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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • For the Petitioner:— Mr. Harjinder Singh, Advocate.
  • For the Respondents:— Shri Jitendar Sharma, Advocate for respondents 4 and 5.
Judges
  • Mr. Justice Charanjit Talwar
Acts
  • Delhi Co-operative Societies Act, 1972, (hereinafter called the Act) and the Delhi Co-operative Societies Rules, 1973 (hereinafter called the Rules)
  • section 26 (1) of the Delhi Act and section 30 of the Maharashtra Act,
  • Section 30 of the Maharashtra Co-operative Societies Act, 1961,
  • Order 1 Rule 10 (2) of the Code of Civil Procedure,
  • SECTION 39 INSURANCE ACT
  • sub-section (1) of section 26.
  • Rule 35 of the Rules.
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • For the Petitioner:— Mr. Harjinder Singh, Advocate.
  • For the Respondents:— Shri Jitendar Sharma, Advocate for respondents 4 and 5.
Judges
  • Mr. Justice Charanjit Talwar
Acts
  • Delhi Co-operative Societies Act, 1972, (hereinafter called the Act) and the Delhi Co-operative Societies Rules, 1973 (hereinafter called the Rules)
  • section 26 (1) of the Delhi Act and section 30 of the Maharashtra Act,
  • Section 30 of the Maharashtra Co-operative Societies Act, 1961,
  • Order 1 Rule 10 (2) of the Code of Civil Procedure,
  • SECTION 39 INSURANCE ACT
  • sub-section (1) of section 26.
  • Rule 35 of the Rules.
See more information ...
Smart Summary

Factual and Procedural Background

The petitioner, Shri Ashok Chandra Aggarwala, sought a writ of mandamus directing the Delhi Administration to substitute his name in place of his late father, Shri C.B. Aggarwala, in the sub-lease executed between his father, the President of India, and the Supreme Court Bar Co-operative House Building Society Ltd. (the Society). The petitioner’s father, a Senior Advocate and member of the Society, was allotted a plot in New Delhi. Upon his death in 1973, the petitioner was nominated by his father as the transferee of the share in the Society in accordance with Rule 35 of the Delhi Co-operative Societies Rules, 1973.

In 1975, the Society passed a resolution substituting the petitioner as a member and sub-lessee in place of his late father. However, the Delhi Administration required a succession certificate from a Civil Court before effecting the substitution. The petitioner’s request for transfer was opposed by other legal heirs of the deceased, who were later added as parties to the case under Order 1 Rule 10(2) of the Code of Civil Procedure. The petitioner challenged the refusal of the Administration to substitute his name in the sub-lease or sanction mutation in his favor.

Legal Issues Presented

  1. Whether the petitioner, as the nominee of the deceased member under Rule 35 of the Delhi Co-operative Societies Rules and section 26 of the Delhi Co-operative Societies Act, 1972, is entitled to mandatory substitution in the sub-lease deed in place of his late father.
  2. Whether the Delhi Administration was justified in requiring a succession certificate from a Civil Court before effecting the substitution or mutation in the petitioner’s favor.
  3. Whether the nomination made under the Act creates a beneficial interest or a statutory succession in the nominee, excluding other legal heirs.

Arguments of the Parties

Petitioner's Arguments

  • The petitioner contended that under section 26 of the Delhi Co-operative Societies Act read with Rule 35 of the Rules, his name should mandatorily be substituted in place of his deceased father’s name in the sub-lease.
  • He argued that as a nominee, he was entitled not only to the share but also to the interest of the deceased member in the Society.
  • He relied on the guidelines of the Delhi Administration which, according to him, supported inheritance of the plot by nomination without the need for a fresh lease deed.

Respondents' Arguments

  • The Delhi Administration and other respondents contended that substitution was not made due to objections from other legal heirs of the deceased.
  • They maintained that the Society’s bye-laws only provide for transfer of the deceased member’s share and not the interest, and that the nomination does not confer an absolute right to the interest in the sub-lease.
  • The respondents argued that the sub-lease deed’s clause includes heirs and legal representatives, and thus substitution requires consent or a succession certificate due to competing claims.
  • They relied on the opinion of the legal adviser that a succession certificate from a Civil Court was necessary to resolve disputes among heirs.
  • Counsel for respondents 4 and 5 submitted that succession in respect of the deceased’s estate, including interest in the sub-lease, is governed by general succession law and not by section 26 of the Act, which does not create a statutory testamentary succession.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Gopal Vishnu Ghatnekar v. Madhukar Vishnu Ghatnekar, AIR 1982 Bombay 482 Interpreting section 30 of the Maharashtra Co-operative Societies Act (which uses "shall" for transfer of shares on death) The Court distinguished this precedent on the basis that the Delhi Act uses "may," indicating discretionary power, thus it is not obligatory to transfer interest to the nominee under Delhi law.
Smt. Sarbati Devi and another v. Smt. Usha Devi, AIR 1984 Supreme Court 346 Interpretation of section 39 of the Insurance Act regarding nomination and beneficial interest The Court applied the principle that nomination does not confer beneficial interest, only the right to receive payment, and heirs retain claims according to succession law; this principle was extended to the present case.

Court's Reasoning and Analysis

The Court began by analyzing section 26 of the Delhi Co-operative Societies Act, 1972, noting that the use of the word "may" in subsection (1) confers discretionary power on the Society to transfer shares or interest of a deceased member to the nominee or legal heirs, rather than mandating such transfer. The Society's bye-laws were examined, which permitted nomination and transfer of shares but did not compel transfer of the interest in the sub-lease.

The Court observed that the Society had admitted the petitioner as a member and nominee, thereby entitling him to the transfer of share according to the bye-laws, but not necessarily to the interest in the plot itself. The Court also considered the Delhi Administration guidelines, finding no statutory authority for them and noting that these guidelines allowed for inheritance by nomination, will, or legal devolution, with nomination not being the sole criterion.

In addressing the petitioner’s reliance on the Bombay High Court decision interpreting the Maharashtra Act, the Court highlighted the difference in statutory language—"shall" versus "may"—and concluded that the Delhi Act does not impose an obligation to transfer the deceased member’s interest.

The Court further agreed with the respondents’ submission that section 26 does not create a statutory succession or testamentary disposition overriding the general law of succession. It relied on the Supreme Court’s decision in Smt. Sarbati Devi, which held that nomination under the Insurance Act does not confer beneficial interest to the nominee, a principle extended to this case.

Given the objections from other legal heirs and the provisions of the sub-lease deed including heirs and legal representatives, the Court held that the Administration was justified in requiring a succession certificate before effecting substitution or mutation.

Holding and Implications

The writ petition is dismissed.

The Court’s decision affirms that the Delhi Co-operative Societies Act, 1972, and the Society's bye-laws grant discretionary power to the Society and the Administration regarding transfer of shares and interests upon a member’s death. Nomination alone does not create an absolute right to the interest in the sub-lease, nor does it override the rights of other legal heirs. The Administration’s requirement of a succession certificate in the face of competing claims is upheld. No new precedent was established; the ruling applies directly to the parties by denying the petitioner’s claim for mandatory substitution without a succession certificate.

Show full summary ...

    Shri Ashok Chandra Aggarwala Petitioner v. Delhi Administration & Ors. S

    Charanjit Talwar, J.:— The petitioner, Shri Ashok Chandra Aggarwala, seeks issuance of a writ of mandamus to the Delhi Administration to substitute his name in place of the name of his late father in the sub-lease executed between his father, the President of India and the Supreme Court Bar Co-operative House Building Society Ltd. (hereinafter called ‘the Society’).

    2. Admitted facts are that the petitioner's father Shri C.B Aggarwala, a Senior Advocate of the Supreme Court, was a member of the Society. The Society is covered by the Delhi Co-operative Societies Act, 1972, (hereinafter called ‘the Act’) and the Delhi Co-operative Societies Rules, 1973 (hereinafter called ‘the Rules’) as well as by the bye-laws framed by the Society. Shri C. B. Aggarwala was allotted plot bearing No. A-25, Niti Bagh, New Delhi, by the Society. For the purpose of transfer of his share he had nominated the petitioner herein in accordance with Rule 35 of the Rules. Shri C. B. Aggarwala died on 13th June, 1973.
    3. By a resolution dated 16th May, 1975, the Society passed a resolution substituting the petitioner as a member of the Society in place of his late father and resolved “that the name of Shri Ashok Chandra Aggarwala, nominee of late Shri C. B. Aggarwala be substituted in place of Shri C. B. Aggarwala as a member of the Society and as a sub-lessee of plot No. A-25, Niti Bagh, New Delhi. A copy of the resolution be sent to Shri A. C. Aggarwala, to the lessors and to other heirs who wrote letters to the Society”.
    4. It appears that the petitioner had in the meanwhile moved the Delhi Administration, respondent No. 1, the substitution in his name in the said sub-lease. He had also moved the Assistant Housing Commissioner, L & B, Delhi Administration, vide his application dated 21st February, 1975, for this purpose. However, he was informed by letter dated 5th March, 1975, to produce the succession certificate from a Civil Court of competent jurisdiction so that further action could be taken in the matter. A copy of the said letter is Annexure ‘E’ to the writ petition. His plea before the authorities was that as a nominee he was entitled not only to the share which his father had but also to the interest of the deceased. Petitioner's efforts to have the transfer of plot in question made in his name having failed, he has moved the present petition.
    5. Mr. Harjinder Singh, learned counsel for the petitioner, submits that in accordance with the provisions of section 26 of the Act read with Rule 35 of the Rules petitioner's name is to be mandatorily substituted in place of his father's name. It is useful to quote the provisions of section 26. section 26 reads: —
    “26. (1) On the death of a member a co-operative society may transfer the share or interest of the deceased member to the person nominated in accordance with the rules made in this behalf, or, if there is no person so nominated to such person as may appear to be the heir or legal representative of the deceased member, or pay to such nominee, heir, or legal representative, as the case may be, a sum representing the value of such member's share or interest as ascertained in accordance with the rules or bye-laws;
    Provided that —
    (i) in the case of a co-operative society with unlimited liability, such nominee, heir or legal representative, as the case may be, may require payment by the society of the value of the share or interest of the deceased member ascertained as aforesaid;
    (ii) in the case of a co-operative society with limited liability, the society transfer the share or interest of the deceased member to such nominee, heir or legal representative as the case may be, being qualified in accordance with the rules and byelaws for membership of the society, or on his application within one month of the deceased member to any person specified in the application who is so qualified;
    (iii) no such transfer or payment shall be made except with the consent of the nominee, heir or legal representative, as the case may be.
    (2) A co-operative society shall, subject to the provisions of section 36 and unless with (in) six months of the death of member prevented by an order of a competent court, pay to such nominee, heir or legal representative, as the case may be, all other moneys due to the deceased member from the society;
    (3) All transfers and payments made by a co-operative society in accordance with the provisions of this section shall be valid and effectual against any demand made upon the society by any other person.”
    6. Another plea of Mr. Harjinder Singh is that under the guidelines laid down by the Delhi Administration the said plot has to be inherited by the petitioner by virtue of the nomination made by his father and in such a case no fresh lease-deed is required to be executed but only mutation is to be sanctioned in favour of the petitioner. The respondent 1 and 2 in their counter-affidavit have submitted that it is because of the objection raised by the other legal heirs of late Shri C. B. Aggarwala that the substitution in favour of the petitioner has not been made by them. In a further affidavit sworn by Shri D. R. Chopra, OSD, Litigation-cum-ex-officio Under Secretary, Land & Building Department, on 19th September, 1984, it has been explained that the father of the petitioner had initially nominated two persons when he made the application to the Society for membership. After becoming a member of the Society he made a fresh nomination in the name of the petitioner, which has been recorded in the register of the society. It is further pleaded that clause III of the Perpetual sub-lease deed, which had been executed, provided that “the expression ‘sub-lessee’ included” his heirs, executors, administrators or legal representatives and the person or persons in whom the sub-leased interest created by a sub-lease shall for the time being be vested by assignment or otherwise. . .”, and, therefore, as the other legal heirs of the deceased had claimed that they also be substituted in place of the deceased, the legal adviser of the department opined that in a case like this it was advisable to ask the contestants to obtain succession certificate from a Civil Court. As such, respondents are unable to substitute the petitioner's name in the sub-lease or sanction mutation in his name.
    7. I may note here that on an application made two of the legal heirs of late Shri C. B. Aggarwala (being his son and daughter) under Order 1 Rule 10 (2) of the Code of Civil Procedure, those were brought on the record by an order dated 21st September, 1977. They are respondents 4 and 5. These very respondents had raised objection before the Administration that the petitioner was not entitled to be substituted in the sub-lease deed.
    8. The submission of the petitioner's counsel is that the sub-lease qua the plot in question being interest of the deceased is liable to be transferred in favour of the petitioner, as noticed above, in terms of section 26 (1) of the Act.
    9. I have already quoted the relevant section. It opens with the words “On the death of a member of a co-operative society may transfer the share or interest of the deceased member to the person nominated. . .” The argument that it was mandatory to transfer the share is not borne out from a reading of the above provision as the use of the word “may” therein is suggestive of this being a discretionary power which has been vested in the Society. The Society in its bye-laws has vested itself with the power to transfer the share only of the deceased and not his interest. Bye-law No. 16 provides “Every member may nominate a person or persons to whom on death his shares shall be transferred but no member may nominate more than one person, unless he holds more than one share and in case unless the amount to be paid to such nominees, whether by way of whole shares or by fixed proportion of the amount available for transfer, as the case may be, is duly specified when the nominee is appointed and he shall attest the nomination by putting his signature or thumb impression in the register of members. If not admitted to membership the nominee or nominees shall be paid the shares of the deceased, and if there is more than one nominee, the amount to be deducted shall be set off against the amount due to each nominee in proportion to their interest”.
    10. The petitioner had undoubtedly been admitted to the membership of the Society vide resolution dated 16th May, 1975, but that entitles him only to the automatic transfer of share as per the bye-laws. A reading of the guidelines issued by the Delhi Administration, relied upon by Mr. Harjinder Singh, in support of his contention, does not show the authority of law under which the same were issued. Learned counsel for the parties were unable to point out to any provision in the Act and the Rules whereunder such guidelines can be issued. It is not necessary fee me in this case to go into the validity of the guidelines as the guidelines themselves show that in spite of the nomination a plot could be inherited under a will or on devolution under law. Three eventualities seem to have been kept in view for sanctioning a mutation in the record, in case a sub-lease deed had been executed during the lifetime of the deceased. Those are, by virtue of nomination form or a will or by devolution under law. The nomination by itself has not been made the sole criterion for the sanction of mutation in the name of a nominee. In the present case as the other legal heirs have objected to the mutation or substitution in favour of the petitioner, it is open to the respondents to ask the petitioner to get a succession certificate. Rule 35 referred to by Mr. Harjinder Singh only lays down the method of nomination by a member for the purpose of transferring his share and interest under sub-section (1) of section 26. As noticed earlier that section does not lay down that a society is obliged to transfer the interest of the deceased member to a nominee.
    11. Reliance by Mr. Gopal Vishnu Ghatnekar… v. Madhukar Vishnu Ghatnekar…., AIR 1982 Bombay 482 (1), in support of his contention is mis-conceived. Section 30 of the Maharashtra Co-operative Societies Act, 1961, which was being considered by the Bombay High Court opens with the words, “On the death of a member of a society, the society shall transfer the share or interest of the deceased member to a person or persons nominated in accordance with the rules. . .” On the face of it, therefore, there is difference between section 26 (1) of the Delhi Act and section 30 of the Maharashtra Act, as in the latter provision the word “shall” has been used whereas in the Delhi Act the word “may” has been used. In the context of the present Act it is not obligatory on the Society in view of the bye-laws to transfer the interest of the deceased share-holder in favour of the nominee. The Society, it appears, has recommended to the Administration and the Delhi Development Authority, to transfer the interest in favour of the petitioner; but that recommendation is not binding on the lessor, particularly in view of clause 12 of the sub-lease deed which lays down that the expression “sub-lease” includes all the legal heirs.
    12. There is another aspect which has been pointed out by Mr. Jitendar Sharma, learned counsel for respondents 4 and 5. According to him, there is no warrant for assuming that section 26 of the Act creates a kind of succession which could be styled as a “statutory testament”. The precise submission is that on the death of a member of a society, his estate, which obviously includes an interest in the sub-lease executed during his life-time, is governed by the law of succession applicable to him. Such a succession can be testamentary or intestate. In support of his proposition he has relied upon Smt. Sarbati Devi and another v. Smt. Usha Devi, AIR 1984 Supreme Court 346 (2). In the said case, section 39 of the Insurance Act was being construed. The question was whether a nominee of a life insurance policy under section 39 of that act on the assured dying intestate would become entitled to the beneficial interest in the amount received under the policy to the exclusion of the heirs of the assured. While over-ruling the two recent decisions of this Court, it was held that that a mere nomination made under section 39 did not have the effect of conferring on the nominee any beneficial interest in the amount payable under the life insurance policy on the death of the assured. It was observed “the nomination only indicates the hand which is authorised to receive the amount, on the payment of which the insurer gets a valid discharge of its liability under the policy. The amount, however, can be claimed by the heirs of the assured in accordance with the law of succession governing them”.
    13. I agree with Mr. Sharma that the above principle can safely be applied in the present case as a third kind of succession cannot be created under section 26 of the Act.
    14. In view of my discussion above I hold that the Delhi Administration is well within its rights to decline the request of the petitioner.
    15. The result is that the writ petition is dismissed but with no order as to costs.
    Petition dismissed.
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    Comments

    Shri Ashok Chandra Aggarwala Petitioner v. Delhi Administration & Ors. S
    (Dec 19, 1984)