nominee to whom the shares and interest are transferred will hold it in trust.

      Can a corporate body like a company file a nomination?

A. Corporate bodies like partnership firms have succession and as such it is not necessary to obtain nomination from them. The transfer of the flat and shares will be governed by the deed of dissolution.

      What is the procedure of transferring a flat by a mother to her son?

A.  The procedure of transfer of a flat is the same even in the matter of a mother transferring her flat to her son during her lifetime. She will have to execute the necessary document of transfer or gift, which will attract stamp duty. Instead of transferring the flat, if she nominates her son, he, as her son will inherit the flat after the mother’s death.

      Can a society refuse membership to the person who makes additions to and alterations in his flat without the permission of the society?

A.  A society is perfectly justified in refusing to admit a person to thee membership of a society, if he makes any alterations in and additions to the flat, without taking written permission from the society, as provided in Bye-law No.47. This includes withhold admission to the membership of the society.

      Does a co-operative housing society have to obtain all documents/papers (including a copy of the sale agreement) in case of transfers from the husband to his wife as in other transfers, where the transferors and the transferees are not related to each other as husband and wife?

A.  According to Section 29 of and the Bye-laws for Co-operative Housing Societies, every transfer of shares and interest of a member in the capital/property of the society, whether between two relatives or not, could be made after complying with the member transferring the shares and interest in the flat to his wife or vice-versa, has to furnish all documents/papers. The agreement is not required but the gift deed should be there.

      Can a guardian of a minor dispose of the property of the minor?

A.  The guardian has no right to dispose of the property of the minor as per the provisions of the Hindu Minority and Guardianship Act, 1956. If at all he wants to sell the property, he will have to take the permission of the competent court.

      One of the members wants to sell his flat and he has intimated the society about the incoming member. The transferee wants to obtain a loan from the bank and he has submitted a form given by the bank to be filled up by the Secretary. The outgoing member’s bank has a lien on the flat. Can the society give Undertaking to the incoming member’s Bank before admission of the member?

A.    Mere intimation from a member of his intention to sell his flat does not create any right or interest of the transferee in the said flat. The transferee therefore cannot raise any charge on the flat until he has been duly admitted to the membership of the society. The society therefore should not give any undertaking to the bank in favour of the transferee till such transferee is admitted to the membership of the society.  The society has to give “no objection” to bank for granting a loan to proposed transferee.  But before giving the no objection, out going member should bring clearance from his bank. If he does not, a remark is to be given in the certificate that there is lien of outgoing member’s bank on the flat.

                                                                                              One of the members has expired in a society. He had nominated his son. However, despite repeated requests, the nominee is not coming forward to become the member of the society. He is also not paying the outgoings of the society. What action should be taken by the society against the nominee?

A.  On his death the member cease to be a member of the society and his shares and interest in the society are to be transferred to his nominee as provided under section 30 of MCS Act. The nominee may be specifically asked in writing to make an application for transfer of shares and interest in the property of the deceased, in his favour, within the stipulated time, failing which, it will be presumed that the nominee is not interested in getting the shares and property transferred to him, and the society will be constrained to acquire the shares and interest of the deceased in the flat. On failure of the nominee to make the necessary application, the society can proceed to acquire the shares and interest after following the procedure provided under Bye-law No.66.

      No Objection Certificate is not required for transfer of flats. What about the outstanding of the member selling the premises?

A.  Bye-law No. 38(e)(vi) provides for submission of an undertaking by the transferor to discharge all the liabilities to the society. In view of this provision, the society can withhold the transfer till the dues are cleared or the incoming member undertakes in writing to pay off the dues.

      No Objection Certificate of a society is not required for transfer of flat but if the flat is sold for commercial purpose, or to trust for religious purpose then what is the solution?

A.    The prospective member, before his admission has to furnish an undertaking on Rs. 20 stamp paper to the society that the flat will be used for the Purpose for which it is allotted. The allotment letter is to be issued to the prospective member at the time of admission as per Bye-laws which stipulate in para five, the use for which the flat is allotted to him. If he makes any change in the permitted use, the incoming member can be expelled from membership of the society as stated in para 6 of the allotment letter.