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Photo: iStockphoto

Ask Mint Money: Nomination doesn’t override succession law

Merely having a nomination does not automatically grant superior rights of ownership to the nominee, over the legal heirs of the deceased

My apartment is not registered, and the residents got together for self-allotment. I have been living in my house for nine years. Now I want to gift the property to my son. I want to ensure that my son doesn’t face any legal problems in future. Do I need to register my property before gifting it? —Sapna Arora

The law governing the transfer of immovable property is laid down in the Transfer of Property Act, 1882 (Property Law). The specific provisions governing the sale under the Property Law states that any transfer of tangible immovable property having a value of 100 or more can be made only by a registered instrument.

The Indian Registration Act, 1908 (Registration Act) Section 17 specifically lays down certain instruments which have to be compulsorily registered, which includes an instrument which creates or purports to create any right, title or interest, whether vested or contingent, of the value of 100 or more to or in an immovable property. Thus, to have a valid and legal ownership right, title and interest in an immovable property having a value of 100 or more, the ownership or title document must be compulsorily stamped adequately and registered before the office of the concerned Sub-registrar of Assurances.

We presume that you were allotted an apartment in a building constructed by the builder, and as mentioned by you, no registered document of title was executed and registered between the builder and yourself. Thereafter, you have been occupying the apartment for nine years.

It is recommended that before you execute a gift deed in favour of your son, you must have the document adequately stamped and registered before the office of concerned Sub-Registrar of Assurances, and gift the property to your son by a gift deed.

My father who is the sole owner of a flat in a registered co-operative society has given a nomination form to the Society stating his daughter (that is, I) has 100% share. However, the Society says that on the basis of nomination form the flat will not be transferred in her name. The concerned nominee will have to get no-objection certificates (NOCs) from siblings after the demise of my father. Is this right? Also, my father has made a Will for the same. Can the Society still refuse the transfer? Alternately, they have advised to go for a gift deed. Is it advisable?—Name withheld on request

Nomination is the process of designating another individual during one’s lifetime to act his/her trustee after his/her demise. A nominee is appointed in respect of specific assets or properties. The general perception regarding nomination is that nomination substitutes a Will. It is a misconception that by virtue of nomination, a nominee derives superior rights over those of the legal heirs of the deceased person to those assets in respect of which nomination has been made, and one needs to understand that nomination cannot substitute a valid Will.

This principal of law has been explained by various courts, including a recent judgment of the Bombay High Court (Shakti Yezdani and Another v. Jayanand Jayant Salgaonkar and Others) to address the misconceptions surrounding nomination and has clarified the correct position in law.

Therefore, merely having a nomination does not automatically grant superior rights of ownership to the nominee, over the legal heirs of the deceased. A nomination is made to ensure that the estate or the rights of a deceased in which a nomination exists, are protected till the legal representatives of the deceased establish their rights of succession and claim to the estate or rights to property. However, it is also made clear by various judgments of various courts that a Society cannot refuse to enter the name of the nominee in the records of the Society upon the demise of the member. The Society is bound by the nomination and must vest the right held by the deceased member in the nominee, until any legal heirs establish claim in terms of succession laws.

While dealing with the concept of nomination, the Supreme Court of India has inter alia held (Indrani Wahi case) that a Society is required to honour the nomination made by the deceased member and cannot refuse to transfer the interest of the deceased member to the nominee; however, such a transfer in favour of the nominee would not operate to restrict or impede the right of the legal heirs of the deceased to pursue their legal right under succession laws, as nomination is not to create a third mode of succession.

The courts have recently through various decisions interpreted the law of succession and clarified that nomination does not prevent or restrict the right of the legal heirs claiming inheritance to the estate of the deceased. Thus, it is clear that nomination does not create a legal right of inheritance and cannot and does not override the laws of succession.

Considering the above, the Society is required to transfer the membership to the nominee, and the Society cannot advice or recommend or refuse to admit the nominee to the benefit of membership considering there is a valid nomination made by the deceased member.

While there are other remedies available under the applicable laws, it would be advisable for you to consult a lawyer for seeking a specific advice in your case.

To read full answers, go to www.livemint.com/askmintmoney

Amit Kolekar is associate partner, Rajani Associates.

Queries and views at mintmoney@livemint.com

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