Nominee is not sole heir of property

A nominee of a property in a housing society does not automatically become the absolute owner of the property after the death of the original owner, the Bombay High Court has ruled in an important order.

Delivering the verdict in a legal battle that has dragged on for over 29 years, Justice A P Deshpande said it would be the personal law of an individual that would determine the successor to the property and not the nomination under the Cooperative Societies Act.

"The Maharashtra Cooperative Societies Act (MCSA) does not provide for a special rule of succession altering the rule of succession laid down under the personal law,'' the judge said, citing two earlier judgments. The court held that a nominee did not become the "absolute owner'' and was empowered only to hold the "property in trust for the real owners, that too for the purpose of dealings with the society''. A nominee has to give way to the legal heirs.

The court's judgment came in a dispute over a 5,610-sq-ft plot at the Nav Rajasthan Co-Operative Housing Society in Pune bought by Shivram Sattur, who had named his wife Tarabai as a nominee.

Tarabai tried to sell the property after his death, but her four children sued her. Two subordinate courts upheld the sale agreement saying Tarabai had become the sole owner of the property as a result of the nomination.

The HC, however, did not agree and said that her children also had a right over the plot as they were the legal heirs.

The Hindu law says that on the death of a man, in case there is no will, the property is equally shared between the wife and the children. Muslims are governed by their personal laws.

Under the MCSA, on the death of a member, the society can transfer the interest to a nominee or an heir or a legal representative. Such a nominee does not become the only owner, the HC said. The nominee represents the legal heirs of the deceased member while dealing with the cooperative society and is only empowered to act on behalf of the real owners. This is a temporary arrangement between the death of the member and till the court decides the legal heir who is entitled to the property or estate.

The HC judgment has been stayed for eight weeks on a request from the developer who bought the property.

NOMINATION FACTS

• A society member can make a nomination, which can be revoked at any time

• On the death of a member, the society transfers the shares to the nominee or the heir or legal representative

• In case no nominee is mentioned, the society puts out a public notice inviting claims

• The nominee is in charge of the property only till the court decides who is entitled to the property as per the succession laws

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Sell or Transfer of Property by General POA

The Supreme Court today ruled in the case of Suraj Lamp & Industries Pvt Ltd Vs State of Haryana that sale transactions carried in the name of general power of attorney will have no legal sanctity and immovable property can be sold or transferred only through registered deeds. “Transactions of the nature of `GPA sales or `SA/GPA/WILL transfers’ do not convey title and do not amount to transfer nor can they be recognized or valid mode of transfer of immovable property.

“The courts will not treat such transactions as completed or concluded transfers or as conveyances as they neither convey title nor create any interest in an immovable property.
“Such transactions cannot be relied upon or made the basis for mutations in municipal or revenue records,” Justice Raveendran, writing the judgment, said.

The apex court said the amendments to stamp and registration laws by various states do not address the larger issue of generation of black money and operation of land mafia and hence there was a need to reduce the stamp duty though it may result in loss of revenue.

“When high stamp duty is prevalent, there is a tendency to undervalue documents even where sale deeds are executed”. When properties are undervalued, a large part of the sale price changes hand by way of cash thereby generating `black’ money.

“Even when state governments take action to prevent undervaluation, it only results in the recovery of deficit stamp duty and registration charges with reference to the market value but the actual sale consideration remains unaltered,” the bench said. The apex court said the Delhi High Court was wrong in upholding the validity of GPA sales in the Asha Jain case (2001).

“Such decisions to the extent they recognize or accept SA/GPA/WILL transactions as concluded transfers, as contrasted from an agreement to transfer, are not good law.

“We, therefore, reiterate that immovable property can be legally and lawfully transferred / conveyed only by a registered deed of conveyance, Justice Raveendran said.

The apex court, however, clarified the sale and other transactions entered through GPAs and through Wills till date will not be affected by its today’s orders and will be treated as valid agreements.

“Nothing prevents affected parties from getting registered Deeds of Conveyance to complete their title. The said `SA/GPA/WILL transactions¿ may also be used to obtain specific performance or to defend possession,” the bench said. According to the apex court, any agreement entered till date may be relied upon to apply for regularization of allotments/leases by Development Authorities.

“We make it clear that if the documents relating to `SA/GPA/WILL transactions' has been accepted acted upon by DDA or other developmental authorities or by municipal or revenue authorities to effect mutation, they need not be disturbed merely on account of this decision.

“We make it clear that our observations are not intended to in any way affect the validity of sale agreements and powers of attorney executed in genuine transactions,” the apex court added.“

A three-judge bench of justices R V Raveendran, A K Patnaik and H L Gokhale also asked the states to reduce stamp duty rates to prevent undervaluation of property and stashing of black money by vested interests. The apex court said a high stamp duty rate has led to rampant abuse of the General Power of Attorney (GPA), sale agreements (SA) and Wills, resulting in huge loss of money to the exchequer.

SOURCE COURTESY: Tax Guru
Link: http://taxguru.in/corporate-law/general-power-attorney-legal-sanctity-immovable-property-sold-transferred-registered-deeds-sc.html

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