A CASE STUDY OF Karan Vishnu Khandelwal vs. Chairman/Secretary, Vaikunth CHS Ltd.

The legal intricacies surrounding ownership and membership rights in cooperative housing
societies often lead to disputes, especially after the demise of a property owner. The case of Karan Vishnu Khandelwal vs. Chairman/Secretary, Vaikunth CHS Ltd., decided by the Bombay High Court on November 9, 2022, offers valuable insights into these issues.

Case Background
The dispute arose after the passing of Mr. Mannalal Suraimal Khandelwal, a member of Vaikunth Co-operative Housing Society in Andheri, Mumbai. Before his demise, Mr. Khandelwal had nominated his grandson, Karan Vishnu Khandelwal, as the nominee for his flat. After Mr. Khandelwalis death, the society
transferred the flaffs shares to Karan as per the nomination.

However, the nomination led to a legal battle between Karan and other legal heirs of Mr. Khandelwal, who contested the ownership of the property. The core issue revolved around whether the nominee could claim absolute ownership or whether the property should be divided among all legal heirs.

Key Legal Principles
The Bombay High Court referred to well-established legal principles to resolve the case.
It reiterated that:

1. Nominee as a Trustee, Not an Owner: A nominee in a cooperative housing society does not become the absolute owner of the property upon the original member’s death. Instead, the nominee acts as a trustee, holding the property for the benefit of all legal heirs. This principle aligns with the Supreme Court’s landmark ruling in Indrani Wahi vs. Registrar of Cooperative Societies, which clarified that nomination only facilitates the transfer of shares but does not confer ownership. Ownership rights are governed by succession laws.
2. Provisional Membership: The Maharashtra Cooperative Societies (Amendment) Act, 2019, introduced the concept of provisional membership. Upon a member’s death, the nominee is admitted as a provisional member, ensuring the society’s smooth functioning. However, the nominee’s status remains temporary until legal heirs establish their ownership through documents such as a succession certificate or legal heir certificate.
3. Society’s Role: Cooperative societies are bound to transfer the shares to the nominee, as mandated by law. However, the society’s responsibility ends there, and it is not authorized to adiudicate ownership disputes among legal heirs.

Court’s Verdict
In its ruling, the Bombay High Court directed the society to admit Karan as a provisional member. At the same time, it advised the contesting heirs to obtain the necessary legal documents to assert their claims. The court emphasized that disputes over ownership should be resolved in civil courts based on succession laws, not by the co-operative society.

Implications for Housing Societies and Members
This case underscores the importance of understanding the distinction between nominee and a legal heir in cooperative housing societies. For members, it highlights the need to create a clear will to avoid disputes among heirs. For societies, it reaffirms their role as facilitators in transferring shares, without delving into ownership disputes.

Conclusion
The Karan Vishnu Khandelwal case clarifies a critical legal aspect of cooperative housing societies: nomination ensures continuity of management but does not determine ownership. Legal heirs must rely on succession laws to assert their rights. This judgment strikes a balance between the administrative requirements of societies and the rightful claims of heirs, serving as a guiding light for
similar disputes in the future.

MSWA’s Housing Society Review – January 2025